Are you uncertain about whether to go forward with a particular construction project on a certain site? If so, before spending money on due diligence, you’ll want to make a smaller, timelier investment known as a feasibility study.

Determining whether a potential site will work for a project is one of the primary reasons owners and developers choose to conduct feasibility studies before buying land or building on their existing sites. Among other things, feasibility studies can also tell you whether your project is financially feasible and whether the locale’s regulatory structure will allow it.

When Schaedler Yesco Distribution, Inc., grew out of its central warehouse facility in Harrisburg, PA, the company didn’t know whether its city location could accommodate the additional 40,000 square feet it needed, which would almost double the current space. After hiring two different contractors to conduct feasibility studies, Schaedler Yesco possessed the information and ideas it needed to make a decision. “We realized we could get enough space to stay here for at least 10 years,” says CEO Jim Schaedler.

Worth the Investment
You can pay from a few thousand dollars to tens of thousands of dollars for a feasibility study, depending on its depth and breadth, which in turn depends on the project size and exactly what you need to know to move forward with your project. Rarely, however, is the cost more than 1 percent of overall project costs, and often it is far less.

Schaedler Yesco spent about $4,000 on the first study and $7,000 on the second, which adds up to “a very, very tiny percentage” of the projected $4 million cost of its warehouse-expansion project, says Schaedler. “Even if we decided we were not going to stay here, we had done the research to make the right decision.”

After spending $38,000 on a feasibility study, Town & Country Trust, Baltimore, MD, decided not to move forward with an $8.5 million residential apartment project on land it already owned. “When we compared development costs with projected market rents, we felt the returns didn’t justify the project,” which would have required extensive site development, including retaining walls, as well as off-site improvements, such as upgrading a road, explains Tony Conrad, Town & Country’s vice president of acquisitions. The feasibility study “was pretty extensive,” Conrad says. “It was the expertise we needed to get to the ‘go or no-go’ decision.”

How a Feasibility Study Proceeds
In most feasibility studies, the first step is a land assessment by an engineering firm to see whether the location is suitable for the project. Ed Black, president of H. Edward Black and Associates, P.C., Harrisburg, PA, says that for every project, his civil engineering and landscape architectural firm does “at least a short-form feasibility study,” reviewing the client’s needs, the topography, and government ordinances.

Black says that for some clients, the short-form study provides enough information for them to decide whether or not to proceed with their projects. But companies that need a more detailed analysis go further to include more detailed site drawings and preliminary plans by an architect.

According to Frank Fox, president of Greenfield Architects, Ltd., Lancaster, PA, the architect also provides specifications for building parts and types of building materials, as well as a description of the facility’s mechanical and electrical systems. These preliminary plan drawings and specifications help establish a cost base, so the builder can then develop a realistic statement of probable cost for your study, also taking into account owner requirements, town ordinances, and land development needs.
A study’s other components include a preliminary schedule, which covers the planning steps and timeframe from study completion to project approval, and any off-site improvements required by the municipality, such as adding a signalized intersection to accommodate traffic flow to and from your facility.

Picking Your Feasibility Team
Involve a builder, architect, and engineer in your feasibility study, rather than depending on just one discipline. An architectural firm or contractor that pulls together a balanced team, by engaging each professional only for the amount of work you need at each point in the process, helps ensure that you don’t end up with too much depth in one area and not enough information in another. You don’t want to spend a lot of money on architectural detail, for example, before you know if zoning or other site constraints will allow the type of facility you need.

Ask a builder or architect to show you examples of feasibility studies they’ve conducted. Eliminate aspects that won’t be of use to you and include or amplify areas that will help answer your specific questions. Once you choose the company or firm to conduct your study, share everything you know about the project, as well as your questions—and be available throughout the study to answer their questions.

If you’re considering a design-builder to conduct your feasibility study, choose one who won’t lock you into a long-term relationship. It’s usually more advantageous in the long run to pay for a study you will own, rather than accept an inexpensive or free study that locks you into using a specific contractor. Even if you choose not to go forward with the project, you can in the future reuse many portions of a feasibility study with relatively minor adjustments, should you decide to reconsider the facility plan or revisit a potential site.