From the course: Construction Finance Fundamentals

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Pre-development phase A: Go, no-go

Pre-development phase A: Go, no-go

From the course: Construction Finance Fundamentals

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Pre-development phase A: Go, no-go

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- [Instructor] Essentially, the developer can take all of the knowledge that was uncovered as part of the pre-development Phase A and compile it into a financial proforma. A high level financial proforma has been provided for download. Please note that the financial proforma will be covered in greater depth during the second course in the construction finance series. Ultimately, the financial proforma will guide the developer to the areas of potential risk that the developer can assess and run sensitivities against to understand the potential impact and available mitigation opportunities. Based on the outputs of this analysis, the developer in conjunction with the capital providers, will assess the return relative to the risk and related mitigation opportunities to determine if the potential reward is enough to compensate for the risk of the project. This is now the Go/No-Go. That is, does the developer complete or decline the purchase? Ideally, the best risk mitigation strategy is to…

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