The Architectural

FEASIBILITY STUDY
FAR EASTERN UNIVERSITY, INSTITUTE OF ARCHITECTURE AND FINE ARTS
ANTHONY DEMIN SARMIENTO, UAP, PIEP, NAMPAP
The FEASIBILITY STUDY
 Thesis Courses require you to prepare an in-depth analysis to check
whether or not the project can be realized. This is done through Cost
of Project- Benefits from Project analysis.
 The cost of project includes cost of building and other
developments using various estimating methods with the operating
(overhead) cost for a specific target number of years while the
benefits are the income generated by the project.
 Using these values, you can prepare a simple income statement
leading you to the computation of the ROI (Return on Investments or
when will the clients get back their investment) and the PP (Payback
Period or when can the project payback the investment using its
yearly income).
 As a general rule, you cannot have a positive ROI before the PP. It is
recommended that you compute your ROI after the PP.

Anthony Demin Sarmiento, uap,piep,nampap

The FEASIBILITY STUDY
COST ESTIMATE ANALYSIS
BUILDING COST
NET AREA ÷ EFFICIENCY RATIO = GROSS AREA GROSS AREA x UNIT COST = BUILDING COST
EFFICIENCY RATIO: THE RATIO OF THE NET ASSIGNABLE AREA TO THE UNASSIGNABLE AREA
EXPRESSED AS PERCENTAGES OF THE GROSS AREA.
EFFICIENCY AREA BASED ON BUILDING TYPES:
 HOME OFFICE BUILDINGS -------- 50/50%
 · CORPORATE R+D---------------------50/50%
 · UNIVERSITY R+D----------------------50/50%
 · SCIENCE---------------------------------60/40%
 · DORMITORY ---------------------------60/40%
 · AUDITORIUM----------------------------60/40%
 · MUSEUM -------------------------------- 65/35%
 · LIBRARY--------------------------------- 65/35% Anthony Demin Sarmiento, uap,piep,nampap
 · ACADEMIC ----------------------------- 65/35%
 · CONVENTION HALL -----------------50/50%
 · CITY HALL ------------------------------ 60/40%
 · HOSPITAL ------------------------------- 65/35%
 · HOUSING --------------------------------75/25%
 · MALL---------------------------------------- 60/40%
 · MARKET ----------------------------------65/35%
 · GYMNASIUM ---------------------------- 70/30%
 · STADIUM ---------------------------------60/40%

 FOR OTHERS: REFER TO YOUR ADVISERS

Anthony Demin Sarmiento, uap,piep,nampap

 UNIT COST (BASED ON QUALITY OF CONSTRUCTION)PER SQUARE METER

 FOR CLARITY, USE ANALOGY OF AUTOMOBILE:

FOR AUTOMOBILE FOR BUILDINGS

 SUPER LUXURY ------------------------------------------------------------ SUPERB

 LUXURY --------------------------------------------------------------------- GRAND
 FULL -------------------------------------------------------------------------- EXCELLENT
 INTERMEDIATE ------------------------------------------------------------ MODERATE
 COMPACT ----------------------------------------------------------------- ECONOMICAL
 SUBCOMPACT ------------------------------------------------------------ AUSTERE

Anthony Demin Sarmiento, uap,piep,nampap

BUILDING TYPE AUSTERE ECONOMICAL MODERATE EXCELLENT GRAND SUPERB

OFFICES P25, 000.00 35, 000.00 49, 000.00 62, 000.00 78, 000.00 100, 000.00

HOSPITALS 35, 000.00 49, 000.00 63, 000.00 77, 000.00 94, 500.00 112, 000.00

EDUCATION 25, 000.00 32, 000.00 39, 000.00 46, 000.00 56, 000.00 73, 000.00

FACILITIES

RESEARCH 50, 000.00 60, 000.00 69, 000.00 78, 000.00 93, 000.00 115, 000.00

LABORATORIES

CITY HALL 25, 000.00 35, 000.00 44, 000.00 55, 000.00 67, 000.00 79, 000.00

CONVENTION 35, 000.00 42, 000.00 49, 000.00 56, 000.00 70, 000.00 105, 000.00

CENTERS

CONDOMINIUM 35, 000.00 40, 000.00 45, 000.00 63, 000.00 78, 000.00 100, 000.00

Anthony Demin Sarmiento, uap,piep,nampap

 FOR
 EXAMPLE: PROJECT HOSPITAL, EFF. RATIO: 65/35%,
MODERATE CONSTRUCTION,
NET AREA=1000 SQM.

