FEASIBILITYFEASIBILITY

STUDIESSTUDIES

FEASIBLEFEASIBLE

CAPABLE OF BEING DONE OR CAPABLE OF BEING DONE OR CARRIED OUTCARRIED OUT

PRACTICABLE, POSSIBLE AND PRACTICABLE, POSSIBLE AND WITHIN REASONWITHIN REASON

FOR A PROJECT, ONE WHICH WILL FOR A PROJECT, ONE WHICH WILL RESULT TO A REASONABLE RESULT TO A REASONABLE RETURN OF INVESTMENT TO THE RETURN OF INVESTMENT TO THE FINANCIERS OR DEVELOPERS.FINANCIERS OR DEVELOPERS.

SPECTRUM OF SPECTRUM OF ARCHITECTURAL ARCHITECTURAL

SERVICESSERVICES

DEVELOPMENT TEAMDEVELOPMENT TEAM DEVELOPER AS THE KEY PROJECT DEVELOPER AS THE KEY PROJECT

PROPONENTPROPONENT ARCHITECTARCHITECT FEASIBILITY ANALYST OR ECONOMIC FEASIBILITY ANALYST OR ECONOMIC

ADVISORADVISOR ENGINEERING CONSULTANTSENGINEERING CONSULTANTS CONTRACTORCONTRACTOR MORTGAGE LOAN BROKERMORTGAGE LOAN BROKER OTHERS DEPENDING ON THE NATURE OTHERS DEPENDING ON THE NATURE

OF THE PROJECTOF THE PROJECT

PROJECT FEASIBILITY PROJECT FEASIBILITY STUDYSTUDY

FINANCIAL STUDYFINANCIAL STUDY

FINANCE – MONEY, RESOURCES, FINANCE – MONEY, RESOURCES, INCOMEINCOME

THE SCIENCE OF MANAGING THE SCIENCE OF MANAGING MONEY MATTERS.MONEY MATTERS.

ART/SCIENCE OF MANAGING ART/SCIENCE OF MANAGING FUNDS AND RESOURCES FUNDS AND RESOURCES MOBILIZED OVER A PERIOD OF MOBILIZED OVER A PERIOD OF TIME TO ACHIEVE SPECIFIC TIME TO ACHIEVE SPECIFIC GOALS AND OBJECTIVES.GOALS AND OBJECTIVES.

BUSINESS VENTURES, BUSINESS VENTURES, IMPORTANT DEFINITIONSIMPORTANT DEFINITIONS

PROJECTPROJECT – VENTURE TO INVEST – VENTURE TO INVEST RESOURCES IDENTIFIED AS CASH RESOURCES IDENTIFIED AS CASH FUNDS, TIME, AND HUMAN FUNDS, TIME, AND HUMAN RESOURCES, IN ORDER TO RESOURCES, IN ORDER TO ACCOMPLISH A SPECIFIC ACCOMPLISH A SPECIFIC OBJECTIVE.OBJECTIVE.

BUSINESS VENTUREBUSINESS VENTURE – WHEN – WHEN VENTURES ENTAILS PRODUCING VENTURES ENTAILS PRODUCING UNITS SELLING THEM AND UNITS SELLING THEM AND GENERATING REVENUES.GENERATING REVENUES.

IINVESTMENTNVESTMENT – THE RESOURCES POURED – THE RESOURCES POURED IN THE PROJECT IN THE FORM OF CASH IN THE PROJECT IN THE FORM OF CASH FUNDS.FUNDS.

CAPITALCAPITAL – RELATIVELY HUGE AMOUNT OF – RELATIVELY HUGE AMOUNT OF INVESTMENT PUT INTO A PROJECT TO INVESTMENT PUT INTO A PROJECT TO START THE PROJECT OR TO ALLOW FOR A START THE PROJECT OR TO ALLOW FOR A SUBSTANTIAL EXPANSION OF SUBSTANTIAL EXPANSION OF OPERATIONS.OPERATIONS.

PROJECT COSTPROJECT COST – AMOUNT OF RESOURCES – AMOUNT OF RESOURCES REQUIRED BY THE PROJECT WHICH REQUIRED BY THE PROJECT WHICH INCLUDE CONSTRUCTION COST, LAND, INCLUDE CONSTRUCTION COST, LAND, PROFESSIONAL SERVICES, TAXES, ETC.PROFESSIONAL SERVICES, TAXES, ETC.

