A feasibility study, also known as a plan and cost review, is a crucial step in evaluating the viability of a construction project. Lenders, investors, and developers rely on this process to identify potential risks, confirm budget accuracy, and assess whether a project aligns with financial and regulatory expectations. At NWM Risk Management, our plan and cost review services provide comprehensive insights to support informed decision-making and mitigate construction risks.
What is a Feasibility Study?
A feasibility study—also known as a plan and cost review—is a comprehensive analysis conducted prior to the start of a construction project. Its main purpose is to assess whether the project is viable from financial, technical, regulatory, and logistical perspectives. For lenders, developers, and investors, this evaluation acts as a safeguard—helping to prevent costly mistakes, identify red flags early, and improve decision-making before committing substantial capital.
In the construction industry, feasibility studies are a critical step in the due diligence process. They provide an in-depth understanding of the project’s design, budget, timeline, regulatory compliance, and risk factors. A well-executed feasibility study enables stakeholders to move forward with greater confidence and helps ensure that the project is set up for long-term success.
Key Components of a Feasibility Study
A typical feasibility study includes a variety of technical and financial assessments. Below are the core elements examined during this process:
1. Project Scope and Design Review
A design review ensures the proposed plans align with the project’s goals and industry standards. This involves analyzing architectural drawings, engineering plans, and construction documents to evaluate the overall practicality and technical feasibility of the design. Any inconsistencies, unrealistic elements, or scope creep are identified early, which can save time and money during the build phase.
2. Budget and Cost Analysis
One of the most important parts of a feasibility study is the detailed evaluation of projected construction costs. This includes labor, materials, equipment, permits, insurance, and contingency reserves. The study checks whether the budget is realistic and compares the estimated costs to current market conditions. It also highlights potential cost overruns and identifies areas where costs can be optimized without compromising quality.
3. Schedule and Timeline Assessment
The construction schedule is evaluated for practicality, including the sequencing of work, contractor availability, seasonal impacts, and potential delays. A feasibility study examines whether the proposed timeline is achievable and helps stakeholders understand the dependencies that could affect timely project completion.
4. Regulatory and Compliance Evaluation
Ensuring that the project complies with local, state, and federal regulations is essential. A feasibility study includes a review of zoning ordinances, building codes, environmental regulations, ADA (Americans with Disabilities Act) compliance, and other legal requirements. It also checks that the appropriate permits and approvals are in place—or identifies what’s missing—so construction isn’t delayed by regulatory hurdles.
5. Risk Management and Mitigation
Every construction project involves risks—whether financial, operational, or environmental. A thorough feasibility study identifies these potential risks and recommends mitigation strategies. This could include revising construction methods, building contingencies into the budget, or adjusting timelines to account for external factors like weather or material shortages.
Why is a Feasibility Study Important?
The primary purpose of a feasibility study is to protect stakeholders’ investments by uncovering issues early in the process. It provides a clear roadmap for decision-making and contributes to better project outcomes. The key benefits include:
- Risk Reduction: Uncovers hidden problems—such as inaccurate cost projections or unrealistic timelines—before construction starts.
- Cost Control: Helps maintain budget accuracy and avoid surprise expenses that can derail the project.
- Regulatory Assurance: Confirms the project meets all required codes and regulations, reducing the likelihood of legal delays.
- Investor Confidence: Gives banks, private lenders, and other investors the data they need to decide whether to fund the project.
- Project Success: Enhances the chances of on-time and on-budget completion by aligning all components before breaking ground.
NWM Risk Management’s (Feasibility Study (Plan and Cost Review) Services
At NWM Risk Management, our feasibility study process is designed to help lenders and investors confidently assess construction projects. We provide detailed plan and cost reviews, ensuring that every aspect of the project is evaluated for success. By identifying potential risks and verifying financial feasibility, we help mitigate issues before they arise, protecting investments and ensuring project success.
We adhere to industry standards by utilizing RSMeans building data for cost feasibility, reviewing AIA contract documents for compliance, and applying CSI MasterFormat divisions for detailed cost breakdowns and specifications.
For more information on our plan and cost review services, contact NWM Risk Management today. Our team of experts is ready to help you navigate the complexities of construction feasibility studies and secure your project’s success.
