Assessment of the Reliability of Techniques Employed in Feasibility and Viability Appraisal

Abstract

The complexities of the property development process involving numerous different professionals and the expenditure of large amount of money have resulted in different attitudes to property development especially in the face of inevitable uncertainty. Feasibility appraisal is concerned with the fundamental question of the practicability or possibility of the proposed decision, or development scheme while viability appraisal is concerned with the equally important and second question of the worthwhileness of the proposed decision. Thus, in the process of ascertaining the worthwhileness or not of a project, various viability appraisal techniques available to an appraiser from which the most appropriate one that meets the investors’ objective(s) is chosen so as meet the objective of the investor which is to maximize profit while also minimizing risk. The study focused on the assessment of the reliability of techniques employed in feasibility and viability appraisal by Estate Surveyors and Valuers in Akure. Questionnaires were administered to 22 practicing Estate Surveying and Valuation firms out of which only 16 were retrieved and valid for analysis. Findings revealed that 43.75% of the respondents rarely secure instructions to carry out feasibility and viability appraisal on most developmental projects, while NPV ranked 1^st as the most adopted and reliable appraisal technique whenever feasibility appraisal is being executed. It was also revealed that most of the Estate Surveyors and Valuers are aware of the availability of other modern appraisal techniques that incorporates risk but cannot use it as a result of its sophisticated nature. The study therefore recommended that the feasibility and viability appraisers should embrace modern techniques that incorporate risks to further enhance the accuracy of appraisals in line with global best practice and also to upgrade themselves by ensuring that the tools employed for investment analysis should be able to cope with modern day technology and situation.

Keywords: Appraisal, Feasibility, Modern techniques, Risk, Uncertainty, Viability