REVENUESREVENUES – TOTAL PESO AMOUNT EARNED – TOTAL PESO AMOUNT EARNED FROM SALES, LESSEES AND THE LIKE (e.g. FROM SALES, LESSEES AND THE LIKE (e.g. SALES OF LOTS, CONDOMINIUM UNITS, OFFICE SALES OF LOTS, CONDOMINIUM UNITS, OFFICE UNITS)UNITS)

PROFITPROFIT – REVENUE LESS COST – REVENUE LESS COST

EQUITYEQUITY – PART OF FUNDS TO FINANCE A – PART OF FUNDS TO FINANCE A PROJECT, RAISED BY THE OWNER/DEVELOPER PROJECT, RAISED BY THE OWNER/DEVELOPER WHICH IS SUBJECT TO VENTURE’S RISKS.WHICH IS SUBJECT TO VENTURE’S RISKS.

LOAN, DEBTLOAN, DEBT – PART OF FUNDS TO FINANCE THE – PART OF FUNDS TO FINANCE THE PROJECT, BORROWED FROM A LENDING PROJECT, BORROWED FROM A LENDING INSTITUTION WHICH IS USUALLY SUBJECT TO INSTITUTION WHICH IS USUALLY SUBJECT TO GUARANTEE/ASSURANCE OF PAYMENT – GUARANTEE/ASSURANCE OF PAYMENT – COLLATERAL.COLLATERAL.

CASH FLOWCASH FLOW – IS THE – IS THE BEHAVIORAL DESCRIPTION OF A BEHAVIORAL DESCRIPTION OF A PROJECT’S INFLOW AND PROJECT’S INFLOW AND OUTFLOW OF FUNDS OVER A OUTFLOW OF FUNDS OVER A PERIOD OF TIME, THE PERIOD OF TIME, THE DIFFERENCE BEING THE NET DIFFERENCE BEING THE NET CASHFLOW.CASHFLOW.

RETURN OF INVESTMENTRETURN OF INVESTMENT – – PROFIT DIVIDED BY INVESTMENT.PROFIT DIVIDED BY INVESTMENT.

PROJECT COST, PROJECT COST, INVESTMENTINVESTMENT

CONSTRUCTION COSTCONSTRUCTION COST ACTUAL CONSTRUCTION – LABOR ACTUAL CONSTRUCTION – LABOR

& MATERIALS& MATERIALS PROFESSIONAL FEES PROFESSIONAL FEES

(ARCHITECTS, ENGINEERS, (ARCHITECTS, ENGINEERS, CONSULTANTS)CONSULTANTS)

EQUIPMENTEQUIPMENT PERMITS, LICENSES.PERMITS, LICENSES.

PROJECT COSTPROJECT COST

LAND COSTLAND COST TAXESTAXES INSURANCEINSURANCE INTEREST DURING CONSTRUCTION INTEREST DURING CONSTRUCTION

(ON ADVANCED CAPITAL) (ON ADVANCED CAPITAL) OTHER ALLOWANCES OTHER ALLOWANCES

/CONTINGENCIES AND PRE- /CONTINGENCIES AND PRE- OPERATING COSTS.OPERATING COSTS.

BASIC MECHANICS OF BASIC MECHANICS OF FINANCIAL STUDIES FOR FINANCIAL STUDIES FOR DEVELOPMENT PROJECTSDEVELOPMENT PROJECTS

GROSS/COMMON/NET AREASGROSS/COMMON/NET AREAS NET AREAS – NET AREAS –

LEASABLE/SALEABLE AREAS. LEASABLE/SALEABLE AREAS. GROSS AREAS – COMMON AREAS GROSS AREAS – COMMON AREAS

AND NET AREASAND NET AREAS

NET AREAS AND GROSS NET AREAS AND GROSS AREASAREAS

SUBDIVISIONSUBDIVISION N.A.- LOTS, C.A.- ROADS, PARKSN.A.- LOTS, C.A.- ROADS, PARKS RESIDENTIAL CONDOMINIUMSRESIDENTIAL CONDOMINIUMS N.A.- RESIDENTAL UNITS PLUS N.A.- RESIDENTAL UNITS PLUS

PARKING SLOTS, C.A.- ELEVATOR PARKING SLOTS, C.A.- ELEVATOR CORE, SERVICE AREAS, LOBBYCORE, SERVICE AREAS, LOBBY

SHOPPING MALLSSHOPPING MALLS N.A.- STORES, COMMERCIAL SPACESN.A.- STORES, COMMERCIAL SPACES C.A.- SERVICE AREAS, HALLWAYS, C.A.- SERVICE AREAS, HALLWAYS,

PARKING AREAS.PARKING AREAS.