 GROSS AREA = 1000 ÷0.65 = 1538 SQM

 1538 X P63, 000.00 = P9.69M

Anthony Demin Sarmiento, uap,piep,nampap

B. FIXED EQUIPMENT:
PERCENTAGE OF LINE A
 COMMERCIAL OFFICE BUILDING ----------- 5 – 7%
 SPORTS CENTER -------------------------------- 5%
 ELEMENTARY SCHOOL ----------------------- 6 – 10%
 SECONDARY SCHOOL ------------------------ 8 – 12%
 UNIVERSITY ACADEMIC BUILDING -------7%
 HOUSING PROJECT ---------------------------- 7 – 10%
 HOSPITAL ----------------------------------------- 18 – 20%
 CONVENTION HALL ----------------------------- 20 – 25%
 HEAVY INDUSTRIAL ARTS -------------------- 30%
 CITY HALL ------------------------------------------ 7%
 CIVIC CENTER ------------------------------------ 8%
 RESEARCH LABORATORIES ---------------- 8 – 12%

Anthony Demin Sarmiento, uap,piep,nampap

C. SITE DEVELOPMENT:

PERCENTAGE OF A
 LOW ----------------------------------- 5%
 MEDIUM ---------------------------10 – 15%
 HIGH ---------------------------------- 20%
 SPECIALLY HIGH ----------------- 30%

 URBAN SITE ------------------------ 5%

 SUBURBAN SITE --------------- 14 -15%
 ELEMENTARY SCHOOL ------ 6 – 12%
 SECONDARY SCHOOL -------- 10 – 15%
 HOSPITAL -------------------------- 10 – 15%
 EXTENSIVE DEVELOPMENT PLUS SPECIAL CONDITIONS SUCH AS ROCK EXCAVATION, STEEP
SLOPES, ETC. ---------------------- 30%
 CIVIC CENTER -------------------- 10 – 15%
 CONVENTION CENTER --------- 10 – 15%
 CITY HALL --------------------------- 6 -12%
 SPORT CENTER ------------------- 6- 12%

Anthony Demin Sarmiento, uap,piep,nampap

D. TOTAL CONSTRUCTION COST:
 SUM OF A + B + C

E. SITE ACQUISITION AND/OR DEMOLITION:

 VARIES WIDELY

F. MOVABLE EQUIPMENT: PERCENTAGE OF A

LOW ---------------------------------------- 5%
MEDIUM ------------------------------- 10% - 15%
HIGH --------------------------------------- 20%

 ELEMENTARY SCHOOL ------- 6-10%

 SECONDARY SCHOOL --------- 8 -12%
 COLLEGE --------------------------- 10 -15%
 HOSPITAL -------------------------- 18 – 20%
 VOCATIONAL SCHOOL ------------- 20%
 CIVIC CENTER --------------------- 6 – 10%
 CONVENTION CENTER --------- 8 – 12%
 SPORT CENTER ------------------ 18 – 20%

Anthony Demin Sarmiento, uap,piep,nampap

G. PROFESSIONAL FEE, INCLUDING CONSULTANTS PERCENTAGE OF D
 VARY FROM 5% TO 10% (CHECK UAP DOCUMENTS)
H. CONTINGENCIES

 LOW ----------------------------------- 5%
 MEDIUM ----------------------------- 10%
 HIGH --------------------------------- 15%

J. ADMINISTRATIVE COST: PERCENTAGE OF D VARIES 1% TO 2%

Anthony Demin Sarmiento, uap,piep,nampap

K. TOTAL BUDGET REQUIRED:

 SUM OF D + E + F + G + H + J = K
 NOTE: FOR THOSE PROJECTS WHICH REQUIRE PERMANENT AND INTERIM
FINANCING COSTS, THE FOLLOWING CONTROL ITEMS CAN BE LISTED AS
SEPARATE ITEMS UNDER “J”.
 J.INTERIM FINANCING COST:

 PERCENTAGE OF LINE D

 VARIES 1.5% TO 2.5% ABOVE PRIME RATE PER YEAR OF CONSTRUCTION

TIME…APPROXIMATELY.

Anthony Demin Sarmiento, uap,piep,nampap

The FEASIBILITY STUDY
Financial Analysis
1. FINANCIAL ANALYSIS FOR PRIVATE INCOME GENERATING PROJECTS

 COMPUTE FOR ALL INCOME OF THE PROJECT

 (ENTRANCE FEES, RENT/LEASE, SELLING COST, TUITION FEES, ETC)

TOTAL REVENUE (TR) = TOTAL SALE, RENT/LEASE, ETC. FOR THE NUMNER
OF YEARS UNDER STUDY.

