How feasible is your commercial construction project? 

So, your team has begun the commercial construction planning process—including taking a look at your building design and budget. The gist of the project is well underway. Exciting, right? Well, to make sure everything will fall into place rather than to pieces, it’s important to conduct a feasibility study before moving any further. 

What is a feasibility study? 

Also known as a “feasibility analysis”, “feasibility assessment” or “feasibility report”, a feasibility study is a chance for your business to adequately determine just how feasible your new commercial construction project will be.

How does a feasibility study work? 

A feasibility study not only strives to determine just how feasible a construction project is but may also help you determine if the building design and process are right for your business. To do this, it must answer a handful of questions. 

“Why do we need new commercial construction?” 

It sounds a little crazy, but some businesses may prematurely jump into new commercial construction projects for the wrong reasons. Whether they’re trying to keep up with the Joneses or they subscribe to an “if you build it, they will come” mentality without crunching the numbers, a new construction effort may not be feasible just out of sheer good sense. 

“Is this a worthwhile investment?”

A commercial construction project without adequately determining the return on investment (ROI) is a recipe for failure. Without adequate means of paying for a new commercial construction effort, a business will likely fail to be able to pay for the project after its conclusion or default on borrowed funds once it is completed. A projected income stream for the necessary revenue to offset the price of new construction is a must. To further answer this question, it’s good to ask: 

 

  • “Will the market support this new facility?” 

 

It’s worthwhile to analyze the continued market for your product or service. Even though it looks like your particular industry is booming now, is your market sustainable enough to pay for this new construction over the term of a mortgage? 

 

  • “Have we accounted for the operational costs of the building?” 

 

If you’re building a larger commercial structure, the costs to operate it will be different than your current structure. Can you cover those new utility costs? Do you need to hire security? If you’re opening a larger retail location, will you need to hire additional staff to manage the influx of shoppers? Have you considered parking in that general location? These are costs some fail to consider when determining the feasibility of new commercial construction. 

 

  • “What will our opening day balance sheet look like?” 

 

For the sake of planning for opening day, in addition to what color tie you’ll wear to the ribbon-cutting ceremony, you need to financially time travel as well. What will your monthly balances look like day one? Day 10? Day 300? Knowing this will help you adequately plan for the construction of your new facility and its ongoing operations for years to come. 

If any of these questions make you sweat a little bit, good! That’s what a feasibility study is supposed to do—help business leaders prepare themselves and their organizations for new commercial construction projects. 

Commercial Construction in Tulsa, OK

For further help with commercial construction projects at any stage, look no further than the professionals at Cowen Construction.