All investment projects start with opportunity definition. A project opportunity is typically assessed first in a prefeasibility study to justify the investment of resources in pursuit of the project and the cost of a comprehensive feasibility analysis.
To determine the most appropriate use of vacant land or an improved property, a landowner or leasehold owner may conduct a highest and best-use study. The purpose of an HBU study is to establish what property development is physically possible, financially feasible, maximally productive, and legally permitted.
After project concept refinement, a preliminary feasibility analysis is commonly conducted by the developer for the “go/no-go” decision and to serve as the basis for the business case. This high-level market research and analysis and investment appraisal is generally based on secondary data that can easily be collected and worked out.
A preliminary feasibility study enables exploration of potentially interesting options before deciding to proceed with the project and for preparation of the preliminary business case. It assesses the basic conceptual, economic and financial viability of the proposed project chiefly to identify the costs and benefits of each opportunity and to eliminate those opportunities that are unsuitable.
If the prefeasibility study shows that the intended project to be promising, the developer can decide to study the investment opportunity in more detail and establish the scope of the study. The prefeasibility study must be conducted before the project's design to reveal the areas that require more attention in the comprehensive feasibility study.
For the feasibility study of sustainable development projects, the developer must ensure that sustainable development principles are applied throughout the project's whole-life cycle. The costs and benefits of the development project to all stakeholders must be assessed during every phase of the property's life, including its eventual demolition and/or recycling.