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How to do a) quick, b) preliminary and c) professional feasibility assessment

Discussion in 'Development' started by ottg, 29th Dec, 2015.

  1. ottg

    ottg Well-Known Member

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    Wonder if there are professional estimators on the forum who can help or point me in the right direction when it gets to rough-cut planning and cost estimation before pursuing acquisitions.

    IMO with any development, during the early due diligence assessment, you need three feasibility assessment stages: quick feasibility assessment, preliminary assessment and professional assessment. My question is around reliable methods to do a quick feasibility assessment. As with other building disciplines, estimators often are using proven short-cut methods to do estimates. What are those methods they are using? (Example: electrician will look at the number of electrical/light points, number of walls, floor area etc to do an estimate on length on cables, labour & material costs. However they will do take-offs from a formal drawing. What if drawings aren’t available yet as during the quick assessment stage?

    1. Quick feasibility assessment:
    a) How do you get quick but reliable costs for site works (say within 10%)?
    What short-cut estimation methods are available? What are key factors to consider? What if it is a multiple dwelling site – how do I scale costs (its not linear)? How will the site layout and services points influence the cost estimates? How do I know where is the services points? How & where do I find the location of easements on the site?​
    b) What about drainage (storm water, black water and gray water)?
    How do I estimate the costs for that?​
    c) Cost estimate for the design consultant fees?
    Can I assume the architect will contract the surveyor, engineers, city planners etc?
    What assumptions do I need to make?
    When do I engage them for the 1st time (before or after the land has been purchased)?
    What % of the development contract value get used?​

    2. Preliminary feasibility assessment
    If we look at the feasibility calculator offered from this vendor: Resource - Be Developer, Australia

    a. If I don’t know the costs yet what percentages can I used for cost estimations and what accuracy does it give?
    b. What is the base value I use for these % estimates?
    c. How often do you use the method that you proposed and how reliable were they after completion.
     
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  2. Scott No Mates

    Scott No Mates Well-Known Member

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    Buy a copy of Rawlinson Construction Cost Guide
     
  3. Leo2413

    Leo2413 Well-Known Member Premium Member

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    @Scott No Mates HI scott,

    I was actually looking at it this morning and think it’s a great resource to have. The 2015 edition is less than half the price of the 2016. Do you think the 2015 edition would still be relevant enough or better to get the 2016..?


    Thanks mate
     
  4. Scott No Mates

    Scott No Mates Well-Known Member

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    You buy one every couple of years imho. It will be wildly out one year then spot on the next.

    If you're really pedantic you'll adjust using the NCAP2 rise and fall provisions.
     
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  5. Leo2413

    Leo2413 Well-Known Member Premium Member

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    Thanks mate.
     
  6. ottg

    ottg Well-Known Member

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  7. Westminster

    Westminster Tigress at Tiger Developments Business Member

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    bob shovel and ottg like this.
  8. Westminster

    Westminster Tigress at Tiger Developments Business Member

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    On point A if you do a Dial Before You Dig it will show the location of all sewer, power and gas for the block and immediate surrounds. This will help you work out assumed easements due to sewer lines, power domes etc. I would estimate $5k headworks per additional dwelling as first dwelling is usually provided for by normal infrastructure.
    The other part of siteworks is retaining due to slope and that is harder to estimate.
     
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  9. ottg

    ottg Well-Known Member

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    Great idea, Thx! Have a bit of homework to do: Will use Rawlinson Construction Cost Guide and compare the results against the BMT cost calculator.
     
  10. Westminster

    Westminster Tigress at Tiger Developments Business Member

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    When using the BMT calculator it doesn't have quite enough permutations - a 3 bedroom villa is generally more expensive than a 3 bedroom shelf design as it's a more complex design but there is no double brick 3 bedroom unique design as a choice.
    I use around 120sqm for a single level 3 bedroom villa.
     
