Feasibility Studies (Unit 21|22)

An APC Candidates Guide.

The Feasibility Studies competency is a specialized Asset Financial Management Competencies unit. Feasibility studies assess a project's viability over its expected lifespan and are crucial for effective decision-making, including securing financing.

Additional indicators for this competency involve strategies for research and data gathering related to predictive information. This includes analyzing data on asset cycles, methodologies for examining supply and demand statistics and employing appropriate analysis and evaluation techniques such as discounted cash flows and sensitivity analyses. It also emphasizes proper recording and documentation practices, particularly concerning data on completed projects.

The elements and performance criteria for this competency include:

Access Information Required for Feasibility Study:

- Establish project objectives and parameters through communication with the client.

- Access the necessary data for the study.

- Prepare documentation inputs, including compiling a database of completed projects and entering relevant information into this database.

Undertake Analysis for Feasibility Study:

- Evaluate and analyze the data.

- Identify the implementation and procurement plan.

- Define project stages and the expected outcomes for each stage.

- Analyze both financial and non-financial returns.

Show Understanding of Property Economic Issues:

- Analyze property market cycles.

- Analyze supply and demand statistics.

- Make and analyze inflation projections.

- Make and analyze interest rate projections.

Communicate the Outcomes of the Study to the Client:

- Provide the client with accurate information and advice for viable functional and financial outcomes.

In summary, this competency empowers a quantity surveying professional to conduct thorough investigations into a project's viability by gathering and analyzing relevant data, understanding economic factors, and effectively communicating findings to support informed decision-making.

Q & A

Here's a list of questions and answers related to the Feasibility Studies competency, covering the key elements and performance criteria:

Access Information Required for Feasibility Study:

Question: What is the first step in accessing the information required for a feasibility study?

Answer: The first step is establishing project objectives and parameters through clear communication with the client.

Question: What are some examples of necessary data that need to be accessed for a feasibility study?

Answer: Necessary data can include market research, cost estimates, regulatory requirements, technical specifications, and historical project data.

Question: What documentation inputs need to be prepared during the information-gathering phase?

Answer: Documentation inputs include compiling a database of completed projects, entering relevant information into this database, and creating detailed records of data sources and assumptions.

Undertake Analysis for Feasibility Study:

Question: What are some key analysis techniques used in a feasibility study?

Answer: Key techniques include discounted cash flow (DCF) analysis, sensitivity analysis, cost-benefit analysis, and risk assessment.

Question: What is the importance of identifying the implementation and procurement plan within a feasibility study?

Answer: It outlines the steps needed to execute the project, including resource acquisition, timelines, and potential challenges, ensuring a realistic project execution strategy.

Question: Why is defining project stages and expected outcomes for each stage crucial?

Answer: Defining project stages and outcomes provides a clear roadmap for project development, allowing for better monitoring, evaluation, and risk management.

Question: What types of returns should be analyzed in a feasibility study?

Answer: Both financial returns (e.g., ROI, NPV, IRR) and non-financial returns (e.g., social impact, environmental benefits) should be analyzed.

Show Understanding of Property Economic Issues:

Question: Why is it essential to analyze property market cycles in a feasibility study?

Answer: Understanding market cycles helps predict future trends, assess potential risks, and optimize project timing for maximum profitability.

Question: How does analyzing supply and demand statistics contribute to a feasibility study?

Answer: Analyzing supply and demand helps determine market saturation, identify potential demand gaps, and assess the project's market viability.

Question: What is the significance of making and analyzing inflation and interest rate projections?

Answer: These projections help assess the project's long-term financial viability by accounting for changes in the economic environment that can affect costs and returns.

Question: What are some factors that influence property economic issues?

Answer: Interest rates, inflation, local and national economics, zoning laws, demographic shifts, and supply and demand are all factors.

Communicate the Outcomes of the Study to the Client:

Question: What are the key elements of effective communication with the client regarding the feasibility study outcomes?

Answer: Key elements include providing accurate and clear information, presenting data in a digestible format, and offering sound advice based on the study's findings.

Question: What is the ultimate goal of communicating the feasibility study outcomes to the client?

Answer: The ultimate goal is to provide the client with the information needed to make informed decisions that lead to viable functional and financial outcomes.

Question: What information should be included in the report to the client?

Answer: The report should include a summary of the project objectives, the methodology used, key findings, financial projections, risk assessments, and recommendations.

Question: How can sensitivity analysis be communicated to the client?

Answer: Sensitivity analysis can be displayed in tables or graphs, showing how changes in key variables (e.g. interest rates, construction costs) affect the project's financial outcomes. This helps the client understand potential risks and uncertainties.

These questions and answers provide a solid foundation for understanding the competency of Feasibility Studies.

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Disclaimer: This information is for general knowledge purposes only and should not be considered legal advice. It is essential to consult with a qualified legal professional for any legal matters or concerns.