Investment in building construction is one of the major lifetime decisions. All this emanates from the fact that there are many variables to be considered. Some of these fall within the building structure alone while others are influenced by the government agencies, the socioeconomic factors, the demographic and many others. Prior to investing in any land property, it is, therefore, imperative to conduct a proper survey regarding the regulations and all other variable likely to affect the investment.
In this paper, the aforementioned will be determined in relation to investing in a duplex residential buiding.Considering the amount of cash available, the feasibility study will determine the viability of the project on technicality, economic and legality among other factors. In essense,the equity and the cost of the project will be determined.
Most property developers understand the need of careful planning prior to investing. Undertaking a proper feasibility study will ensure that there is profitability in the investment (Ford, Lander, & Voyer, 2002) .It ensures that there is sustainability as well as value in the construction project Moreover, the feasibility study will be used in identifying the most viable alternatives as well as ensure that there is proper documentation to assist in the execution stages and the briefing..
The planning permission
It is one of the major determinants of project development. The risk of planning for a building that is not recommended by the local authority cannot be overlooked (Zou, Zhang, & Wang, 2007). It is the responsibility of the local planning authorities to determine which types of developments are acceptable as well as those that are not acceptable. In essence it should be done prior to any construction in order to minimize the costs that would be associated with any building structure not approved by the state or the local authority.
The main profession involved in this is the lead engineer or designer. He/she is supposed to engage the authority on the requirements (Zou, Zhang, & Wuang, 2007). Some of the requirements may include drawings, notices, and analyses among others. Nevertheless, the lead engineer may be required to make a presentation of the proposed development to the committee prior to approval. Moreover, this part of the feasibility study acquaints the client with the knowledge of the types of buildings that may be approved as well as those that may be considered exempt.
In doing a feasibility study, the client as well as the team should conduct an Environmental impact assessment study (Edum-Fotwe & Price, 2009). Its main aim is to understand the effects of the development option on the general natural environment. Moreover, this is a requirement of the local planning authority and ensures that the general effects are properly considered prior to granting an approval. Moreover, the environmental impact assessment report will ensure that the proposed development can be modified if there is need.
The screening option is provided to those proprietors who are unsure of what should be contained in the assessment report. On the other hand, the scoping option may be provided to those individuals who want to understand the details of the environmental impact assessment (Klotz & Valdes-Vasquez, 2012). Nevertheless, it is to be conducted very early in the development in order to ensure that there are no delays as per the schedule and the project timeline.
However, an environmental assessment may is only limited to a number of development options. In line with the development of a residential complex, some of these considerations include the locations, the size of the project and the complexity of the project among others. The end results of the environmental impact assessment is the statement which concludes all the findings and the likely impacts of the project (Long, Ogunlaha, Quang, & Lam, 2004).
Apart from the planning approvals, it is also important for the client and his team to consider the state development regulations. In Australia, this is done by the Australian buildings code board (Australia Building Codes Board, 2015). The board determines all the measure that should be achieved by a certain building. Compliance to the code set out by this board and ensures that the safety of the occupants as well as the environment is considered during the design process.
It is imperative to understand the site in order to determine factors that may be relevant to the professional teams. Site information is important for both the design and construction teams since it provides geotechnical results, development outcomes among others (Smith, Merna, & Jobling, 2009). Nevertheless, the information should be present for use in the short term and long term.
Moreover, understanding the location ensure that the team can determine the sustainability and social outcome of the project (Shen, Tam, Tam, & Ji, 2010). As such, there are other factors to consider such as contamination, the drainage, the site history, the amenities available, and the boundaries among other factors. All these are vital in understanding what other requirements are necessary to meet the needs of the potential customers.
Taking all factors into consideration, the team has to understand all the costs that will be associated with development as well as the value to be achieved. Some of these costs include the costs associated with design, tendering, construction as well as the occupancy. Understanding all these factors enables the client to understand the economics of the project which in turn determine the viability of the project. It may have significant effect on the venture since the analysis also determines the alternatives (Kelly, male, & Graham, 2014) that may be suitable in case the initial development option fails
The most significant internal factor that may prevent investment is the lack of funds. There are numerous costs involved in development such as the purchase of land, materials, labor requirements, and approval among others. Therefore, prior to initiating the development, it is imperative to understand the available funds. Nevertheless, the amount of funds available determine the most viable option
Expertise within the team
Construction projects are composed of a complex team of engineers, surveyors, architects, land experts and geologists among others (Winch, 2010). It is the skillset within the team that determines the type of development. A more diversified team may be mandated with complex projects while smaller and less skilled teams may be mandated with simpler projects. Nevertheless, the proprietor can source for another skilled team when the funds are available and the project is complex. As such, it is imperative to undertake a feasibility study of project requirements and the team’s competency.