  11. ottg

    ottg Well-Known Member

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    Anyone using QwikFeaso?
    What is your view on this apps?
    If you want to run this android apps on a PC what android emulator should I use for best results?
     
  12. Tenex

    Tenex Well-Known Member

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    This is a good topic. I have actually come across a couple of online calculators myself but I have found that builders (and other types of consultants) tend to be wildly different in how they go about calculating the cost and also the final amount. So what happens in theory and practice often ends up considerably different.

    I wonder if others have had a similar experience
     
  13. Leo2413

    Leo2413 Well-Known Member Premium Member

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    Generally I have found that the longer you have analyzed an area and looked at a few deals that didn't work out, the more reliable doing future 'quick feasos' in the area will be as you already have some of the key numbers to put in from past research. Going blind into a new area and trying to do a quick feaso can be really tricky and way off the mark if your not careful imo.
     
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  14. Be Developer

    Be Developer Property Developer Business Member

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    @ottg,

    our calculator can provide preliminary feasibility study and have hidden 5% buffer on construction cost. As most newbie developers are using Industry standard SQM rate for construction without factoring in site cost, site specific variables,DA/TP conditions,etc.

    We may be able to add bit more comprehensive feasibility calculator when we do overhaul of current website (Early feb 2016)

    in meantime, feel free to email us information and we can put numbers thru our comprehensive calculator.
     
  15. ottg

    ottg Well-Known Member

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    @bedeveloper - thanks for the reply. I dont think its got anything to do with newbie developer but rather a check if the numbers do stackup using a quick napkin check before deciding to invest any further effort. IMO there are three stages (my focus now is on the 1st & 2nd stage only):
    • Costing by area (use for preliminary estimate only)
    • Costing by a costing guide or estimating manual
    • Detailed costing by material, labour and plant
    A feasibility is only as good as the quality of its inputs.This initial preliminary feasibility is based more on gut feel, and historic data available and is completed to determine whether it is worth progressing the concept. Approximately 5% of the total project expenditure determines 65% of the end financial result. If the feasibility doesn’t work at this stage, no amount of financial engineering is going to change the outcome. It should use parameters from Rawlinson construction handbook or the AECOM Blue Book
    It seems as if QwikFeaso tick the boxes - your view?
     
  16. Leo2413

    Leo2413 Well-Known Member Premium Member

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    @ottg what i did for my Brisbane project when trying to determine if the major costs were in the ballpark for a quick feaso, i created a couple pages profile for the build i want, level of spec needed and an allowance for site costs, soft costs. I then approached 4 builders (recommended to me) and asked them what they think it woud cost appprox to build something like i have outlined with the spec level i want. I also included pictures of internal specs of recent sales similar to what i wanted. I also did soil testing (but i owned the place already).Then i compared all the building quotes (trying to comapre apples with apples as much as possible) and also cross checked it with Rowlinson figures. I believe all the data i got back gave me a reasonably good idea of the costs involved and whether to take the project to the next level or not.. Thats not including adding in a contingency of course. It might not be a 'quick' feaso per se, but after doing this if the numbers didnt stack up, it would then be much faster to assess future deals in the same area based on prior research.

    Cheers.
     
    Last edited: 5th Jan, 2016
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  17. ottg

    ottg Well-Known Member

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    Thanks - good advice!
    How would you go about it prior to purchase?
    Apparently 1 out of 100 properties will tick the boxes for a good % return - view on this?
     
  18. Leo2413

    Leo2413 Well-Known Member Premium Member

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    ,
    Not sure about the 1 in 100 being good, but you possibly could have it in a DD clause something to the extent of 'subject to satisfactory soil test'. I know some ppl who do that.
     
  19. thatbum

    thatbum Well-Known Member

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    Its more like 1 out of 10,000 or 50,000 to find a property that fits my strategy.
     
  20. Leo2413

    Leo2413 Well-Known Member Premium Member

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    What's your strategy?