RICS APC

STUDY PACK 1 FEASIBILITY AND DEVELOPMENT APPRAISAL

FEASIBILITY AND DEVELOPMENT APPRAISAL

GENERAL GUIDANCE
Feasibility and development appraisal happens at the very beginning of a project. This is a critical stage in any project. It is the point at which
establishing the projects viability and the right project solution will produce the best results for a client.
Feasibility study
A feasibility study will establish that a project can be completed within technical, financial, programme and legal or regulatory constraints and
that it will meet the clients business or personal objectives. It will involve the whole project team and will cover:
1. Evaluation of options
2. Environmental impact assessment
3. Site assessment
4. Planning guidance
5. Technical assessment
6. Commercial assessment
Before any feasibility study can be undertaken the clients brief must be clearly established and its objectives understood by the whole project
team. This is the stage when value management could best be used to ensure the clients requirements are met in the most effective way.
Candidates should understand how value management could be used to explore viable alternatives, or to improve the value of the proposed
scheme for the client.
Development Appraisal
A development appraisal looks at the commercial viability of a development. It will balance cost against income or value and establish the
profitability or financial reward to the developer. It also compares alternative development proposals.

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STUDY PACK 1 FEASIBILITY AND DEVELOPMENT APPRAISAL
In addition to construction costs, candidates should be aware of the other cost elements of an appraisal and should know how such data might
be obtained. Cost elements might include:
1. Land purchase costs
2. Site remediation costs
3. Finance charges
4. Professional fees
5. Legal costs
6. Planning costs
7. Taxation allowances and grants
8. Profit
Candidates should also understand in principle how the value of the finished development would be assessed.
In a development appraisal, by equating cost and value, a residual valuation can establish how much money is available for the purchase of
land, or to construct the development. Alternatively it can show the level of profit or return for the developer, or it can be used to establish the
value of the development in order to set a sale price.

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STUDY PACK 1 FEASIBILITY AND DEVELOPMENT APPRAISAL

RELATED APC COMPETENCIES:

QS PATHWAY
Capital allowances
Design economics and cost planning
Due diligence
Project evaluation
Quantification and costing of construction works
Sustainability

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STUDY PACK 1 FEASIBILITY AND DEVELOPMENT APPRAISAL

AREAS OF STUDY
Viability

Appraisal methods

Technical

Financial

Programme

Site restrictions

Height restrictions

Access

Services

Structural

RIBA Plan of Work Stage B

Funding

Budgets

Profit

Value

Acquisition of site

Design development

Planning permission

Construction period

Commissioning

Legal and regulatory

Residual valuation

e.g. residual land valuation

Value management

Value

Function

Cost

Risk management

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STUDY PACK 1 FEASIBILITY AND DEVELOPMENT APPRAISAL

Sensitivity analysis

Life cycle costs

Value or income

Cost

Whole life costs

Valuation of completed development

Income stream or rental values

Grants and taxation allowances

Profit or return

Land acquisition

Site costs

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Capital

Replacement

Operational

Maintenance

Life cycle cost

Finance costs

Occupancy cost

Income stream

Disposal costs

Market valuation

ERV and Yield

Comparable evidence

Profits method

Construction cost method

RICS Red Book

ERV

Comparable evidence

Capital allowances

Demolition

Contamination

RICS APC
STUDY PACK 1 FEASIBILITY AND DEVELOPMENT APPRAISAL

Design efficiency

Environmental factors

Construction

Fees

Legal

Finance

Planning

Risk

Taxation

Whole life costing

Site density

Wall to floor ratio

Storey height

Floor area ratios e.g. net to gross

Functional unit rate

Planning

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Access

Services

Preliminaries

Construction works

Design fees

Consultancy fees

Investigations and surveys

Life cycle costing

Building Information Modelling

Outline and full permission

Permitted development

RICS APC
STUDY PACK 1 FEASIBILITY AND DEVELOPMENT APPRAISAL

Planning Policy Statements and

Guidelines - PPS and PPG

Sustainable development

Sustainable construction

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Section 278 and 106 agreements

Listed buildings

Conservation areas

Change of use

Social impact

Environmental impact

Economic impact

Polluter pays principle

Landfill regulation

Landfill tax

Carbon footprint

Energy efficiency

Renewable energy sources

Sustainable sources of materials

Recyclable materials / Waste

Site Waste Management Regulations

Environmental assessment methods

RICS APC
STUDY PACK 1 FEASIBILITY AND DEVELOPMENT APPRAISAL

TYPICAL APC QUESTIONS

The following questions are general examples of what a candidate should be able to answer when they are professionally competent in this
subject. Each candidate should adapt the questions to suite their own individual experience.

Knowing
Doing
Advising

Level 1 questions relate to your basic knowledge of the subject

Level 2 questions are about your experience of the subject
Level 3 questions are about your ability to give advice on the subject

In the RICS APC final assessment interview the panel will ask questions at levels 2 and 3 that are based on the candidates experience. It is
essential that the candidate should include sufficiently detailed information in the Experience Record to enable the panel to do this.
Level 1

What is a feasibility study trying to achieve?

What are the main components of a development appraisal?

Explain the term residual valuation?

What are the main methods of valuing a property?

Explain the terms Yield and Evidence in relation to property valuation?

What is the RICS Red Book?

What are the main fees you would expect to take into account in a development appraisal?

What impact might sustainability issues have on a development appraisal?

What is the minimum information you would need to produce an estimate of the construction cost on a project?

Where would you find the definition of NIA, GIA and GEA?

What sources of cost data are available?

How would you adjust historical data for use in an estimate?

What are the typical exclusions you would expect to see associated with a construction estimate?

What factors influence the accuracy of an estimate?

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How might life cycle costs be used in a development appraisal?

What is whole life costing?

How is net present value used within a development appraisal?

Level 2

Explain how you have carried out (would carry out) a development appraisal for a client?

Explain how you have carried out (would carry out) a residual valuation?

Explain how you have carried out (would carry out) a sensitivity analysis?

If you were given the net internal area of a building, what would be included in that area and how would you go about converting it to
gross internal area?

How have you (would you) deal with risk in a development appraisal?

What sort of qualifications would you expect to see in a construction cost estimate?

Explain how the planning approval process has influenced a development appraisal that you have been involved with?

How have you (would you) establish the level of fees to include in a development appraisal?

Level 3

Explain to your client how capital allowances might influence his development appraisal?

Explain the term polluter pays to your client?

Explain to your client how the use of LCC and WLC can help in a development appraisal?

I am a developer wanting to build an office block to sell. I have seen a suitable site and need to know how much I should pay for it in
order to make a profit from the development. Explain to me how you would carry out a development appraisal for me?

It is 5.30 on a Friday and everyone has gone home. You are the last person in the office and just as you are about to leave, the phone
rings and it is a client. He says he is on his way to a meeting to buy a plot of land on which he intends to build a hotel. He wants to

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know how much hotels cost so that he can work out how much he can afford to pay for the site. He will be at the meeting in half an
hour and needs to know by then. How would you respond to the call?

A client says that he wants to build a new office block to accommodate his expanding business. Explain how value management might
be used within a feasibility study?

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