Types of Feasibility Studies
There are two main types of feasibility study – and many people confuse the two. Architects will undertake a development feasibility study to determine what is possible on a site. The results should not be confused with a market feasibility study that determines the financial viability of a scheme based on the market(s) for which it will cater. The results of such a study should then be used to inform the architect’s work to ensure that project budgets are reasonable.
Feasibility Study Objectives
Market feasibility studies are required to:
• raise funding,
• satisfy grant awarding bodies, where appropriate, both financially and in terms of project outputs, • satisfy the directors that a project is viable,
• determine the optimum facility mix to maximise revenue,
• ensure that all parties agree on the key elements of a project, • form the basis for initial market and project planning,
• in some cases, provide the argument for business closure or change of use applications/ planning appeals, • enable third parties to value operating contracts (for example, enable museums and other visitor attractions to vale catering contracts).
What Does the Study Identify?
Hotel, restaurant, leisure and retail market feasibility studies should be completed for any capital project. It is essential that they weigh up all of the market information available dispassionately and relate the findings in potential revenue estimates. These estimates should show the number of units (rooms, meals, memberships etc.) estimated to be sold and the expected tariffs to be achieved, resulting in estimates of revenue and project outputs.
The information used to form the base for the above assumptions should include the: • location and visibility of...