Feasibility Study

PROJECT FEASIBILITY STUDY 
(KAJIAN DAYAMAJU PROJEK)


The Project Feasibility Study (FS) is a preliminary study to be conducted by every Property Developer involved in Housing Development in Malaysia. It's also famous known as FS.

PROCESS TO PRODUCE FEASIBILITY STUDY

Factors to be considered in preparing FS.

1. Land Area.
It is important to know the size and shape of the land. The size and will affect the development component to be developed on that land.

 2. Topography.
The topography will be appeared when the land surveyor produce the Contour Plan. It will capture the highest level and lowest level of the land. 


3. Density
In general it is determined by the planning requirements by respective local authority.

4. Layout Plan
It is paramount to have, highest and best use of layout plan, in order to maximise Gross Development Value (GDV). 

5. Market Study
It will determine type of product to be considered in the proposed development. In addition market study also to advice on the proposed sale value by considering the competitor product and market value.

6. Infrastructure cost
Infra cost for the whole project is vital, to reflect the cost to be shared by every products listed in the FS.

7. Building cost
The cost to be calculated based on construction cost psf, 

8. Land cost
The cost to be considered is the market value of the land. 

9. Professional fees
The cost to pay the appointed consultants from the very beginning until project completion.
It consists of several components that must be included in the study as follows: 

Project Feasibility Study

Main Component

1. Gross Development Value (GDV)

2. Gross Development (GDC)

3. Infrastructure Cost

4. Land Cost

5. Professional fees

6. Contribution to Local Authorities

7. Overheads

8. Profit BeforeTax(PBT)

9. Return on Cost(ROC)

1.0 Gross Development Value (GDV)

GDV is the total value of the proposed development project. It includes residential units, commercial units, industrial lots and vacant land.

GDV is calculated based on the type of product and the proposed selling price.

Sample of GDV calculation :

Type of Development	Total Unit	Land Area	Built up area (sf)	Selling Price (psf)	Selling Price /Unit	Total GDV
Single Storey Terrace (20’x 50’)	10	20’x70’	1,000	150.00	150,000	1,500,000.00
Double Storey Terrace (24’x 60’)	10	24’x 80’	2,500	200.00	500,000	5,000,000.00
Total	20					6,500,000.00

Based on the above sample, the total GDV is RM6,500,000.

2.0 Gross Development Cost (GDC)

GDC is the total cost of the proposed development project.

 The cost involved is as follows:

i. Building cost
ii.Infrastructure cost
iii.Land Cost
iv.Professional Fees
v.Contribution to Local Authorities
vi.Marketing Fees
vii.Other cost

Sample of GDC calculation :

Type of Development	Total Unit	Land Area	Built up area (sf)	Selling Price (psf)	Selling Price /Unit	Total GDV
1.0 BUILDING COST
Single Storey Terrace (20’x 50’)	10	20’x70’	1,000	150.00	150,000	1,500,000.00
Double Storey Terrace (24’x 60’)	10	24’x 80’	2,500	200.00	500,000	5,000,000.00
Proff fees (Building)
Legal Fees (SPA)
2.0 DIRECT PROJECT COST
Local Infrastructure cost						2,000,000
Professional Fees   (3%) Sales & Marketing Cost (10%) Contingency (10%) 3.0 LAND COST Land Value 4.0 COMMON PROJECT COST Government Charges Major Infrastructure Cost Proff fees (General) Property Management Cost Sale & Marketing cost (township) Financial Interest Contingencies 5.0 OVERHEADS Administrative and Project Management 6.0 TOTAL DEVELOPMENT COST To Add items (1.0 to 5.0)						60,000
Total

The failure of FS will contribute to the following factor:

1. Low take up-rate
The proposed product (land size, built-up area, selling price) is far below expectation of the potential purchaser.

2. Low Return on Investment (ROI)
Inaccurate estimating for construction and other cost will led to low ROI.