A project can stay on budget and still stop making financial sense. The construction estimate may remain accurate while the financing assumptions behind it no longer hold.
The Wall Street Journal recently reported on commercial property buyers renegotiating deals after borrowing costs rose. One buyer secured a $600,000 reduction on an approximately $20 million apartment acquisition.
Revisit feasibility as the project develops
For development teams, this is a reminder to revisit feasibility throughout a project. Design, approvals, and procurement take time. The financial case needs to keep up with the decisions and conditions that change during that period.
Before committing more money, the team needs to check whether the scope, delivery dates, and financing terms still support the approved budget. An unchanged construction total cannot answer that question on its own.
Sources: The Wall Street Journal: The Surge in Rates Is Blowing Up Commercial Real-Estate Deals
Review cost, schedule, and financing together
The construction budget, schedule, and financing need to be reviewed together. A change in one can affect what is achievable across the others. A later completion date, for example, can change how long funding is needed even if the scope and construction prices stay the same.
Keeping the assumptions and their dates visible makes that review more useful. The team can see what changed, what remains confirmed, and which decisions need another look before additional spending is committed.
The earlier those changes are understood, the more room there is to make thoughtful decisions about design, scope, and timing.