SELLING PRICESELLING PRICE CONDOMINIUM BUILDINGCONDOMINIUM BUILDING TOTAL PROJECT COST P100,000,000TOTAL PROJECT COST P100,000,000 DIVIDED BY DIVIDED BY NET AREANET AREA 10,000 10,000 COST/SQ.M 10,000COST/SQ.M 10,000 PLUS MARGIN (SAY 40%) 4,000PLUS MARGIN (SAY 40%) 4,000 BASE SELLING PRICE 14,000BASE SELLING PRICE 14,000

LEASINGLEASING AREASAREAS

NET COST/SQ.M P 10,000NET COST/SQ.M P 10,000 RETURN RATE(/YEAR) 12%RETURN RATE(/YEAR) 12% USUALLY RELATED TO USUALLY RELATED TO THE COST OF MONEY THE COST OF MONEY RENTAL RATES/SQ.M P 1,200/SQ.MRENTAL RATES/SQ.M P 1,200/SQ.M DIVIDED BY 12 MONTHS/YRDIVIDED BY 12 MONTHS/YR RENTAL/SQ.M P 100/SQ.MRENTAL/SQ.M P 100/SQ.M

REVENUEREVENUE

TOWNHOUSETOWNHOUSE

NET SALEABLE AREA/UNIT 100 SQ.MNET SALEABLE AREA/UNIT 100 SQ.M

NO. OF UNITS 10NO. OF UNITS 10

TOTAL NET AREA 1000 TOTAL NET AREA 1000 SQ.MSQ.M

X SELLING PRICE X SELLING PRICE P15,000/SQ.MP15,000/SQ.M

TOTAL REVENUE P15,000.000TOTAL REVENUE P15,000.000

REVENUEREVENUE COMMERCIAL APARTMENTCOMMERCIAL APARTMENT NET LEASABLE AREA/UNIT 200 SQ.MNET LEASABLE AREA/UNIT 200 SQ.M NO. UNITS 50NO. UNITS 50 TOTAL NET AREA 10,000 SQ.MTOTAL NET AREA 10,000 SQ.M X LEASE RATE/MONTH P 200/SQ.M X LEASE RATE/MONTH P 200/SQ.M P2,000,000/SQ.M/MONTH P2,000,000/SQ.M/MONTH X 12X 12TOTAL REVENUE P24,000,000TOTAL REVENUE P24,000,000

INCOME STATEMENTINCOME STATEMENT

TOWNHOUSE PROJECT (PERIOD TOWNHOUSE PROJECT (PERIOD OF PRE-SELLING & OF PRE-SELLING & CONSTRUCTIONCONSTRUCTION

EX.EX.

GROSS REVENUES P15,000,000GROSS REVENUES P15,000,000

LESS:LESS:

PROJECT COST 10,000,000PROJECT COST 10,000,000

GROSS PROFIT 5,000,000GROSS PROFIT 5,000,000

GROSS PROFIT P5,000,000

LESS:

COST OF ADMIN. 200,000

COST OF OVERHEAD 100,000

MARKETING EXPENSES 700,000

SUB-TOTAL P1,000,000

NET INCOME BEFORE TAXES

P4,000,000

TAX 35% 1,400,000

NET INCOME P2,600,000 11%

11% NET INCOME RETURN FROM GROSS SALE

RETURN ON INVESTMENT

ROI = INCOME / INVESTMENT

= P2,600,000 / P10,000,000

= 26% RETURNS

PAYBACK PERIOD – AMOUNT OF TIME NEEDED TO RECOVER ALL THE INVESTMENTS.

TOTAL INVESTMENT P120,000,000

AVERAGE INCOME PER YEAR

P 24,000,000

PAYBACK PERIOD = P120,000,000

P 24,000,000

= 5 YEARS