Phases of a Feasibility Study

Phases of a Feasibility Study for a Building Development

Initial Definition, Preliminary Planning and Profit Analysis

Real estate developments are structured in phases that define the life cycle of the building project. Along the life cycle, costs and resources increase progressively until they reach a maximum level and then decrease. Also, the more you advance in the cycle, the probability of success increases and the risks decrease. In large investment projects, the Feasibility Study should be the first phase of the cycle. The approval and acceptance of the Feasibility Study by all parties involved in the development is a prerequisite for the start of any subsequent phases.

Phases of the Feasibility Study

The purpose of the Feasibility Study is to determine the project's profitability and its comparison with other investments with lower risk. Such determination is made by applying certain criteria to monetary flows, which are calculated on the basis of a preliminary planning which, in turn, requires the availability of descriptive data about the final product sought by the building project, structured in an initial definition. Thus, the draft of a feasibility study may be structured into the following phases:

• initial definition of the final product pursued by the building project
• preliminary planning of the project
• profitability analysis.

The Preliminary Planning Phase

The preliminary planning phase includes the following processes:

• time schedule, with the result of a work program
• economic planning, with the results of the budget and the curves of revenues and expenses
• financial planning, which determines project flows from a funding scenario.

In turn, the time schedule of the project includes the following processes:

• defining activities
• estimating a time schedule for every activity
• determining an appropriate order for the implementation of all activities
• calculating the program.

And the economic planning includes the following processes:

• planning of resources
• estimation of costs
• layout of the costs curve.

The Profitability Analysis Phase

The phase of analysis of the building project's profitability includes the following processes:

• applying profitability criteria on the flows obtained in the planning phase
• evaluation of risks impacting on the profitability of the project.

The General Review of Building Works (I)

General Review in Spain (I)

Responsibility. Replacement.

In Spain, the Director of the Works ('Director de obra' in Spanish) is the ultimate authority during the performance of the works, whatever the type of his recruitment. His function is the General Review of the works during the construction process, and this is an independent professional activity, so it is possible that one single building project has one architect assigned to the Architectural Design and the Construction Documents, and another architect assigned just for the General Review. It can also happen that the same construction work has several Directors, all of them assigned together.

Responsibility of the Director of the Works

If an architect accepts making the General Review of the works in a building project and he is not the author of the Construction Documents, he will be forced to assume the responsibilities arising from any possible deficiency that may be present in them. However, he will be entitled to recourse against the author of the documents. Moreover, when the construction is completed, he shall be responsible, together with the Director of the Performance of the Works ('Director de la Ejecución de la Obra' in Spanish), about the veracity of the statement on the Certificate of Completion of the Works ('Certificado final de obra' in Spanish). When several architects are hired as Directors of the Works, all of them will share the responsibility.

Replacement of the Director of the Works

If the Developer ('Promotor' in Spanish) decides to terminate his contract with the Director of the Works, or the Director decides to resign, the architect who comes to accept the new contract will have to notify the event to the Architects' Association and to the ceased architect, and his assignment will not become effective until the removal, replacement or resignation of the substituted architect is drafted and signed. The replacement shall be recorded in the Book of Orders and Assists ('Libro de órdenes y asistencias' in Spanish). The responsibility of the outgoing architect will be limited just to the works performed under his direction. The incoming architect, new Director of the Works, will have to take on the Construction Documents and the portion of the works already performed. The procedure requires drafting an Act of Acceptance and Transfer of Authority, which will state the current status of the works. The Act of Acceptance shall be submitted to the Architects' Association, and the replacement shall be notified to the City Council.

Architect Daniel Trujillano

http://www.arquitectotrujillano.com/home.html

Architectural Services for Building Works in Spain