Feasibility and Quantity Surveying
Introduction
Every construction project begins with a question: is this worth building? Before an architect draws a floor plan, before a contractor prices a tender, someone needs to establish whether the project is financially viable, technically achievable, and commercially realistic. That someone is usually the quantity surveyor.
The feasibility stage sits at RIBA Stages 0 and 1 — Strategic Definition and Preparation and Briefing. It is the point at which a developer decides whether to buy a site, a housing association decides whether to bid for grant funding, or a local authority decides whether a new school can be delivered within budget. The QS’s contribution at this stage shapes every decision that follows. Get the numbers wrong here and the project either never starts (opportunity lost) or starts on false assumptions (cost overrun guaranteed).
This article explains what the QS does at feasibility, how feasibility cost estimates are prepared, how development appraisals work, what site factors drive costs up, and where practitioners most commonly go wrong. A worked example shows how a simple residential development appraisal is constructed — and how sensitive it is to small changes in assumptions.
What Is a Feasibility Study?
A feasibility study is a preliminary investigation that assesses whether a proposed development is viable — financially, technically, and commercially. It answers three fundamental questions: can it be built (technical feasibility), can it be afforded (financial viability), and should it be built (commercial case).
In the RIBA Plan of Work 2020 framework, feasibility work spans two stages. Stage 0 (Strategic Definition) covers the business case: preparing client requirements, reviewing project risks, undertaking site appraisals, and comparing feasible options. Stage 1 (Preparation and Briefing) develops the preferred option into a detailed brief with an agreed project budget, site surveys, and a project programme.
Feasibility studies are commissioned by developers assessing land purchases, housing associations evaluating affordable housing delivery, local authorities planning public facilities, and private clients considering commercial or institutional projects. The common thread is that significant capital is at stake and the decision to proceed — or not — depends on the cost and revenue assumptions being credible.
What a Feasibility Study Contains
A comprehensive feasibility report typically includes a project description and objectives, a site appraisal (location, access, ground conditions, utilities, planning constraints), an indicative cost estimate with contingency, a development programme, a financial viability assessment (development appraisal showing whether the scheme can deliver an acceptable return), and a risk assessment identifying the factors that could change the numbers. The QS is responsible for the cost estimate and contributes directly to the viability assessment and risk analysis.
The QS Role at Feasibility
The quantity surveyor at feasibility stage is not measuring bills of quantities or pricing trade packages. The design does not yet exist in enough detail for that. Instead, the QS is working at a strategic level: benchmarking costs, testing viability, identifying risks, and advising on whether the project can be delivered within the client’s budget.
Core Responsibilities
The QS’s specific contributions at feasibility include preparing order-of-magnitude cost estimates using cost per square metre benchmarking and comparable project data, applying location and date adjustments to ensure benchmarks reflect the project’s actual context, identifying abnormal costs (ground conditions, demolition, contamination, utilities diversions) that could materially affect viability, feeding construction cost data into the development appraisal to test whether the scheme produces a positive residual land value, advising on value engineering opportunities at the point where they have the greatest impact (before detailed design commits the project to expensive solutions), and providing life cycle cost comparisons where the client needs to understand whole-life implications of design choices.
The most effective feasibility work happens when the QS is engaged alongside the architect from the outset — not brought in after the design is fixed. Integration at Stage 0 allows the QS to challenge assumptions, test alternatives, and shape the brief before costs are locked in.
How Feasibility Cost Estimates Are Prepared
At feasibility, the QS does not have detailed drawings or specifications. Cost estimates are prepared using benchmark data, adjusted for the specific project’s characteristics. The three principal methods are cost per square metre, cost per functional unit, and interpolation from comparable projects.
