Economic Optimization Appraisals
What is an Economic Optimization Appraisal?
An Economic Optimization Appraisal (EOA) is an independent assessment of a development to ascertain what the best proposal for a site is economically, i.e. – what is the most profitable development for a site based on what is realistic from a planning policy perspective?
Oftentimes referred to as ‘Viability Appraisals’ or ‘Socio-Economic Appraisals’, EOAs are a decisive step in the pre-planning submission process to understand what is best for an applicant/developer.
If you’ve ever wondered what is best at your site economically, here are THREE questions to consider before submitting your planning application.
1. What are the costs of my development?
Development costs are on the rise and here at VP we understand that this is one of the main factors which makes many developments unviable and, sometimes, not go ahead at all.
Whether you are an homeowner looking to revitalise your home or a developer looking at a major development which can create a new sense of place, having an initial understanding of what a development is likely to cost you is critical in getting past the planning process and through to bricks and water.
An EOA can help in understanding what a development is likely to cost and what it could be worth.
2. What is the best scheme at my site economically?
Sometimes, developers look at a site and can’t quite decide what they want to build – should you build 7 large, detached houses with spacious gardens or 16 terraced and semi-detached houses? On the face of it, the second option would seem to be the obvious choice, but once the development costs, legal contributions and other factors have been taken into account this may not be the case!
An EOA is irreplaceable in terms of understanding what is the best scheme at a site economically. An EOA will often follow an initial Planning Appraisal or Pre-Application, once we understand what is realistic from a planning policy perspective and have an initial idea of what is going to be proposed in an application. An EOA can then make informed recommendations on the quantum, size and tenure of dwellings.
3. Should I get a Viability Assessment?
A Viability Assessment is submitted with a planning application to consider the values and costs associated with a proposed development. Often these can be used to dispute or negotiate certain requirements, such as Affordable Housing contributions. VP have a blog on what is included within a Viability Assessment which you’re welcome to view here.
An EOA is a first step towards understanding whether a development is viable and the likely outcome of a full Viability Assessment.
Interested in learning more?
Here at VP, we specialise in development economics, and are able to assist with any prospective scheme – no matter what planning stage it is at! If you would like to understand what the most economically optimal or profitable development at your site is, or better understand what the scope of an EOA would be for your needs, we would be more than happy to discuss your scheme.
If you’d like more support in assisting you with a specific development, please don’t hesitate to get in touch.
