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By Altus Group | 28 February, 2019

This article originally appeared in The Urban Developer

As the shifting sands of a market correction make conditions more uncertain, the obligation for property developers to assess the true viability of their projects grows.

For any developer, project feasibilities are a constant source of inspiration and perspiration. As the central source of truth for a project, the beloved “feaso” is the culmination of each and every assumption that supports the viability of a development. From revenue assumptions, sales rates and product mix, to construction costs, capital structure and delivery program, the project feasibility is more than just numbers.

So what really makes a development project feasible?

Balancing risk and return
At the core of all business is the proposition that risk must equal return. Undertaking property development is no different. If anything, the importance of this promise increases as you slide up the risk curve — and property development is an inherently risky business. For industry-leading software solutions business Altus Group, learning how to control the relationship between risk and return is the defining factor in ensuring a successful financial outcome. Whether it is managing construction cost budgets or creating a development feasibility that tracks actual accounts throughout the lifecycle of a project, the management of risk is paramount to achieving a return.

Actual versus forecast
Let’s face it. Most property developers are “glass half-full” characters with every project beginning life with a series of assumptions that paint a picture of the future. Will the market go up? Will construction costs go up? If so, by how much? How long will it take to get a planning permit? How many pre-sales do I require and how long will it take to secure them? Where will I source my construction funding and how long will it take to secure it? What is the likely construction program and how will this impact settlement? These are all questions that every developer needs to answer prior to committing to a project. But what happens when forecasts are replaced by actual numbers and actual dates? Managing and exchanging information between stakeholders across static spreadsheets just doesn’t cut it anymore.

Altus Group’s suite of industry-leading software, such as ARGUS Estate Master, provide the tools required to manage the reality of a project once its begins. Powered by technology, their Quantity Surveying team provide a succinct and clear view of projects from inception, to completion. From establishing, monitoring and ultimately achieving a construction cost to tracking consultants fees, marketing costs and interest payments, Altus Group provides the solutions that deliver real returns.

With the only certainty in the market place being uncertainty, there has never been a more important time to give yourself the tools that you need to navigate turbulent property cycles.

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