What is a feasibility study?
A feasibility study is a process that determines the legislative, economic and servicing constraints, marketing potential and physical parameters of a project. The process identifies the strengths, weaknesses, risks and potential rewards of a project.
Each feasibility study is unique as the criteria of assessment will be different each time, for instance:
Legislative Framework
The legislative framework differs between states and between local governments. A Town Planner must review the requirements for each and every project to ascertain the rules – even if you have worked within the local government area (LGA) before.
Economic Framework
The economic circumstances are also unique to each project. Land values, supply and demand factors, employment statistics and the socio-economic profile of the local area can impact upon the feasibility of your project. Funding sources should also be considered during a feasibility study. It’s important to know where the money will be coming from – unless you have a spare couple of million hiding under your bed.
Servicing Constraints
Some projects look like they stack up financially, but you have to do your homework properly. Imagine being told by Council in a Pre-DA meeting that your site won’t have access to the sewer network for another 10 years. Servicing constraints are important factors for consideration before investing in property.
Marketing Potential
Some areas call for certain types of development. For instance, one area may have a high demand for family style homes, while another might be in short supply of housing for young professionals. Each of these groups has different requirements and expectations. You need to know who is going to buy your product before you design it.
Physical Parameters
The marketing, legislative, economic and servicing constraints should be amalgamated into a concept feasibility plan. This plan can tell you what your potential yield might be, the square metre area of the development, or the types of spaces within and outside the building, such as size of apartments or office space. This information will feed back into your feasibility to test its suitability.