Cost per Square Metre
The most common approach. The QS identifies the building type and specification level, obtains the relevant cost per square metre of Gross Internal Area (GIA) from BCIS or comparable project data, and multiplies by the proposed floor area. Current UK cost ranges (2025–26) vary significantly by building type.
| Building Type | Cost per m² GIA (2025–26) | Notes |
|---|---|---|
| Houses (standard specification) | £1,750–£3,000 | Wide range reflects size, specification, location |
| Flats / apartments | £2,800–£4,133 | Higher end for London high-rise |
| Offices (Class A) | £3,600–£9,200 | CAT A fit-out; significant London premium |
| Offices (Class B) | £2,700–£4,600 | Mid-tier specification |
| Retail | £1,800–£3,650 | Shell and core; tenant fit-out separate |
| Industrial / warehouses | £1,200–£2,000 | Large floor plates, minimal specification |
| Hotels | £3,000–£5,000 | Varies by star rating |
These figures are starting points, not answers. They must be adjusted for location (using BCIS regional indices), date (using the Tender Price Index to bring benchmark data to the project’s expected tender date), and specification (the difference between budget and premium specification can be 25–40% on the same building footprint).
Cost per Functional Unit
For some building types, cost per functional unit is more meaningful than cost per square metre. Schools are compared on cost per pupil place, hospitals on cost per bed, hotels on cost per bedroom, and car parks on cost per space. This method is particularly useful when briefing documents specify capacity requirements rather than floor areas.
Interpolation from Comparable Projects
The most reliable feasibility estimates come from a firm’s own historical project data — actual tender prices and final account costs from completed schemes of similar type, specification, and location. The QS adjusts for differences in date (inflation), location (BCIS indices), and scope. Large QS practices with extensive project databases have a significant advantage at feasibility stage: their benchmarks reflect real market pricing, not generic published data.
Accuracy at Feasibility
Feasibility estimates operate within wide accuracy ranges, and this must be communicated clearly to the client.
| Estimate Type | RIBA Stage | Accuracy Range | Recommended Contingency |
|---|---|---|---|
| Order of magnitude | Stage 0 | ±25% to ±35% | 20–30% |
| Feasibility estimate | Stage 0/1 | ±15% to ±30% | 15% |
| Cost Plan 1 | Stage 2 | ±15% to ±20% | 10% |
| Cost Plan 2 | Stage 3 | ±10% | 7.5% |
| Pre-tender estimate | Stage 4 | ±5% to ±8% | 5% |
A feasibility estimate of £20 million with ±25% accuracy means the actual cost could fall anywhere between £15 million and £25 million. The QS who presents a single number without a range is implying a precision that does not exist at this stage. Always present the range, always explain the contingency, and always identify the assumptions that carry the most uncertainty.
Development Appraisal and Viability
The QS’s feasibility cost estimate does not exist in isolation — it feeds directly into the development appraisal, which determines whether the project is financially viable. Understanding how a development appraisal works is essential for any QS practising at feasibility stage.
The Residual Land Value Method
The standard approach for assessing development viability in the UK is the residual land value (RLV) method. The calculation is straightforward in principle:
Residual Land Value = Gross Development Value − Total Development Costs − Developer’s Profit
If the residual land value is positive and exceeds the actual cost of acquiring the site, the project is viable. If it is negative, the project cannot support the land price and is unviable at the current assumptions. The RLV is extraordinarily sensitive to small changes in cost and value inputs — a 5% increase in construction cost or a 5% decrease in sales values can swing a borderline scheme from viable to unviable.
Components of the Appraisal
Gross Development Value (GDV) is the anticipated market value of the completed development. For residential schemes, this is the total sales revenue from all units. For commercial schemes, it is typically the capitalised rental income. The QS does not usually calculate GDV — that is the valuer’s role — but the QS must understand it because construction cost is tested against it.
Total development costs include construction costs (the QS’s primary input), professional fees (architects 8–12%, engineers 6%, QS 0.75–1.5% of construction cost), finance costs (interest on borrowed capital during the development period, typically 4–6% per annum), Section 106 planning obligations and Community Infrastructure Levy, marketing and sales costs, and abnormal costs (demolition, remediation, utilities diversions). The QS is responsible for quantifying the construction costs and abnormal costs, and for ensuring the contingency allowance is appropriate for the stage of design development.
Developer’s profit is the return required to compensate for risk. For market-led residential development, 17–20% of GDV is standard. The draft NPPF reforms (December 2025, currently under consultation) propose standardising this at 17.5% for market housing and 6% for affordable housing tenures — though the 6% figure is heavily contested by the development industry.
