Real Estate development is capital intensive and whatever the financial approach or combination of approaches to be adopted for the realization of the project and whether the project is a private or public good, it is important to assess the likely performance of the investment before embarking on it. This underscores the need to carry out project appraisal for all forms of proposed projects.

A necessary prerequisite to testing the viability of a project is to examine its practicability or otherwise. This is termed Feasibility Test which seeks to answer the question, “can it be done?” Viability Analysis examines the profitability or otherwise of the project and answers the question, “should it be done?” Several techniques can be used to determine the viability of a project depending on project type and objective. Further assurance on the performance of a proposed project can be obtained by a consideration of what-if scenario about the probable changes in major economic variables of the project. We achieve this through a broad-scope Sensitivity Analysis.

Proper project planning requires detailed appraisal in order to ensure rational investment decision either by private or public real estate investors. We present in this proposal, our professional project appraisal service for your consideration.

PURPOSE

The purpose of our appraisal service is to provide professional advice as basis for rational decision making on whether to invest or not in any proposed project. To this end, the objectives of our appraisal work usually include:

1. To assess the likelihood of project realities.
2. To determine the project performance
3. To analyse conditions for optimum performance
4. To avoid capital lock-up and ultimately prevent colossal loss
5. To maximise the returns/risks trade-off of the project.

SCOPE OF OUR APPRAISAL SERVICE    

Our project appraisal service involves a test of the feasibility of the project, the viability and assessment of the likely inherent risks. The scope of analysis however depends on the outcome of each of the aspect of the appraisal in sequence.

DELIVERABLES

Our professional advice normally centres on all or at least, some of the under-listed assessments depending on the project possibilities and scope of service. The deliverables are:

• Analysis of Project Practicalities.
• Profitability Assessment.
• Assessment of Highest and Best Use.
• Determination of level of optimum returns / Capital Absorption Capacity.
• Combination/Portfolio Optimization.
• Assessment of best financing approach.
• Risk assessment.
• Ratio analysis.

    STRATEGIC ISSUES IN APPRAISAL

SENSITIVITY ANALYSIS       

Detail viability analysis of any proposed project requires a means of identifying and measuring the risk or risk/returns trade-off of the investment. Project parameters are usually subject to fluctuation most likely resulting from systematic risk. Sensitivity analysis measures the responsiveness of the project to the likely fluctuation.  Informed decision can then be taken in the form of: 

• Guiding the project with special focus on the parameter.
• Reviewing the project concept where necessary.

DOCUMENT REQUIRED

Critical viability analysis requires that the appraiser should forecast the cash flow profile of the proposed development. The pattern and timing of outflows and inflows must be projected and put under consideration in the analysis. To this end, we always require or generate the under-listed document for a more critical analysis.