Capital Project Feasibility – Building a Team of Experts
Your project’s success depends on thorough strategic planning; the first step is to determine feasibility. Capital project feasibility assessments test an agency’s ability and organizational readiness to fundraise, finance and manage a capital project. Proper feasibility assessment is a major time commitment for an existing staff and may require skills outside your staff’s expertise. Retaining third-party advisers is a best practice; they can augment the board’s and staff’s existing skills with their experience while providing an impartial evaluation of the agency’s readiness.
If no one on the board or staff has experience with a capital campaign or construction project, it is essential to get assistance as early as possible in the planning process.
Owner’s Representative
An owner’s representative, a person or firm skilled in design and construction management, provides pre-planning services including:
- Working with the agency to “pre-program” the site and building requirements
- Determining department and user space requirements
- Working with the agency or their advisor to determine prospective site suitability
- Modeling pro-forma operational costs
- Developing the initial project budget
The owner’s rep is retained through the design, construction and close-out phases to manage the budget, schedule and program. The owner’s rep ensures the project stays on track.
Development Feasibility Consultant
The development feasibility consultant provides an assessment of the agency’s ability to fundraise, including:
- Local economic and fundraising climate
- Current image of non-profit and goodwill of community
- Agency and board readiness to launch campaign
- Community support for the project
- Lead donor prospects and foundation support for the project
- Volunteer pool sufficiency and availability to promote campaign
- Effect of new building on future annual campaign requirements
Ideally, the development feasibility consultant works with the owner’s rep to dovetail the agency’s aspirations with realistic cost projections and a viable campaign. The development feasibility consultant may also develop the initial donor solicitation lists but often transitions fundraising duties to the existing development team once the campaign is underway.
Financial Feasibility Consultant
The financial consultant provides an assessment of the project’s financial parameters, including:
- Aligning capital campaign and financing parameters with construction schedule cash requirements
- Determining borrowing needs
- Determining what financing options are available
- Estimating the cost to finance the project
- Estimating how long will it take to pay off the loan
- Determining best allocation of financing costs to capital and operating budgets – before and after construction
- Determining loan collateral sources
The financial feasibility consultant is best retained to work as a team with the owner’s rep and campaign feasibility consultant. The financial feasibility consultant may continue to provide financial analysis, including budget and project risk quantification, throughout the project or may transition these activities to the agency’s finance department.