Project Costs and Income

The financial projections associated with a business plan for asset transfer will be a focus for investors and supporters and as a result should have the most detailed treatment. It should include calculations about all the relevant costs over the time period of the project, or at least a three year period, including realistic assumptions about how these costs might change from year to year.

The featured table attached sets out the main headings for Capital and Revenue Costs and Income as a checklist for both an initial assessment and a detailed business plan.

Cash Flow

When the Capital and Revenue Costs and Income have been projected and show that income exceeds costs, it is important that these are put into a cash flow for the first years of the project and that the timing and assumptions about timing for income in the cash flow are clearly explained and presented. The failure of projects is often associated with problems of cash flow rather than overall profitability. Consistently missed income in terms of its timing can stretch the patience and confidence of investors and the nerves of the management team.

Whole Life Costing

For the purposes of financial planning for the revenue and capital costs of running the asset, it is essential to get professional advice on its whole life costing, that is, the systematic consideration of all relevant costs and revenues associated with the ownership of the asset. Typically, a surveyor estimates over a 20-25 year period what it will cost to operate, repair, replace and renew building or landscape elements. These costs are then given a current value in order that the owner can make decisions about and plan investment in the asset. It involves making judgements about which elements, (windows, doors, etc), will need replacing or repairing and what kind of cyclical maintenance, (like decoration), will be required.

The Asset Transfer Unit has worked with property specialists Davis Langdon to develop the Buildling Calculator, an interactive whole life costing tool.