Method and Effectiveness of Feasibility Study in Apartment Project

In the real estate investment business, decision making is very important which influence the success or failure of the project. One of the its significant stages is Feasibility Study stage.

Based on the characteristics of construction industry, which has high uncertainty, many risks occur during Project Feasibility Study. Therefore, this problem will influence to the decision making of the project and its profit. The main construction factors should have been anticipated and calculate into the feasibility analysis so that risk will not happen and

may become advantage for the investor.

Le Mien Thuy made a case study which objectives were summarized as follows:

1. Framework of FS in Apartment Project.

2. To study the application of the framework in project case

3. To find the problem in FS for Apartment Project

4. To proposal the solution base on theory.

This issue is more significant to some of these construction investors facing serious problems with budget control, as an effective budget control is critical for investing in large projects. Construction project management, which includes project Cost Estimation, is an area of weakness for those investors who want to expand or invest more in the international construction market.

Conclusions

The successful project is determined by Feasibility Study. This is one of the most important stages of project life cycle. There are some problem occurring in Feasibility Study and what we should do to prevent in future project are the following:

1. Incorrect assumption: The people conduct with good experience in construction industry.

2. Misunderstand the Demand of Market: To study carefully the market situation base on survey data of professional company.

3. Cost & revenue estimate is not match reality: To study the some similar project that successful before and collect good information from contractor.

4. Time schedule planning is not practice: To get the advisor of contractor and expert

5. Forecasting of cash flow is wrong: To break down detail a task base on general schedule and the selling program..

6. Mistake in term of FS calculation technical: Competency people should be in charge with the professional software. 

7. Lack of information in term of information of land: Good connection to authority.

8. Based on above study we can understand deeply a significant element which impacts the consequence of project.

The literature review also gives us the typical Feasibility study Framework for apartment project. It is comprised of 6 phases: Identify Conceptual, input data, estimate method application, method of evaluation, identify requirement, and identify benefit. In the initial step of FS framework, the preparation work is most important .This section conducts entire of data for FS processing to ensure the result is truth .In the processing step of FS framework, the method of estimate, evaluation demonstrate the feasible project. There are many tools to measure the benefit of project and specify the good decision –making in apartment investment.

The emphasize point in theory of FS is cost estimation method and cost estimation element. These method are Functional unit method, superficial method, element cost plan, approximate quantities techniques, and all of them can be implemented in real apartment project efficiently. The cost estimation elements describe the detail of some important figure such as: cost of land, cost of legal and professional fee in acquiring the land, construction cost, cost associated with facilities management, and cost of finance. Because Cost is the input data for FS processing, thus knowledge to understand it is critically studied in this report.

The case study of CARINA PLAZA is discussed based on the FS framework. The comparison between actual and theory demonstrate the investor to implement feasibility study framework relevant theory. With the actual project had just finished we can get experience relate to FS problem.

 

Recommendations

According the case study analysis, some problem occurring in feasibility study for apartment project was identified. In other hand, the cause is also revealed base on the comparison between actual and theory.

In order to improve the Feasibility Study of Apartment Project , the existing problem should be avoided such as increasing cost of land , high inflation , revenue changing , and fluctuation of material.

The method of cost estimation should be implemented properly and appropriately to ensure its accuracy as much as possible. Particularly the knowledge of construction industry is most important factor to implement result of project. Cash flow control is under-taken by people who have enough experience in construction work.

To get the information is concentrated highly to eliminate the risk in future stage. The revenue of project to be executed following the real market. Beside, the input data and the output data, the calculation technique should be carried out carefully and checking by many people involving to make-sure decision making is good.

The leader should support the team to carry out the FS by the information from other party such as: Marketing research, contactor, consultant, designing company and some expertise. Especially in Vietnam the Policy of Government is not stable that is why the good relationship with government is the most important point in feasibility study.

Conclusion, in order to achieve the feasibility study in apartment project the people conducting should be a integrated knowledge competence in term of construction industry, financing, marketing , politic, and selling.

         

Abstract

Vietnam is the developing country which is booming economic and the new medium classification increasing rapidly. The movement of people from rural region to urban region is grow up every year. The population growing is 2% a year that is compressing of Housing Supply for social need. The entire above figure is good reason for real estate business in Vietnam. However in order to success in property business the Feasibility study stage is most important factor should be consideration.

The subject of this study is analysis the method & effectiveness of feasibility study in Apartment Project. Base on theory and actual project the problem statement occurring in FS will be identified such as: Incorrect assumption , misunderstand the Demand of Market, cost & revenue estimate is not match reality, time schedule planning is not practice, forecasting of cash flow is wrong, mistake in term of FS calculation technical, lack of information in term of information of land. According the literature review the object study is summarized as Framework of FS in Apartment Project. To study the application of the framework in project case. To find the problem in FS for Apartment Project .To proposal the solution base on theory.

With the real project Carina Plaza the analyze of the comparison between theory and the actual activity is show up the different and causing of it. The method of cost estimate is concentrate to study according the theory and project case. The revenue estimate is also access careful to ensure the catch flow management always is positive and project is archive.

The final report specifies the most important factor to impact the FS and a successful of project in medium apartment. The FS should be conducted by the people who are integrate knowledge such as: construction knowledge, financing, marketing, communication.