Feasibility Studies: The Step That Saves Developers the Most Money

A proper feasibility study on a mid-sized commercial scheme costs roughly £10,000 to £30,000 once you add up the surveys, the appraisal and the pre-application advice. On a build worth £5m that is under half a percent of the project, and it is the cheapest money you will ever spend on it. Feasibility is the last point where you can still change what you build, renegotiate the land price, or walk away, before you have committed the lot.

We have appraised sites across Greater Manchester since 1992, and the pattern barely changes. The deals that went wrong were rarely killed by something on site two years in. They were killed at the start, by a question nobody asked until it was too late to matter.

What is a feasibility study, and what does it actually test?

It is the appraisal that tells you whether a site will let you build what you want, and whether the numbers still stack up once it does. It sits at Stage 1 of the RIBA Plan of Work 2020, before any real design, and it pulls four separate risks into one picture: the planning position, the ground, the physical constraints, and the money. Most bad decisions come from testing those four in isolation, each carrying its own quietly optimistic assumption.

The heart of it is the residual land valuation. You take the finished value of the scheme, subtract every cost of getting there, subtract the profit you need, and what is left is the most you can afford to pay for the land. Get the cost side wrong at this stage and the residual figure lies to you. That is how developers end up overpaying for a site and only discovering it at the final account, when there is nothing left to do about it. Our property consultancy team builds that appraisal for clients before they commit a penny.

What does a feasibility study cost, line by line?

Here is where the money goes on a typical mid-sized brownfield scheme. These are the surveys and reports that turn an opinion into an appraisal you can lend against.

Two things about that list. The intrusive ground investigation is the line clients most want to defer, and it is the one that most often saves them a fortune. None of the rest is wasted either, even when the answer is no, because a feasibility study that tells you to walk away has just saved you the whole purchase price.

Why is the ground investigation the line that saves the most?

Because the ground is the one risk you cannot see, cannot judge from a desk, and cannot cheaply fix once you have exchanged. A Phase 2 investigation drills real boreholes and tests real samples to BS 5930 and BS 10175. It costs a few thousand pounds and a fortnight of programme. The abnormals it uncovers, the contamination, the made ground, the buried obstruction where your foundations were meant to go, can run into the hundreds of thousands.

I will not produce an appraisal off a desk study and an optimistic build rate. Plenty of consultants will, because it wins the instruction and keeps the client happy for a fortnight, and it is a bad trade. A report that hides the two numbers most likely to move, the abnormals and the planning obligations, is worth less than the paper it is printed on. It does not remove the risk. It just moves the discovery to a point where the risk is yours and the money is gone.

We learned to hold that line the hard way. On an early scheme we were brought in late, after the client had already agreed a price on a former works, working from the vendor's tired Phase 1 and a rate per square foot that flattered everyone. Once we priced the remediation and the Section 106 the desk study had ignored, the residual land value came out about £400,000 below what he had shaken hands on. He tried to renegotiate, the seller would not move, and he walked. It felt at the time like we had cost him the deal. Eighteen months later the site was still sitting undeveloped in someone else's ownership. The feasibility fee had been a few thousand pounds, and walking away had saved him a six-figure loss.

What does feasibility look like on a North West brownfield site?

Harder than the glossy CGI suggests, because of what our sites are made of. A large share of the development land around Stockport and the wider North West is former cotton-mill and works ground, which means thick made ground, buried Victorian foundations and asbestos in almost anything touched before the 1999 ban. Culverted watercourses, old arms of the Mersey, the Goyt and the Tame, run under plots that look bone dry on the surface. Much of Greater Manchester sits inside a coalfield referral area, so a Coal Mining Risk Assessment is often not optional. And in Town Centre West, the regeneration zone run by the Stockport Mayoral Development Corporation, the heritage and design expectations around the Underbanks and the railway viaduct are high enough that a pre-application conversation is close to mandatory before you spend real money on drawings.

A clean greenfield plot on a business park is a short appraisal. A former mill off Chestergate is where feasibility earns its fee, because every one of those constraints is a number, and every number belongs in the residual land valuation before you exchange, not after.

How long should feasibility take, and when is it a waste?

Realistically 6 to 10 weeks on a scheme of any size, because the ground investigation and the laboratory turnaround set the pace and you cannot honestly rush them. That pushes exchange back by 4 to 6 weeks, and it costs money on a site you do not yet own. I will be straight about the tradeoff, because there is one. On a genuinely clean, well-documented plot, a good deal of the work will confirm what you already suspected, and it can feel like an expensive way to be told yes.

We still do it every time.

Because you cannot know which site is the clean one until you have looked, and the cost of being wrong is asymmetric. Skimp on a study and get lucky, you save a few thousand pounds. Skimp and get unlucky, you inherit an abnormal that comes straight out of contingency in the first month on site. On a funded scheme it matters more again, because the lender's monitoring surveyor will test every drawdown against real progress, and an appraisal built on hope does not survive that scrutiny. Our fund monitoring work sits on the other side of that same table, which is exactly why we know what a thin feasibility study looks like when the money starts to move.

The one number that decides everything

The residual land value is the number a feasibility study exists to protect. Every survey in that table feeds it, and every cost you leave out inflates it and flatters the deal. A week of honest feasibility, priced properly through the cost management lens, is what keeps the number true.

If you are weighing up a site, or partway through a scheme that is starting to feel more expensive than the appraisal promised, the cheapest possible time to talk is now. Our project management team can pressure-test a scheme before you commit, and if the honest answer is walk away, we will tell you that too. Send us the site and we will give you a straight read on what it should cost and whether the numbers stand up.