How A Feasibility Study Helps You Prevent Construction Cost Overruns
A feasibility study helps you prevent construction cost overruns by maintaining and enforcing objectivity. Remaining objective when making decisions about construction projects is a challenge for each project stakeholder.
No construction project is just a project. Each project has emotion attached to it, this makes it very challenging to recognize where a project needs to be improved, reassessed, or even halted before the actual digging begins.
The opportunity that comes with new roads, updated transit, a new school, an improved hospital, a new community church, or community center can make it challenging to step back and consider the feasibility of the project.
Will the project meet expectations? How much will this construction project cost? Can we get it completed in time? Who will benefit in the short- and long-term? Is our team equipped to complete this project on-time and on-budget?
These are just some of the questions a feasibility study answers for you. At PCS, Construction is PersonalTM – we hold ourselves accountable to independently and objectively quantify the costs for making your dream a reality.
What is a Feasibility Study?
A feasibility study is used to analyze and assess the viability of a construction project. When done correctly, the feasibility study uses objective techniques to assess the pros and cons of the construction project.
Ultimately, the feasibility study reveals aspects of the project that could put it at risk for scheduling delays, cost overruns, design problems, and other hidden issues. The inherent objectivity of the feasibility study allows stakeholders to make informed and qualified decisions about the project – how to improve it, what needs to be changed, and the project strengths.
It should be stressed that a feasibility study isn’t only about looking for flaws or areas for improvement. When done correctly, the feasibility study also highlights the strengths and benefits of the construction project.
What Are the Different Types of Feasibility Study?
The different types of feasibility study include:
The technical feasibility study is used to determine how well-equipped key contractors, companies, and stakeholders are to provide the technical resources needed for the construction project. This includes aspects such as transportation, materials, labor, design, and technological infrastructure.
Are there enough hard goods and materials available for the duration of the project? Is the best construction technology being used? Does the team have the technical skills and experience to use the latest technology? How will materials and other hard goods be transported? Do the design, materials, and skills align?
The goal of every construction project should be profitability. The project should be managed, scheduled, and budgeted to avoid cost overruns and financial loss. The economic feasibility study is a deep analysis of every aspect of the project, looking for areas where costs can be improved.
It is key that the budget is reviewed and assessed in accordance with stakeholder and client expectations. This is when a BOE, independent project oversight, and value engineering techniques can be used to help assess economic feasibility.
All contracts, regulations, and legal aspects of the construction project must be assessed. Can the stakeholders, construction contractors, and companies meet legal agreements and standards? Do updates need to be made to legal contracts and agreements?
The operational feasibility assesses how well the proposed construction project solves problems and meets goals. Every construction project, be it a new road, school, hospital, housing subdivision, or shopping center is and should be an answer to a problem. For example, making it easier for people to commute into the city from the suburbs or to meet the needs of a growing community.
The operational feasibility takes a bigger view of the outcomes of the project to ensure that when completed as planned and budgeted, that the identified problems and goals are achievable. Who will this project benefit? What are the expected outcomes of the project? What are the short- and long-term goals of the construction project? Does the project management team have the skills and experience to achieve the construction project goals?
A poorly planned construction schedule results in delays, cost overruns, and construction errors. When dates are missed, often corners are cut, last-minute changes are made to design, or money is spent in an effort to bring the project back on-track.
The best way to prevent this panicked approach to construction is with independent oversight that takes a deep look into the project scheduling and project management. It’s important to remember that the most balanced schedule will not work if the people executing the project lack the skills and knowledge to manage the project.
During the scheduling feasibility it’s beneficial to analyze the design, architecture drawings, materials, budgets, environmental impacts, regulations, and risk areas.
It’s also important to assess the construction project for safety, environmental impacts, the true benefits to the community, and the ability of the team to succeed in completing the construction project on-time and on-budget.
How Can a Feasibility Study Help Prevent Construction Cost Overruns?
A feasibility study helps prevent construction cost overruns by highlighting to project stakeholders how and where the project needs to be improved. The results of objective feasibility studies including the technical, economic, legal, operational, and scheduling underscore and emphasize what needs to be done before digging starts.
The primary benefit of the feasibility study is in identifying threats and areas of risk that can delay the project and force it into cost overruns. Project stakeholders should use the feasibility study results to determine how best to proceed with the construction project.
At PCS, we want your project to succeed. We provide independent oversight of every aspect of your construction project to improve cost certainty and project success. Contact us to learn how PCS services and expertise can help keep your project on-budget and on-time.
About the author
Lee Thomas, MBA is the chairman and CEO of Project Cost Solutions. Lee has over 20 years of hands-on operational process experience under his belt. He is deeply committed to seeing your construction project succeed.