Section 106 and CIL
Planning obligations can materially affect viability. Section 106 contributions are site-specific obligations negotiated with the local planning authority — typically covering affordable housing provision, education contributions, highways improvements, and public open space. Community Infrastructure Levy (CIL) is a standardised charge per square metre set by each local authority. CIL rates vary enormously: some authorities charge nothing, while others charge over £200/m² for residential development. The QS must identify the applicable CIL rate and likely Section 106 requirements early, as these can represent 5–15% of total development costs in high-obligation areas.
Viability Assessments for Planning
Where a developer argues that a scheme cannot afford the full planning policy requirements (particularly affordable housing), a viability assessment is submitted to the local planning authority. The draft NPPF 2025 reforms are tightening the rules: viability assessments must now be publicly available (not confidential), all inputs and assumptions must be fully evidenced, and site-specific viability testing should be limited to cases where circumstances have materially changed since the Local Plan was adopted. The QS’s construction cost input is a critical element of any viability assessment and will be scrutinised by the authority’s own cost advisers.
Worked Example: Residential Development Appraisal
To illustrate how a feasibility appraisal works in practice, here is a simplified example for a residential development in the Midlands.
Project Brief
A developer is considering a brownfield site for a mixed-tenure residential scheme: 100 dwellings (70 market sale, 30 affordable rent), 8,000 m² GIA, 24-month programme, in a medium-sized Midlands city.
Construction Cost Estimate
The QS prepares the indicative cost using BCIS benchmarking. The baseline cost per square metre for residential apartments is £2,230/m² (BCIS 3Q 2025). Applying the Midlands location factor of 0.95 gives £2,118/m². For 8,000 m² GIA, the building cost is £16,944,000. Adding site works and abnormal costs (demolition £150,000, remediation £200,000, utilities diversion £120,000, access roads £200,000, SuDS £100,000, and assessment costs £10,000) brings the site works to £780,000. Preliminaries at 8% add £1,356,000. Contingency at 15% adds £2,862,000. The total construction cost estimate is approximately £21.9 million.
Full Development Appraisal
| Item | Amount | Basis |
|---|---|---|
| Construction costs | £21,942,000 | BCIS benchmark + abnormals + contingency |
| Professional fees (18.75%) | £4,114,000 | Architects, engineers, QS, planning |
| Finance costs | £1,010,000 | 5% p.a. on average drawdown over 24 months |
| Section 106 contributions | £450,000 | Education, highways, open space |
| Community Infrastructure Levy | £960,000 | £120/m² × 8,000 m² |
| Sustainability premium (5%) | £1,097,000 | Enhanced thermal performance, heat pumps |
| Marketing and sales | £200,000 | Agents, show home, advertising |
| Total development costs (excl. land) | £29,773,000 |
Gross Development Value
The 70 market sale units have a weighted average value of £264,000 (reflecting the mix of 1-bed at £200,000, 2-bed at £280,000, and 3-bed at £350,000), giving market GDV of £18,480,000. The 30 affordable units, valued on capitalised rental income at £96,000 each, contribute £2,880,000. Total GDV: £21,360,000.
Developer’s Profit
At 17.5% of market GDV (£3,234,000) and 6% of affordable GDV (£173,000), the total profit requirement is £3,407,000.
Residual Land Value
RLV = £21,360,000 − £29,773,000 − £3,407,000 = −£11,820,000
The scheme produces a negative residual land value of nearly £12 million. It is not viable at baseline assumptions. This is not unusual for affordable housing-heavy schemes in the current market — construction costs have risen approximately 25% since 2021 while affordable housing rental income has fallen 15% in real terms since 2015.
Sensitivity Testing
The value of the appraisal lies not in the single answer but in understanding what changes would make the scheme viable. The QS should test the key variables.
| Scenario | Change | Impact on RLV |
|---|---|---|
| Reduce construction cost by 10% | Value engineering to £1,906/m² | +£2,194,000 |
| Increase market values by 10% | Average unit to £290,000 | +£1,512,000 |
| Reduce affordable to 15% | 15 affordable units instead of 30 | +£2,100,000 |
| Increase density to 120 units | Same site, more units | +£3,500,000 (approx.) |
| Obtain grant funding | £5 million SAHP grant | +£5,000,000 |
No single change closes the gap. But a combination — value-engineered construction cost, increased density, and grant funding — could bring the scheme to viability. That is exactly the analysis the QS provides at feasibility: not just the number, but the levers that move it.
