Sensitivity and Scenario analysisOur in-depth knowledge of the local real estate market assists in making the judgment of the project's success, and failures, and also identify opportunities while helping investors and developers avoid potential pitfalls.
Sensitivity analysis used to assess the impact of uncertainties (key input variables) on investment decisions (outputs). Also, the method identifies those critical elements which have the greatest impact on feasibility (Costs and returns) and allow them to management scrutinisation, and for defining mitigation measures or for at least further investigation.
- The sensitivity analysis technique used to make an informed choice through assessing the impact of the change of single or multiple variables on the development appraisal key performance metrics outcomes. Attention can then be directed to such factors, and appropriate steps can be taken to reduce or/and eliminate the potential risks.
- In essence feasibility study has two parts, the first part relates to market research in order to understand the demand and supply factors, and the second is the projected financial performance; If appropriate, a sensitivity study is conducted in order to test the veracity of the inputs within the financial model.
- Scenario analysis used during the decision-making process to evaluate the impact of changes in possible events/assumptions that could occur in the future on various project outcomes.
- Performing an analysis by generating different future states has vital benefits include, avoiding risks and failure, future planning and building a proactive plan to avoid or decrease potential losses by analysing events or situations that may lead to unfavourable outcomes.