Feasibility Studies: An Overview
Before spending on due diligence for a construction project, a smaller investment could save you time and money.
You can expect to pay anywhere from a few thousand to tens of thousands of dollars for a feasibility study, depending on its depth and breadth, which in turn depends on the project size and exactly what you need to know to move forward with your project. Rarely, however, is the cost more than one percent of overall project costs, and often it is far less. And that's a reasonable cost for analyzing the information you need to make the right decision.
In most feasibility studies, the first step is a land assessment by an engineering firm to see whether the location can work for the project. Even a small-scale feasibility study entails reviewing the client's needs, topography, and government ordinances. Companies that need a more detailed analysis take the study further, to include more detailed site drawings and preliminary plans by an architect.
The architect also provides specifications for building parts and types of building materials, as well as a description of the facility's mechanical and electrical systems. These preliminary plan drawings and specifications help establish a cost base, so the builder can then develop a realistic statement of probable cost for your study, also taking into account owner requirements, town ordinances, and land development needs.
A study's other components include a preliminary schedule, which covers the planning steps and timeframe from study completion to project approval, and any offsite improvements required by the municipality, such as adding a signalized intersection to accommodate traffic flow to and from your facility.
Picking Your Feasibility Team
Involve a builder, architect, and engineer in your feasibility study, rather than depending on just one discipline. An architectural firm or contractor that pulls together a balanced team, by engaging each professional only for the amount of work you need at each point in the process, helps ensure that you don't end up with too much depth in one area and not enough information in another. You don't want to spend a lot of money on architectural detail, for example, before you know if zoning or other site constraints will allow the type of facility you need.
Ask a builder or architect to show you examples of feasibility studies they've conducted. Eliminate aspects that won't be of use to you and include or amplify areas that will help answer your specific questions. Once you choose the company or firm to conduct your study, share everything you know about the project, as well as your questions - and be available throughout the study to answer their questions.
If you're considering a design-builder to conduct your feasibility study, choose one that won't lock you into a long-term relationship. It's usually more advantageous in the long run to pay for a study you will own, rather than accept an inexpensive or free study that ties you to using a specific contractor. Even if you choose not to go forward with the project, you can in the future reuse many portions of a feasibility study with relatively minor adjustments, should you decide to reconsider the facility plan or revisit a potential site.
• Be sure to research any upcoming infrastructure changes. If the site you're considering is adjacent to or near another construction project, for example, you'll want to know what offsite requirements they'll be implementing that might affect how the site you're considering can be used.
• Remember that low-priced land may be more costly to prepare for construction. Research the site's topography before you buy. If costs to develop the site are extensive, you may be able to negotiate a better price. Or you might find that another higher priced lot actually costs less in the long run.
• Expect a feasibility study to take about 60 to 90 days. Unless the market is very hot, don't tie up much money, if any, in sales agreements for the land during this time period. Be sure any agreements you sign include a reimbursement of your deposit should you elect not to pursue the project.
Matt Twomey is president of High Construction Company, a Lancaster, Pa.-based firm specializing in design-build, general contracting, and construction management services for the industrial, commercial, hospitality, healthcare, and education markets throughout the Mid-Atlantic region. Mr. Twomey can be reached at (717) 390-4600; visit the company website at www.highconstruction.com.
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