Site Appraisal: What Drives Abnormal Costs
The feasibility estimate is only as good as the site information it is based on. The QS must understand the site factors that can materially change the cost — and flag them as risks when information is incomplete.
Ground Conditions
Foundation costs can vary from £50/m² on straightforward ground to over £500/m² where piling or specialist solutions are required. The difference between pad foundations and piled foundations on a scheme like the worked example above could be £1 million or more. At feasibility, the QS typically assumes standard foundations unless a geotechnical desk study (Phase 1 ground investigation) indicates otherwise. The assumption must be stated explicitly: “pad foundations assumed; if piling is required, add £X.”
Contamination
Brownfield sites carry contamination risk. A Phase 1 environmental assessment (desktop appraisal of historical land use, typically £2,000–£10,000) should be commissioned before the feasibility estimate is finalised. If contamination is identified, a Phase 2 intrusive investigation (soil and groundwater sampling, £10,000–£50,000+) is needed to quantify remediation costs. Remediation can range from £50,000 for light contamination to over £1 million for severe cases. New remediation technologies like ReBind (2025) are reducing costs through on-site soil stabilisation rather than excavation and disposal, with potential savings of up to 50% on traditional methods.
Utilities and Infrastructure
Utility diversions are one of the most commonly underestimated costs at feasibility. If existing water mains, foul sewers, gas mains, or electricity cables cross the development site, diversion costs can run from £50,000 to £500,000 or more. The QS should request utility searches early and include a provisional allowance where searches have not been completed. Similarly, the cost of new utility connections, access roads, and off-site highway works can be substantial and must be captured as separate line items.
Other Site Factors
Flood risk (requiring flood-resistant construction, SuDS, or raised floor levels), topography (sloping sites requiring retaining walls at £200–£2,000 per linear metre), demolition of existing structures (£10,000–£25,000+ per building, plus asbestos survey and removal costs), and landfill tax on waste disposal (£126.15 per tonne as of April 2025) all affect the feasibility cost. Each should be identified as a separate line item, not buried in a blanket contingency.
Current UK Context (2025–26)
Several factors make feasibility assessment particularly challenging in the current market.
Construction Cost Inflation
The BCIS Tender Price Index shows annual growth of 2.5% as at Q4 2025, with forecasts of 2.8% for 2025 and 2.7% for 2026. Labour costs are rising faster — 7.1% year-on-year as at Q2 2025, with BCIS forecasting a 15% increase by Q3 2030. Materials costs are forecast to rise 13% over the same period. For a project that will not go to tender for 12–18 months, the QS must apply an inflation allowance to the feasibility estimate — failing to do so is one of the most common errors.
Housing Viability
The combination of rising construction costs (up 25% since 2021), constrained affordable housing rental income (down 15% in real terms since 2015 due to government rent policy), and increasing affordable housing requirements in planning policy is creating a viability crisis for mixed-tenure residential schemes. The new Social and Affordable Homes Programme (SAHP) 2026–2036 commits £39 billion nationally, with at least 60% required to be social rent, but grant levels are often insufficient to close the viability gap on individual schemes. This makes the QS’s role at feasibility more critical than ever — accurate cost information and robust sensitivity testing are essential to securing funding and planning consent.
Regulatory Costs
Three regulatory changes are adding to feasibility costs. The Building Safety Act (from October 2023) requires enhanced testing, certification, and gateway approvals for higher-risk residential buildings of 7+ storeys, adding programme and compliance costs. Net zero carbon requirements under increasingly stringent Building Regulations are adding 5–15% to construction costs through improved thermal performance, heat pumps, and low-carbon materials. Biodiversity Net Gain (mandatory from February 2024) requires a minimum 10% biodiversity improvement, adding modest costs (typically less than 1% of scheme value) but requiring specialist ecological input. All three must be captured in the feasibility estimate.
Common Mistakes in Feasibility Estimating
The most frequent errors at feasibility stage are predictable and avoidable.
Underestimating abnormal costs. Using “typical” foundation assumptions without a geotechnical desk study, ignoring contamination risk on brownfield sites, and failing to identify utility diversions are the three most common causes of feasibility estimates that prove unreliable. The QS should flag every assumption about ground conditions, contamination, and utilities as a stated risk.
