1. Stage 3: Project Feasibility (II)
Reading: RE Development, Principles and Process. (Chapter 16)

2. Stage 3: Project Feasibility
Outline
What is it?
Carrying out the study
Market Research & Analysis
PESTEL factors feasibility
Level 2 feasibility
Risk management
Who uses information from the feasibility study
Stage 3: Project Feasibility

3. Stage 3: Project Feasibility
P – Political factors
Political landscape --- stability, ideologies etc...
In depth knowledge of the macro economic landscape
GDP and per capita income
Interest rates
Inflation
Job security and income levels
Industrial productivity
Stability in stock market (business growth)
Possible PPP or other partnerships (UN etc based on political accommodation of such etc...)
Stage 3: Project Feasibility

4. E – Environmental Factors
Define your catchment area and be sure development fits into environmental requirements of that area
Trade areas or mile rings or the population (market) densities etc can be used depending on the nature and type of development/ product
Going green -- ensure design and construction methods of development are sustainable and energy efficient
Stage 3: Project Feasibility

5. S – Socio-cultural Factors
Involving both social and cultural factors
Social issues:
Proper identification and management of “social” stakeholders
General demographics and their preferences
Value systems and ethical requirements
Cultural issues
Cultural practices that will influence development
Stage 3: Project Feasibility

6. T – Technological Factors
Preliminary drawings – elevations, floor layouts (plans), perspectives etc... (tendering???)
Initial construction and total cost estimates – more accurate estimates for construction
Sensitivity analysis --- moving plan from feasibility to optimization
Decide on technologies to be employed and ensure availability, implementability etc...
Stage 3: Project Feasibility

7. Stage 3: Project Feasibility
E – Economical Factors
Cash flows of the development should be analyzed using Payback or some discounted cash flow method (NPV or IRR)
Costs... Pg 412
Cash flow during development period should be determined and analyzed (s-curves)
Identify and analyze lenders and investors
Checking their requirements and meeting them
Seeking mutually satisfying terms and conditions
Providing enough information for Due diligence
Stage 3: Project Feasibility

8. Stage 3: Project Feasibility
L - Legal Factors
Influenced by political factors???
Research on and obtain permits and other government considerations
Special focus of land issues due to local context
Legal advise on various contracts and agreements to come up to/ with
Due diligence of all factors, requirements and expectations
Stage 3: Project Feasibility

9. Value of their Participation : Cost of their Participation
Level Two Feasibility
Ensuring project is feasible for each participant
They must all see the development in the same light as the developer w.r.t. Value : Cost
Can legal obligations suffice?
Show cash flows of each participant in feasibility
Focus > keep a committed team together throughout
Value of their Participation : Cost of their Participation
Stage 3: Project Feasibility

10. Stage 3: Project Feasibility
Data Sources
Ghana Statistical Board
Census Data
Economic Consultants
Marketing Consulting Firms
Ghana Education Service
Other related Government Agencies
General Public
Other developers
Etc…
Stage 3: Project Feasibility

11. Stage 3: Project Feasibility
Risk Management
Some risk issues to consider:
Availability of requisite data
Financing this stage
Proper feedback from market
Ensuring appropriateness of design
Availability of utility lines etc
Permits from government agencies
Warranty from design team + other insurances
Etc.....
Stage 3: Project Feasibility

12. Who uses the feasibility study?
Developers
Determine suitability of a location
Best products for market demand
Submits to lender for loans
To fine-tune the product
Investors/Lenders
Assess project’s viability
Ensure sound basis to give loans/investments
Due Diligence
Stage 3: Project Feasibility

13. Who uses the feasibility study?
Designers
To understand target market
To create product style (looks), amenities, features unit sizes, etc.
Marketing Managers
To formulate sales strategies
Advertising campaigns
Interior merchandising
Public relations
Other promotional efforts
Stage 3: Project Feasibility

14. Who uses the feasibility study?
Local Government
To determine whether to grant permit
Whether public will accept project (meet their need)
To determine financial impact on local economy
To determine development impact fees
Tenants & Occupants
Firms use it for site-selection process
To determine which city/town to locate office
Suitability of specific properties for leasing
Stage 3: Project Feasibility

15. Who uses the feasibility study?
Sellers, Purchasers, Landowners
Used as part of appraisal
Identify an appropriate selling price for a project or land
Property Managers
Gain insights and information to reposition an existing property (renovation minor upgrade, etc.)
Etc…
Stage 3: Project Feasibility

16. Stage 3: Project Feasibility
Decision time.....
Go No Go Postpone Improve Project
Stage 3: Project Feasibility