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Index
•Overview
• Purpose (Problem Definition)
• Process Definition
• Process Interfacing
• Process documentation
• Process Implementation

Prepared By: Rajesh Jujare

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Overview
1. In the present process the product development and launching of
project is done in isolation by the departments involved.
2. The various processes such as market survey, product development,
liasoning, estimation and sales is done in isolation.
3. The available cost for construction shall be worked out based on the
sales price as below

Sales price Average sale price as per sales projections

Less Land Cost Land cost at the time of replenishment
Less anticipated profit Reasonable projections based on the risk taken
Cost available for construction All the construction cost required must be fitted

4. Thus product cost must be checked at the concept stage and the
product shall be changed to fit in the cost available for construction.

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Purpose - Understanding Project

Feasibility Process
Sales Price Variable as per Market Committing an Early Sales price
Conditions reduces flexibility to absorb cost
escalations thus impacts directly on
the profitability
Land Cost Variable as per Market Land cost shall be considered when the
Conditions land is replenished for the next project
Construction Variable based on various Construction cost is the combination of
Cost parameters various elements such as direct
construction costs, overheads,
development costs, legal & liasoning
costs, consultancy, marketing & sales cost
etc. which are vulnerable to the market
conditions
Final Profit Sales Price Less Land Cost & All the required efforts must be taken to
Construction Cost keep the final profit intact
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Purpose - Elemental Understanding of

Project Feasibility Process - Sales Price
1. Sales prices are always market driven, and does not bare
resemblance with the estimated costs normally.
2. Sales Price is a committed value and does not change. Thus
once committed, and in case of cost escalations in the project
execution phase, it directly impacts on the profitability
3. The sales price shall be calculated based on the weighted
average method to give exact impact on the profitability.
4. The additional revenue generates such as Parking, MSEB
charges etc. shall be added in the sales price.

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Purpose - Elemental Understanding of Project

Feasibility Process - Sales Price Trend Analysis
Project: Marvel Enigma
Total Saleable Area ==>>

Total Slab Area =====>>

Actual Sales Done (Committed Sales)
Sr. No. Project Phase Period Area Sold Average Sales Price Average Committed Risk
Revenue

1 Design Phase Quarter 1 High risk zone

Quarter 2

2 Execution Phase Quarter 3 Moderate Risk Zone

Quarter 4

Quarter 5

Quarter 6

Quarter 7

Quarter 8

Quarter 9

Quarter 10 Low risk Zone

Quarter 11

Quarter 12

TOTAL

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Purpose - Elemental Understanding of

Project Feasibility Process – Land Cost
1. When a unit is sold the part of land is also considered to be
sold. Thus land is considered to be the raw material which shall
be replenished upon use.
2. As the project progresses, the land cost in surrounding area
automatically increases. Also the increased infrastructure and
proposed development plans, helps land cost to grow
substantially.
3. Hence the land cost shall be equivalent to the land on which the
project is being constructed at the time of purchase of new
land.
4. There are lot of other parameters to be considered when the
land cost is determined to check the feasibility
5. TDR purchase cost to be considered in the land cost
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Purpose - Elemental Understanding of

Project Feasibility Process – Land Cost
Project: Marvel Enigma
Total Saleable Area ==>>
Total Slab Area =====>>
Total Land Area ====>>
Land Price at the time of purchase ====>>
Land Cost ====>>
Land Cost in Surrounding Area
Sr. No. Project Phase Period Average Land Price Land Area Purchase
Capability in Sft

1 Design Phase Quarter 1

Quarter 2
2 Execution Phase Quarter 3
Quarter 4
Quarter 5
Quarter 6
Quarter 7
Quarter 8
Quarter 9
Quarter 10
Quarter 11
Quarter 12
TOTAL
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Purpose - Elemental Understanding of Project

Feasibility Process – Construction Cost
1. Construction Cost comprises of the following elements
a. Direct Construction cost of Building (Shell/ Finishes & Services
b. Common Area Construction Cost (Infrastructure, Common Services & Amenities)
c. Consultancy charges
d. Legal & Liasoning Costs
e. Finance Costs
f. Supervision & Overheads
g. Sales & marketing Costs
h. Infrastructure Costs required for Construction
i. Miscellaneous Costs, Provisions and escalations

2. The construction costs are normally worked out after working drawings
are ready. Hence the value engineering efforts cannot be done at this
stage as the designs are almost ready and any change in the same
directly affects on the project timeline.
3. Construction costs are vulnerable to market conditions, hence the
escalation provisions shall be made with history data.

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Elemental Understanding of Project Feasibility Process –

Construction Cost – Possibility of Value Engineering

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Process Definition - Cash Flow Cycle

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Departmental Interface
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From Input To
Land Acquisition Land details such as areas, boundaries, constraints and other such D&D
details
Liasoning Statutory requirements & Design Constraints D&D
Marketing & Sales Product requirements as per market study and salability D&D

D&D Concept Plan for Product Study Marketing & Sales

D&D Concept Plan for Statutory Compliance assessment Liasoning
D&D Concept Plan along with the specifications for Initial Costing Estimation
D&D Concept Plan for Constructability Analysis Engineering
Sales Sales Projections (for Revenue projections) Business Development
Land Acquisition Land Rate projections till completion of the project Business Development
Business Development Available Cost of Construction Estimation
Estimation Ball park estimate with available data along with assumption D & D, Business
Development, Engineering
Engineering Value Engineering suggestions for cost reduction D & D, Sales & Markeing,
Business Development
D&D Concept Plan for Constructability Analysis Engineering
Estimation Revised Estimate based on revised concept plan D & D, Business
Development, Engineering
Engineering Final Value Engineering suggestions for cost reduction D & D, Sales & Marketing,
Business Development
D&D Concept Plan for for Final Review Engineering
Estimation Revised Estimate based on finalized concept plan D & D, Business
Development, Engineering
Business Development Approval of Concept Plan based on the profitability projections Management

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Departmental Interface

Legal &
Liasoning
Estimation &
Costing

Design & Land

Business
Development Acquisition Development

Engineering Marketing &

Sales

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Process Documentation

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Process Implementation

Prepared By: Rajesh Jujare