Project Feasibility Studies

The key components of the project feasibility study's market analysis component can be further divided into four (4) basic tasking groups:

1. Initial Demand Analysis.  The first step is an initial demographics analysis to determine the potential demand for the proposed project.  Here we see the first evidence that will confirm (or repudiate) the major project elements.  This data is typically more than a year old, so the field investigation and final demand analysis must reconcile these facts.

2. Field Investigation.  The next step is the field investigation.  All facilities within the geographical primary marketing area that are essentially similar to the project under consideration are shopped and all their relevant data is collected and put into compendiums to determine market conditions. 

3. Reconciled Final Demand Analysis.  The demographic information is typically 18 months or older.  This means the demand analysis must be reconciled with the changes in local market supply over the previous 18-month period.  Once the changes in supply have been accounted for, a final demand analysis is undertaken.

4. Final Report Drafting.  All of the information garnered in the process of preparing the market feasibility study is then compiled into a final report that contains a table of contents, table of exhibits, index and appendix section (for the raw data collected in the process).  All portions of the data collection and analysis are represented in the report, together with the means and methods used to derive all conclusions and recommendations.

Once the data for the market study is complete, the next step is to create a pro forma financial presentation based upon the conclusions and recommendations of the market feasibility analysis (altogether, frequently referred to as the financial feasibility study) that also uses a four-step process:

1. Stabilized Operating Cash Flows Analysis.  The first level of the analysis is to determine the likely enterprise value that would result if all assets were in place.  This analysis discounts all non-operating issues so as to create a "clean" presentation of the potential value of the project and the limitations on capital funding that are likely to result.

2. Capitalization & Development Cash Flows Analysis.  Using the findings of the Stabilized Operating Cash Flows Analysis as the scenario governor, the pre-construction phase cash flows and construction phase cash flows are created/projected and analyzed.

3. Reconciled Consolidated Cash Flows Analysis.  This analysis takes the findings of the Stabilized Operating Cash Flows Analysis and combines them with findings of the Capitalization & Development Cash Flows Analysis to produce a single, consolidated pro forma financial presentation.

4. Final Report.  The final report is created and incorporates each of the aforementioned study elements into one massive volume of some 300 to 800 pages, that includes all FASB pro forma statements for each scenario, all department budgets, occupancy schedules, routine revenue schedules, ancillary revenue schedules, extraordinary revenue schedules, non-operating expense schedules, charts, graphs, notes and a detailed presentation of all empirical assumptions used in the projections.