Page 197 - In Pursuit of the Sunbeam.indd

182 In Pursuit of the Sunbeam: A Practical Guide to Transformation from Institution to Household
This is an important but often overlooked aspect that is key to good project management. Failure to adequately track costs can quickly put a project in the red and cause financial struggles years after it is completed. Some firms have developed interactive forecasting where changes can be made from a distance while viewing a computer screen. This can drive down onsite service costs.
Depending upon the scope of the project and the type of financing and debt structure used, you may be required to obtain formal financial and market feasibility studies. The scenarios grounded by your pre- feasibility analysis lay the foundation for the formal financial feasibility study and will establish your project’s parameters. If your pre-feasibility forecast is thorough and kept current throughout the design process, you should be able to secure a formal feasibility analysis at a significantly discounted cost.
The market analysis completed during your pre-feasibility inquiry may satisfy the formal feasibility requirement depending upon its depth and how much time has lapsed. If you have additional, related requirements, they probably are limited in scope and therefore less expensive than had you not performed pre-feasibility analysis.
Determining Financing Alternatives
Each organization must evaluate which funding sources are most appropriate for their particular transformation. These may range from conventional financing, investment capital to tax-exempt or taxable revenue bonds, and fundraising (if you are a not-for-profit) or a combination thereof.
Having only limited cash at the onset not only may aggravate scarcity thinking, but also can be a very real hurdle to launching the project. You will want to analyze your ability to secure additional debt based on current operational performance and project feasibility. If in your pre-project operation you have even a small ability to increase debt, you may want to consider taking out a temporary line of credit from a local bank (or a consortium of local/regional banks.) Doing so on the front end of your efforts may preserve your existing cash while enabling you to forge ahead with development plans. The line of credit and the dollars accessed against it can usually be included in the final financing of the project. You can then pay off the line of credit at the time of actual project financing.
In addition, predevelopment and development costs are capitalized (assuming the project is eventually built) and therefore do not negatively