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Commercial construction projects are big investments. A lot of planning and research are needed to ensure their success. A project will begin as a vision, but many questions must be answered before it can become a reality (if it can, in fact, become one).
In the construction industry, this process is achieved by conducting a feasibility study.
Keep reading to learn about this vital step of construction management.
Table of Contents
1. What is a Construction Feasibility Study?
2. Why Are Construction Feasibility Studies Important?
3. Factors Examined During a Feasibility Study
4. Steps to Complete a Construction Feasibility Study
5. Common Obstacles Faced During a Feasibility Study
A construction feasibility study, also known as a feasibility analysis or viability study, is a detailed assessment of proposed project plans to determine their viability.
Its purpose is to identify any hurdles or opportunities ahead of time to allow for adjustments and planning.
A feasibility study should be done in the very early stages of a project. This is usually after the proposal, scope, and objectives are determined but before the project design begins in the preconstruction phase.
Since feasibility studies can be extensive, many commercial projects conduct a pre-feasibility study. This is a preliminary analysis of several different options for the project at a more surface level.
This will determine the best project scenario for a complete feasibility study.
As mentioned, feasibility studies require time, energy, and investment. This step is vital for many reasons:
These studies identify potential risks and challenges that could affect the project’s success and help develop strategies to mitigate these risks.
The data gathered during a feasibility study accurately estimates the project’s costs, preventing budget overruns. Presenting this data to investors helps in securing funding and financial planning.
Learn more: Mastering Construction Budgeting: A Comprehensive Guide
This process assesses the availability and requirements of resources, including labor, materials, and equipment. Having this data in hand during construction ensures the efficient and effective use of resources and helps with timely material procurement.
Project managers can develop realistic timelines for project completion because this study helps plan and coordinate activities to meet deadlines.
Throughout the feasibility study process, research is done to identify necessary permits and approvals required before construction begins. This ensures the project complies with all relevant:
A feasibility study assesses the project’s environmental impact and develops strategies to minimize adverse environmental effects.
This study includes an extensive site analysis, which evaluates the suitability of the proposed site for the construction project. It considers factors such as:
Keep reading: How Is an Architecture Site Analysis Conducted?
By identifying all stakeholders and their interests, a feasibility study ensures that everyone’s needs and concerns are addressed early in the planning process.
This process assesses the project’s sustainability, including energy efficiency and material selection. It also develops strategies for long-term maintenance and operation.
Lastly, feasibility studies determine whether to proceed with, modify, or abandon the project.
Several different types of feasibility studies can be conducted on one project, each focusing on one particular factor. Some projects will require all studies to be undertaken, but narrowing it down to just a few areas will be sufficient for others.
Typical factors analyzed can include:
The first step of a feasibility analysis is to evaluate a proposed location for your project. Part of this study will consider the soil stability and topography of the land to see whether construction of the project design on this site is even possible.
Research will be done to determine whether restrictive covenants or zoning regulations will affect the project. Accessibility and utility availability are other vital issues that could potentially affect a site’s feasibility.
A site without access will require more time and cost to create a roadway to it. If utilities are lacking, they must be brought in, adding cost and time to the project’s schedule.
Lastly, how much environmental impact will the project’s progression on the site have? Are there any protected flora or fauna in the area?
The design feasibility study’s goal is to answer one question:
“Is the project achievable within the constraints of the site, budget, and technology available?”
The initial architectural and engineering plans will meet these constraints and design standards. However, some of the original designs may not be possible.
If the design needs to be adjusted, will it affect the structure’s functionality, aesthetics, or compliance with building codes?
This aspect of the study determines if the project can be executed with the available technology, skills, and expertise. The project may be limited to specific construction methods or technical knowledge. Additionally, some special equipment and innovation may be needed. This process will identify these needs with the goal of providing a solution.
The analysis of the financial aspects of the project is called the economic feasibility. Of course, without the proper funding, the project can’t start.
All project owners will be interested in its profitability. To figure this out, the first step is to calculate a cost estimation and projected revenue, providing the cost-benefit analysis and projected return on investment.