One of the limitations is the lack of data and information. It is a major bottleneck in determining the eventual cost of development (Zou & Zhang, 2009). All this is based on the fact that the team requires proper estimates on the cost of materials, the cost of land and the cost of labor among other factors. Shortage of data and information means the team can lead to wrong estimations and analysis.
Moreover, there may be a shortage of professionals required in the feasibility study. Such professionals, if available, may charge exorbitantly. Some of these expertise are those in geotechnical studies, wind experts among others
Rockingham is located in Perth, Western Australia. The average population is about 14,285 with, most of the residents’ single (55%) as compared to those married (45%).Moreover, the residents are owners (62%) as compared to those reentering (38%).As with the age ,the age group of 20-39 forms the highest composition(30%), while 40-59 are 24%. Those over 60 are 26% while under 20 are 20% (David Denett, 2018).
An average duplex has been estimated to occupy a land area of about 83.6 square meters. It occupies a larger land area as compared to an apartment which occupies about 80 square meters. In essence the most suitable land to accommodate the development project is 127 parkin street, Rockingham WA6168.The area available is 274 square meters (David Denett, 2018).
The site is good for development since it is located near some of the most important amenities such as primary schools, high schools, shopping centers, electricity, churches roads among others. Moreover, the land area is close to the beach which may be suitable for people who want to get away from the chaos of the city. As such, the price of the land is $279,500 (David Denett, 2018).This may be suitable for those buying land for the first time, people who have retired and even professionals. Nevertheless, the land prices increase with increasing land area. The maximum land area for purchase is 310 square meters.
Port Bouvard homes is the construction team to be employed in the development. One of the advantages of using this experienced team is the fact that they are well conversant with the development of duplexes. They are one of the trusted home developers in Rockingham having an experience of the region extending to over 20 years (Port Bouvard Homes, 2017). Nevertheless, some of the factors influencing the choice is the fact that they have a variety of designs, customization of homes, and integration of the proposed plans into their schedule. Moreover the team is well conversant with the planning and statutory requirements of Rockingham. The zoning that will be required as per Rockingham is R40. Nevertheless, the charges that are applicable to this development project include the materials, the labor, the use of machinery and the charges for the contractor.
The price for the building can be computed through the daily and hourly charges required. Masons, excavators and carpenters charge around $70 every hour, electricians about $85, plumbers about $45 per hour and the paint job requires about $ 25 each hour (FIXR, 2018). As such, the total cost of the project would be about $226000.
However, it is important to understand that the land area can accommodate 2 duplexes. The land area covered by the two will be 167.2 square meters which presents a significant investment decision. The other portion of the land will be for recreation purposes.
The monthly charges of a duplex in this region varies between $300 and $500 and as such, to attract more customers, the price may be $450 per month for each. This is considering the quality of the work As such, the total accrued per month is about $ 900 for the two duplexes. The yearly earnings will be $10800.
The cost of purchasing a land varies from one location to another. Areas that are strategically situated have the highest land prices while those far away from amenities may be have lower land rates.However,as per the feasibility study, the cost of investing in the property would only be justified after 20 years.
The occupants, however, have to cater for their electricity, gas and water bills monthly. Nevertheless, the building would be located in a very good neighborhood with most of the residents’ able youth. Therefore, it is a possibility that the potential market is the age group of 21-30 years. The monthly charges of the duplex are derived from the observations made on the monthly charges of the nearby duplexes. However, the land rates are derived from the local agents.
Feasibility studies are an integral part of investments. They provide the proprietor with insight regarding the development and moreover, ensure that the building complies with all council and state requirements. Nevertheless, the feasibility study should indicate the red stops and is a way in which the client and his team do not engage in practices that are not allowed by the state and the local council.
The feasibility study indicates that it is important to determine the time period when the investment will justify the cost. If the investment does not provide returns within the required time frame, the proprietor may decide to go with other alternatives. Alternatives in this case may be condominiums or apartments, provided the returns are justified within the required time.
Australia Building Codes Board. (2015, September 26). Developing a solution-It’s your choice. Retrieved from Building connection: buildingconnection.com/au/2015/09/26/Developing-a-solution-It’s-your-choice/
David Denett. (n.d.). Raine and horne Agents. Retrieved from www.domain.com.au/127-parkin-street–rockingham-6168-20134725688&hl
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