eres2010_130_Henneberry_MODELLING_THE_RELATI(17)

The paper describes the development and application of physical-financialmodelling techniques to the analysis of relations between development design –covering the broad characteristics of a scheme, such as land use mix, developmentdensity and built form – and financial viability. It is divided into two parts

(apartment prices decrease at -2% per floor)

a) Total Value, Cost and Residual

b) Average and Marginal Revenue and Cost

Conclusions

One of the key decisions that must be made by a developer relates to the strategic approach to the development of a site. This involves the identification of the broad characteristics of the scheme to be pursued, such as land use mix, development density and built form. These characteristics have a fundamental influence on the project’s financial viability, its environmental performance and the chance of it obtaining planning permission. The tools available to developers to explore development strategies are limited. Time and cost constraints often result in a combination of sketch schemes and outline (or even ‘back of the envelope’) appraisals being used to explore the relation between design and viability. Consequently, relatively few alternatives are considered in relatively little detail. The paper describes the development and application of physical-financial modelling techniques that address this problem and offer the potential substantially to increase developers’ capacity to consider alternative approaches to site development.

Clearly, the rapid representation of alternative designs and their corresponding financial structures requires simplification. Design sensitivity and financial specificity suffer as a result. The detailed distribution of land uses – such as retail units – to create active frontages around key spaces and routes may simultaneously enhance social interaction, liveliness and movement, and property values. Similarly, design decisions may enhance or exploit positive externalities (for example, by increasing the number of dwellings with a waterfront view) or reduce negative externalities (for example, by reducing the number of dwellings facing onto busy roads), thereby altering property values. The modelling system can take such factors into account through a combination of detailed revisions to the basic imported designs in Simmetry3d, followed by their return to SketchUp and their appraisal using a spreadsheet edited to incorporate the different values and costs. Currently, this is a time-consuming process but we are working both on faster exchanges between Simmetry3d and SketchUp and on further developments of the spreadsheet to include more varied, detailed cost and value data in the appraisal.