Anthony Demin Sarmiento, uap,piep,nampap

2. COMPUTE FOR COST OF GOOD SOLD (COGS). COGS IS THE
FEASIBILITY COST, BUILDING COST, AND ACQUISITION COST. COGS IS
ALSO CONSIDERED AS INVESTMENT.

 COGS = INVESTMENT ( FEASIBILITY, BUILDING, ACQUISITION COST)

Anthony Demin Sarmiento, uap,piep,nampap

3. DEDUCT COGS(INVESTMENT) FROM TOTAL INCOME.
 NOTE: GET NUMBER OF YEARS INCOME THAT WILL RESULT TO POSITIVE
PROFIT. THIS NUMBER OF YEARS IS APPROXIMATELY THE PAYBACK
PERIOD OF THE PROJECT.

 TR – COGS = GP (GROSS PROFIT)

Anthony Demin Sarmiento, uap,piep,nampap

4. FROM RESULTING GROSS PROFIT, DEDUCT COST AFTER
CONSTRUCTION i.e. OPERATING COST, LOAN INTEREST, OVERHEAD
COST.

 GP – OPERATING COST, OVERHEAD, INTEREST COST = NET PROFIT

BEFORE TAX (NPBT)

5. THE RESULTING PROFIT IS NET PROFIT BEFORE TAX (NPBT)

Anthony Demin Sarmiento, uap,piep,nampap

6. DEDUCT 35% TAX FORM NPBT

 NPBT x 35% = TAX

 NPBT – TAX = NET PROFIT AFTER TAX (NPAT)

7. GET NET PROFIT AFTER TAX (NPAT)

Anthony Demin Sarmiento, uap,piep,nampap

8. RETURN OF INVESTMENT (ROI) IS:

 NPAT ÷ COGS = ROI IN PERCENTAGE

 ACCEPTABLE ROI SHOULD BE 15% MINIMUM OR 3 % MORE THAN THE

PREVALING COST OF MONEY.

Anthony Demin Sarmiento, uap,piep,nampap

9. PAYBACK PERIOD IS (PP):

 COGS ÷ NPAT = PP

 NOTE: OPERATING COST VARIES WIDELY DEPENDING ON THE

ORGANIZATIONAL SETUP AND PROJECT LOCATION. LOAN INTEREST IS
APPROXIMATELY 12% PER ANNUM

Anthony Demin Sarmiento, uap,piep,nampap

The FEASIBILITY STUDY
Financial Analysis
FINANCIAL ANALYSIS FOR GOVERNMENT-RUN INCOME GENERATING PROJECTS

 COMPUTE FOR THE TOTAL COST OF THE PROJECT (REFER TO BUILDING COST)
 COMPUTE FOR THE TOTAL REVENUE
 COMPUTE FOR THE OPERATING COST
 IF TOTAL REVENUE FOR ONE YEAR IS GREATER THAN THE OPERATING COST FOR
THE SAME YEAR, THE PROJECT DOES NOT NEED ANY SUBSIDY FROM THE
GOVERNMENT. IF, HOWEVER, THE OPERATING COST IS GREATER THAN THE TOTAL
REVENUE, THE PROJECT NEEDS A
 GOVERNMENT SUBSIDY EQUAL TO THE DIFFERENCE BETWEEN THE TOTAL REVENUE
AND THE OPERATING COST.
 PREPARE A LIST OF SOCIO-ECONOMIC BENEFITS OF THE PROJECT.

Anthony Demin Sarmiento, uap,piep,nampap

The FEASIBILITY STUDY
Financial Analysis
FINANCIAL ANALYSIS FOR GOVERNMENT NON-INCOME GENERATING
PROJECT
 COMPUTE FOR THE TOTAL COST OF THE PROJECT (REFER TO BUILDING
COST)
 COMPUTE FOR THE OPERATING COST
 OPERATING COST IS EQUAL TO THE GOVERNMENT SUBSIDY TO THE
PROJECT.
 PREPARE A LIST OF SOCIO-ECONOMIC BENEFITS OF THE PROJECT.

Anthony Demin Sarmiento, uap,piep,nampap

REFERENCES
Architecture Thesis Manual 2014
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Anthony Demin Sarmiento, uap,piep,nampap