In development, a feasibility study measures the ability to complete a project successfully and account for economic, technological, legal and scheduling factors that may affect it.
Potential property owners or existing owners use feasibility studies to determine both positive and negative outcomes before investing a considerable amount of time and resources into the development.
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From an architect’s perspective, a feasibility study helps determine if options for a particular site are achievable and sustainable with the resources available. Because they hold so much value, these studies are used in a variety of industries.
The 5 types of feasibility studies:
1. Preliminary Feasibility Study
2. Architectural Feasibility Study
3. Project Feasibility Analysis
4. Market Feasibility
5. Fundraising Feasibility Study
A feasibility study is typically presented in the form of a report and may include sketch designs, legal implications, construction notes and maintenance costs. It also may include likely finance sources, strategies in which the project may be achieved and the next steps to get started. It is a systematic evaluation that helps determine whether a project is technically, financially, and operationally feasible.
In today’s blog, we’ll be exploring the 6 elements of a good feasibility study and how you can leverage the insights before purchasing a development property.
Where does a feasibility study fit in the project life cycle?
A good feasibility study tests the viability of an idea, project or even a new business. The goal is to identify potential problems that might occur if you pursue the project, considering all significant factors. Feasibility studies are conducted in the initial stages of development. However, they’re best leveraged before a property is purchased.
For example, a business looking to expand its reach would benefit from a feasibility study. This will determine whether it should follow through on the property, the material and labor costs associated with a remodel and how disruptive the project would be to the general public. Feasibility studies also address where and how it will operate, potential obstacles that may occur during construction and the funding to get it up and running.
Why are feasibility studies so important?
A feasibility study identifies logistical problems and nearly all business-related problems. Not only does this allow you to explore solutions ahead of time but can influence your marketing strategies used to convince a financial institution that investing is a wise choice. In architecture, feasibility studies are essential for assessing technical feasibility, site suitability, financial viability, regulatory compliance, risk mitigation, and facilitating effective communication with clients. Now that you understand the basics of a feasibility study and when its best implemented, let’s dive into its six elements.
The 6 elements of a good feasibility study
While there isn’t a fixed list of contents for a feasibility study, there are common questions that should be addressed. In the beginning, you’ll address the objective, organization, project management and location.
Then is the question of market demand and property use, which are critical factors that govern the capital and running costs of a project. Here are the six individual elements that make up a successful feasibility study.
1. Project Scope: is used to define a problem or address an opportunity. The project scope should be clear, concise and define the parts of the venture that are being affected directly or indirectly. The project sponsor should also be identified during this phase. In architecture, it refers to the defined boundaries, objectives, deliverables, and constraints of a specific architectural project. The project scope sets the parameters within which the architectural design and construction processes will take place.
2. Current Analysis: is used to define the current method of implementation and uncover miscommunications or inefficiencies. Architects evaluate the project's potential environmental impact, energy efficiency, and sustainability measures. It helps identify opportunities for modifications rather than a complete overhaul. It also identifies the strengths and weaknesses of the current approach as well as elements that may be used to save time and money.
3. Requirements: are defined based on the project itself. For example, requirements for new construction would substantially differ from an existing strip mall. Because each has different design properties, its processes are defined differently as well. In this phase, you’re defining for both the development and its system. It allows them to identify potential technical challenges and find appropriate solutions early in the project, ensuring the project's viability and success.
4. Approach: presents a recommended solution or course of action that satisfies the requirements listed in the section above. This phase provides alternatives as well as explanations for architectural selections and includes renderings to determine viability. This is where “build vs. buy” decisions are made.
5. Evaluation: determines the cost-effectiveness of the approach that’s chosen. It begins with an analysis of the estimated total cost of the project then examines alternatives for comparison. During this time, labor and out-of-pocket expenses are also determined and used alongside a project timeline to determine start and end dates. Architects assess the estimated construction costs, material expenses, design fees, and other related expenses to determine if the project is financially feasible within the available budget. The study helps architects identify cost-saving measures, evaluate potential revenue streams, and ensure that the project aligns with the client's financial goals and constraints. After the total cost of the project is calculated, a cost and evaluation summary are prepared.
6. Review: combines and organizes this information into a formal feasibility study that is presented to all parties involved. The review serves two purposes: to ensure accuracy and to make a final project decision. If approved, all parties will sign the document. If rejected, the reasons will be explained and included in the document.
In terms of return on capital invested and the contribution the project makes to the community, financial institutions and investing sources are looking for a sound investment. Conducting a feasibility study before you purchase property allows you to troubleshoot any obstacles, explore alternatives and build a case for your decision.
Choosing the right architect is crucial to the project’s success.
If you own property or are investing in a new development, a site analysis and feasibility study could mean the difference between a profitable commercial property and a failed venture. A feasibility study helps you pinpoint logistical, legal and business-related issues as well as the sustainability of your project. Feasible studies in architecture are essential for assessing technical feasibility, site suitability, financial viability, regulatory compliance, risk mitigation, and facilitating effective communication with clients. The provide architects with critical information and insights needed to make informed design decisions and ensure the success of the architectural project. We invite you to reach out to our team today at (866) 226-8071 for more information on feasibility studies and the benefits of conducting one before purchasing a property.
