Viability studies offered by PPQS, your trusted quantity Surveyor Cape Town company
Before you begin a development project, it is always a good idea to subject the project in question to a viability study. This study, through several aspects, sets out to analyse the viability of a project or task in order to establish whether or not it will succeed or be financially plausible. We at PPQS, as your trusted quantity surveyor Cape Town company, offer viability studies of the highest quality and meticulousness. In just a few minutes of reading, find out more about viability studies in general as well as how we provide this valuable service.
What exactly does a viability study by a quantity surveyor Cape Town company involve?
Operating with a given set of assumptions at the helm, a viability study includes the calculation of almost every aspect of a project over its lifetime. It can be described as an investigation of the proposed venture’s longevity. It is one way to determine whether or not a development project should be approved.
A viability study also involves working with strategies to aid the venture’s growth and sustainability. A project’s growth is one massive aspect of viability. The study also includes an investigation into cash flow projections and professional fees involved in the development. Cash flow projections are an incredibly important part of the viability study, seeing as it is what will give you a clear idea of how much cash you can expect to come in and out of your project.
Further, understanding this movement of money may aid you to make wiser decisions as well as avoid a cash flow crisis in the future of your project. Next, professional fees refer to the prices that are charged by those specially trained in specific fields, who will undoubtedly be involved in the commencement and execution of your project.
Viability studies also delve into thorough market and technical research from various angles in order to establish whether or not the project or idea proposed is one that is likely to succeed. In doing so, expert quantity surveyor Cape Town companies like us at PPQS can perform an exhaustive study that can shed light on potential cracks and seams in a project, or ultimately provide reason as to why the project will either fail or succeed.
Breaking down the viability study performed by your chosen quantity surveyor Cape Town company
Projects often undergo viability studies in order to determine the potential profit that exists in the proposed idea or development. As previously mentioned, some common aspects included in viability studies include the analysis of the market, business or project model, management as well as technical aspects. However, the aspects included in a viability study largely depend on the specific nature of the project in question.
Market studies
When your quantity surveyor Cape Town company delves into market research during a viability study, it is common that the reviewing of many external factors that a company or project cannot control will occur. This often involves the notions of:
Resource availability
This pertains to the resources you are able to use on your project, as well as when they will be available to you and the conditions of their availability in that case.
Consumer demand
This has to do with both the willingness and the ability of consumers to take you up on your services or products.
Regulatory environment
This refers to the political and legal environment in which your project will take form. This leg of market research includes establishing whether or not your project is compliant, and the measures that need to be taken to ensure that it is.
Competition
This has to do with the number of projects or developments offering similar services in the region.
Each factor above, or a number of them, can indicate potential issues for a new development during the market research phase of the viability study.
Technology study
It is no secret that technology usually plays a massive role in the current business landscape. Within a viability study, one important technical aspect included is the investigation of the supply chain. In this context, this refers to the digital equipment that will need to be used to simplify the supply chain processes in order to assist carriers and shippers. Today, the importance of technology in supply chain management cannot be understated.
Management models
Analysing management models is another significant part of a viability study that a quantity surveyor Cape Town company like us at PPQS offer. This is because those responsible for projects must make a wise decision when it comes to who will be guiding the operation from its infancy and beyond. This often involves suggestions of hiring new management resources and the encouragement of utilising only highly qualified individuals. Part of this leg of the study also involves a thorough review of all the manpower that is available for the project in order to establish how the project will be staffed.
The 4 horsemen of viability studies
Many argue that every project development has certain outcomes that ought to be met in order for it to be considered viable. Aside from the abovementioned factors of the study that will be investigated by your chosen quantity surveyor Cape Town company, the ongoing viability of a project depends heavily on these 4 aspects:
Cost
In most cases, a project is not considered viable if its value is found to exceed its costs. Sometimes, the cost viability of a venture changes over the duration of its development. As an example, if a specific amount of money has been designated for the project in question, and it seems that the actual costs will exceed the pre-decided budget, the venture may lose viability. There are various factors that influence costs, such as a change in the scope of the project or simply an increase in the cost of materials or supplies.
Time
When it comes to time, a project or development that is not on track to meet its deadline may lose viability. Further, delays can often become the cause of additional fees and penalties.
Manpower
Humans are at the heart of every project development. Therefore, it makes sense to say that losing key staff members has the ability to cost a project its viability. Should someone who is equally qualified and determined rise up to take a position, the development may regain its viability. In a similar sense, the behaviour of those chosen to lead up a project has a significant role in sustaining the viability of a project. This is another aspect that your chosen quantity surveyor Cape Town company may choose to address during a viability study.
Quality
Finally, should a project’s quality not be as achievable as previously anticipated, it may also lead to a loss of viability. This scenario can be caused by multiple crises, such as a shortage of materials or a loss of funding halfway through a development. It is a common occurrence and the reason behind many unfinished freeways or developments you may notice during your every-day travels.
The notion of project viability
A project’s viability is measured by its potential for survival in the long term, as well as its ability to gather and sustain profits over a certain period of time. But what does it mean to say that a project or development is “viable”? Project viability means that a project is, or can potentially be, successful. A viable project or development is one that is considered profitable (meaning that there is more revenue coming in than money being sent out to address running costs).
If project is not viable, it will be difficult to recover should any unexpected problems arise during construction or execution. Viability is also linked with solvency as well as liquidity which shall also be addressed. Once your project has undergone a viability study from a reliable quantity surveyor Cape Town company like us at PPQS, you are likely to feel more confident in the knowledge that you have done your utmost to ensure the success of your project, or close the door on it if need be.
Creating a viable project or business
Before submitting your project or business ideas to any company for a viability study, it is always a good idea to try your best to ensure its viability in the first place. This will help you shape the idea and plan better in the long-term. Many argue that creating a viable project or business is a 2-part process. Firstly, a marketing or pitching strategy, depending on the type of idea, can be done by understanding who you are and what service you will be providing.
Secondly, it involves ensuring that your financial dreams for the project are achievable and can actually come to life in a realistic manner.
Clearing up the confusion
Within the realm of viability studies, there are often some mix-ups in understanding. There are a few concepts that while associated with studies aimed at determining a venture’s success, are not the same as a viability study. With this in mind, it may be worthwhile to understand the differences between:
Viability and solvency
Many tend to confuse the above two concepts, which though similar, are actually distinct. You now know well that viability refers to a broad assessment of whether a project is or will be successful, and involves assessing several aspects of a project including marketing and the financial side.
Solvency, on the other hand, refers to whether a project or development has, or will have, enough money in order to reach its goal – an assessment which is often undertaken using ratios. A project or business is solvent when it has ample or enough assets that can be used to cover its liabilities.
Viability and liquidity
Viability is also often confused with liquidity, and the two are certainly very different. Where the assessment of viability is not wholly centred on finances, liquidity can be described as a shorter term measure of a project or business’s financial health.
Viability and feasibility
Perhaps the most misunderstood of all, a feasibility study aims to uncover both the strengths and weaknesses of a venture (whether proposed or already in existence). It considers opportunities offered by the environment and its resources. It also includes the historical background of a venture. It addresses operational details, accounting statements, legal requirements, tax requirements as well as service descriptions.
Why choose PPQS as your quantity surveyor Cape Town company to conduct a viability study?
When it comes to choosing the perfect quantity surveyor Cape Town company to conduct a meticulous viability study of your project, we at PPQS can assure service of the highest quality. Since our emergence onto the quantity surveyor Cape Town scene, we have been committed to tailoring our services to meet the specific needs of each project with which we are met. Should you wish to submit your project to a viability study, do not hesitate to contact us.