This process will provide a site appraisal before and after project completion and identify potential financial risks.
Commercial construction projects must comply with all legal requirements and regulations.
A legal feasibility study will identify all zoning laws, building codes and permits, land use regulations, and environmental laws, and then ensure the project complies with them.
It will also make sure you are meeting all contractual obligations and acquiring all planning permissions.
Some research into market trends must be done to assess the market demand for the project and its potential for success, answering:
All these factors will come together to outline the project’s potential market share.
The project’s social impact on the community is much more significant than most companies admit. Whether a project has community acceptance or brings benefits to the public could make or break its success. Any negative impact on local culture and society will also harm the project’s profits.
Can the project be completed within the proposed timeline?
Consider:
A critical path analysis will determine which tasks must be completed in a particular order so as not to delay the completion of other requirements.
A feasibility study will evaluate whether the site can be successfully operated once it’s completed. To understand this, the operational requirements — including staffing, maintenance, and management capabilities — will need to be identified. The site’s long-term sustainability is another important aspect of its operation.
Related: Commercial Construction Management
Now that we have explained what a construction feasibility study analyzes, let’s break down the steps that must be taken to complete this process.
Before you can determine whether any aspect of a project is feasible, you must outline its objectives, goals, and requirements. Also, the stakeholders and their interests should be considered. Now you have a baseline against which to compare all findings.
First, gather the initial information you have about the project. Carefully examine this to identify any potential constraints or opportunities.
Before purchasing real estate, you should evaluate the proposed site’s physical characteristics. Conduct soil tests, topographical surveys, and environmental impact assessments, and check zoning regulations and site accessibility.
If all tests and assessments meet the project’s needs, you can move on to the next step.
As discussed, a feasibility study has several aspects, but only some projects will need to consider all of them.
Identify and conduct all feasibility studies that pertain to your particular project among the following list:
Every project presents risks. Identifying all the ones related to your particular project is essential during the feasibility study. Next, develop risk mitigation strategies and contingency plans for each identified potential pitfall.
Summarize the findings from each feasibility assessment and provide recommendations based on the analysis. Present possible alternatives and their implications.
Compile all the information into a comprehensive feasibility study report. Include an executive summary, detailed findings, and recommendations. Make sure all documentation is clear, accurate, and thorough.
Review the report with collaborators and experts and make any necessary revisions based on their feedback.
It is time to present the findings and recommendations to project stakeholders and decision-makers, providing supporting data and justifying the conclusions. Be prepared to answer questions and give clarifications if necessary.
Feasibility studies can be complicated, and many construction companies face the same obstacles.
Keep reading for some possible solutions to the following common hurdles.
Reliable data can be challenging to find, especially for unique projects. To ensure you aren’t relying on faulty info, use multiple sources and cross-check the data to see if they corroborate.
You can almost always find trustworthy sources from governmental, educational, or industry reports. If you can’t find anything in print, speak to experts in the field.
Although feasibility reports are worthwhile, you can easily get sucked into the process. Don’t overdo the feasibility report to balance the cost and time it takes to conduct. Instead, work on priority studies first. Create a plan and timeline for the study and stick to it.
A risk assessment can be tricky to conduct accurately. For many, the SWOT analysis model is the most reliable. It stands for:
Strengths and weaknesses are identified as internal factors, while opportunities and threats are external.
Remember to update the risk assessment regularly since it can change as the project progresses.
Many stakeholders prefer to see progress with as little investment as possible, making it challenging to convince them of the value of a feasibility study.
Explain the importance of a feasibility study, sharing a detailed analysis of one conducted in the past and how it helped the finished product. Maintain communication with the stakeholders about the study’s findings with regular meetings to provide updates.
A construction feasibility study can provide insight for project owners, managers, and contractors on how to tackle each task for the best possible outcome.
These studies can assess risk, estimate cost, allocate resources, engage stakeholders, and ensure legal and regulatory compliance.
If you need help completing a construction feasibility study for your next commercial project, contact FMP Construction today!
