Graeme says that “determining the financial viability of a project is an on-going process. It begins during the earliest feasibility phase and helps determine the balance between government requirements, mission goals, and the site and market conditions”. The key components of the feasibility cycle are:
Defining the criteria. This involves identifying the client’s goals, including the type of housing they will provide, the demographic they plan to serve, services they will offer, etc.
Developing the concept. With the criteria in place, the next step is to determine the size of the building, number of units, special facilities needed, etc., to meet the goals of the development.
Costing the concept. This begins by making assumptions about various costs including per square foot construction, contingencies, consultants, and potential rebates such as HST, etc.
Identifying financing sources. As a non-profit, it’s important to figure out if you are able to cover your capital costs with grants, financing and other sources, and if you’ll have enough revenues derived from rent, parking, laundry, etc. to cover your operating costs. Graeme says that “the more affordable the rents, the more grant and equity will be required to cover costs”.
Graeme tells us that this cycle “is an iterative process. Anecdotally, every time we go around the circle and update the major assumptions of a project, we’ll save the file to a different name, and at the end of the project, we may have 100 different versions of the project budget”.