Ignoring inflation. Estimating at current prices without adjusting for the development programme is a fundamental error. On the worked example above, 24 months of inflation at 2.7% adds approximately £900,000 to the construction cost. The QS must apply a TPI adjustment for the expected tender date.
Overoptimistic sales values. Basing GDV on asking prices (Rightmove) rather than actual transaction prices (Land Registry) overstates revenue. The QS should insist that the valuer uses recent completed sales, not aspirational listings, and should sensitivity-test the appraisal at 5% and 10% below the base case.
Inadequate contingency. Using 5% contingency at feasibility is inappropriate — 15% is the standard, reducing to 10% at Cost Plan 1 and 5% at pre-tender. The contingency covers genuine unknowns (scope development, unforeseen site conditions, regulatory changes) and should not be confused with inflation, which is a separate allowance.
Missing Section 106 and CIL. CIL rates vary enormously by local authority and can represent a six-figure cost on a medium-sized residential scheme. Section 106 obligations (education, highways, open space, affordable housing) add further. Both must be identified early by checking the local authority’s CIL charging schedule and supplementary planning documents.
Not adjusting BCIS data. Using a BCIS cost per square metre figure without adjusting for location (BCIS regional indices) and date (TPI from the data’s base date to the project’s expected tender date) will produce an inaccurate estimate. Both adjustments are straightforward but frequently overlooked.
Tools and Data Sources
The QS at feasibility stage relies on several key data sources. BCIS Online (subscription required) provides elemental cost analyses, cost per square metre studies, location factors, and tender price indices — it is the primary UK benchmark for feasibility estimating. Spon’s Architects’ and Builders’ Price Book (published annually by AECOM, now in its 150th edition) provides 20,000+ item prices, labour constants, and inflation forecasts. Argus Developer (Altus Group) is the industry-standard development appraisal software, used by developers, funders, and advisers for residual land value calculations and sensitivity testing. In-house cost databases — actual project costs indexed by type, location, date, and specification — are often more reliable than published data when good historical records exist. Land Registry provides actual transaction prices for residential comparable evidence, and the Valuation Office Agency provides commercial property valuations and rental evidence.
Practical Tips
Get involved early. The QS who is engaged at Stage 0 alongside the architect can shape the brief, test alternatives, and identify deal-breakers before costs are committed. The QS who arrives at Stage 2 is pricing a design they had no input into.
State every assumption. At feasibility, the estimate is built on assumptions — foundation type, specification level, inflation rate, contingency percentage, location factor. Document every one. When assumptions prove wrong, the estimate can be explained and updated rationally rather than defended or discredited.
Present ranges, not single numbers. A feasibility estimate of “£22 million ±25%” is honest and useful. A feasibility estimate of “£22 million” without qualification is misleading. The accuracy range communicates the level of design development and the degree of uncertainty remaining.
Sensitivity-test the appraisal. Run the development appraisal at base case, then test what happens if construction costs are 10% higher, sales values are 10% lower, the programme extends by 6 months, and the affordable housing requirement increases. The variables that swing the scheme from viable to unviable are the ones the client needs to manage.
Separate abnormal costs from building costs. Ground remediation, demolition, utility diversions, and other site-specific costs should be identified as separate line items, not averaged into the cost per square metre. This makes the estimate transparent and allows abnormal costs to be refined as site information improves without recalculating the entire estimate.
Commission site investigations early. A Phase 1 environmental assessment and geotechnical desk study cost £5,000–£15,000 combined. The information they provide can validate or invalidate feasibility assumptions worth millions. The cost of not knowing is always higher than the cost of finding out.
External Resources
BCIS Online — RICS’s official cost data platform for UK construction pricing and benchmarking.
RICS New Rules of Measurement (NRM) — the cost management framework for order of cost estimating and cost planning.
RIBA Plan of Work 2020 — the design stage framework defining when feasibility work is undertaken.
NPPF Draft Reforms 2025 — current government consultation on viability assessment, developer profit rates, and affordable housing policy.
Related ProQS Articles
What Does a Quantity Surveyor Do? — overview of the QS role across all project stages.
Introduction to Estimating in Construction — the fundamentals of construction cost estimating, including order-of-magnitude estimates at feasibility.