Method & Effectiveness of Feasibility Study in Apartment Project: A Case Study of Carina Plaza Building

In the real estate investment business, decision making is important to influence the success or failure of the project. One of the significant stages is the Feasibility Study (FS) stage.

Based on the characteristics of construction industry having high uncertainty, many risks occur during Project Feasibility Study. Correct decision and assumption will help to make the project a successful one. To those assumption, main construction factors should have been anticipated and calculate it into the feasibility analysis so that risks will not be happened and will be of advantage for the investor.

Mr. Le Mien Thuy made a case study on the method and effectiveness of FS. His research objectives were: (1) Framework of FS in Apartment Project, (2) study the application of the framework in project case; (3) find the problem in FS for Apartment Project; and (4) proposal the solution base on theory.

This issue is more significant to some of the 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

A successful project is determined by Feasibility Study. This is one of the most important stages of project life cycle. There are some problems occurred in Feasibility Study and how to prevent those in future project are really important. Below are some tips such as:

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 some similar successful project and collect good information from contractor.

4. Time schedule planning is not practice: To get the advice 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: Competent people should be in charge with the professional software.

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

Based on above study we can understand deeply a significant element which impacts the consequence of the project. Based on the literature review, typical Feasibility study Framework for apartment project 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 the most important. This section conducts entire of data for FS processing to ensure that the result is true .In the processing step of FS framework, the method of estimate and evaluation demonstrate that the project is feasible. There are many tools to measure the benefit of the project and specify the good decision –making in apartment investment.

The important point in theory of FS is the cost estimation method and cost estimation element. These methods are functional unit method, superficial method, element cost plan, approximate quantities techniques, all of them can be implemented in real apartment project efficiently. The cost estimation element describes 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 critical study in this report.

Recommendations

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

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

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

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

The leader should support the team to carry out the FS by the information from other party side such as: Marketing research, contactor, consultant, designing company and some experts especially that in Viet Nam, 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 who will conduct should have an integrated knowledge competence in terms of construction industry, financing, marketing, politic, and selling.

His thesis abstract is copied and posted.

Abstract

Viet Nam 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 growing 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 Viet Nam. 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 in formation 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 specify 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 is integrate knowledge such as: construction knowledge, financing , marketing, communication.