What steps can you take to ensure an objective and unbiased feasibility study?

Clarity is key 🗝️ A feasibility study for a garden style multifamily property in a tertiary market is going to look completely different than if you were doing a study for a life sciences building in a dense urban city. And although you need to have a clear idea going into the study, it's important to be aware of your biases throughout the study. Don't cherry pick data to support your thesis just to make it look like your project will succeed (this will likely ensure your project does not succeed). Having a clear idea but being flexible enough to interpret what the study is telling you and revise your thesis will help you succeed in the long run. 🏆

A feasibility study systematically analyzes a product opportunity's potential to succeed. It aims to determine whether a proposed opportunity is financially and technically viable, operationally feasible, and commercially profitable1. To ensure an objective and unbiased feasibility study, it is essential to conduct the study with an objective, unbiased approach to provide information upon which decisions can be based12. Here are some steps that can be taken to ensure an objective and unbiased feasibility study:

For an unbiased DCF feasibility study in Australia, ensure an expert follows these steps: 1) Gather accurate and comprehensive data on cash flows, discount rates, and terminal values. 2) Employ conservative assumptions and avoid overly optimistic projections. 3) Thoroughly research and validate market trends, economic indicators, and industry benchmarks. 4) Scrutinize input variables and test sensitivity to changes. 5) Consider various scenarios, including downside risks. 6) Utilize independent third-party valuers and experts for validation. 7) Disclose all assumptions transparently. 8) Stay updated on regulatory changes and economic shifts. 9) Encourage peer reviews and challenge assumptions to enhance objectivity.

It's hard to overstate how important site visits you're evaluating a deal. You can have the most up to date data but there are some considerations you can only observe from an in-person visit. Once, I was evaluating a piece of land that looked like a fantastic opportunity 💯 all of the data - market growth, rent growth, population growth, comps - supported our idea that this would be a good site for multifamily. We knew it was within a mile of an airport but it wasn't in the direct take-off/landing flight path. When I visited the site...oh my, it was LOUD👂! This piece of information killed the deal for us and was a good example of the kind of thing you can only truly understand from visiting a site in person.

Define the opportunity: Define the problem or opportunity the feasibility study will address. Clearly define the study's scope and the objectives it aims to achieve. Conduct market and user research: Conduct thorough research on the market and users to understand the demand for the product or service. This research should include an analysis of the competition, the target market, and the potential customers.

Gather Comprehensive Data: Collect data from a wide range of sources to get a full picture. Relying on too narrow a data set can introduce bias.

There’s certainly a tendency to fall into ‘biases’ with data. In my experience we are generally optimistic and we naturally want to validate an opportunity. It is critical to be very diligent around demonstrated evidence versus ‘opinions’ and guesstimates. Particularly with hard costs and forecasting revenue. Regular third party ‘sanity checks’ helps during this process

Analyze technical feasibility: Analyze the technical requirements of the product or service to determine whether it is feasible to develop and launch it. This analysis should include an assessment of the resources needed to develop and launch the product and the potential risks and challenges. Assess financial viability: The financial viability of the product or service is assessed by analyzing the costs of development, manufacturing, and distribution. This analysis should also include an assessment of the potential revenue streams and the return on investment3. Evaluate potential risks: Evaluate the risks associated with the product or service, including legal, regulatory, and environmental risks.

Involve a Diverse Team: Assemble a diverse team with different backgrounds and perspectives to conduct the study. This diversity helps to challenge assumptions and reduce individual biases.