Project feasibility assessment in Sustainable Urban Renewal
Research framework
Faculty of Architecture, Real Estate & Housing
Supervisor: Prof. Eng. A. Thomsen
Mentor: Drs. C.L. van Flier
Duration: 2001 – 2005.
PROBLEM DESCRIPTION
The way districts, neighbourhoods function, and particularly the malfunctioning of certain
neighbourhoods, are issues that have been in the centre of societal and political attention for a long
time. In the beginning, the focus lay on the renewal of the pre-war neighbourhoods, but in the mid
nineties, it appeared that social-economical and social-cultural problems in the post-war
neighbourhoods had increased enormously. The housing stock in these neighbourhoods is
characterised by the one-sided composition of low comfort small multilevel dwellings, populated by a
significant number of vulnerable households with low incomes.
National, local governments and housing stockowners find a solution in the application of an
comprehensive renewal approach towards the malfunctioning post-war neighbourhoods, with the
revitalisation of these areas and the city as a whole, as main objective. Restructuring of the housing
stock must solve the urban problems by transforming the neighbourhoods in attractive residential
areas with social economically more differentiated residential compositions. The need for sustainable
urban restructuring is also acknowledged in many governmental policies. Sustainable urban
restructuring distinguishes it self from urban restructuring by putting the environmental angle first.
Urban restructuring can be seen as a gathering of many sub processes with the involvement of many
parties (local government, residents, housing associations, private investors, etc.). Those parties
have different interests concerning the neighbourhood and the restructuring process. The parties
however, who take the initiative, are in most cases the housing associations and the local
governments. In this, the local governments and the housing associations are mutually depended
with regard to the form and content of the process of sustainable urban restructuring.
The present state of sustainable urban restructuring
In practice, the process of urban restructuring in the Netherlands implies mostly demolition and
reconstruction of new buildings with new design and renovation. In many post-war neighbourhoods,
housing associations opt for demolition of social housing as an instrument to secure the feasibility of
the desired modification of the residential and housing composition of the neighbourhoods. By
replacing dwellings of poor quality with new construction, often fewer dwellings are built than the
number demolished and most of the newly constructed dwellings are houses for the owner-occupied
sector and not social-rental dwellings. This form of restructuring contrasts in many ways the
theoretical notion of sustainability. Nowadays, urban restructuring is also considered stagnating. The
stagnation and the gap between the theoretical notion and the application of sustainable restructuring
are tokens of the complexity of this process. For a better understanding of the complexity concerning
urban restructuring, it is necessary to analyse the present context in which this process takes place.
The stagnation of the urban restructuring is caused, among others, by; the stagnating building
production, the difficult cooperation between local governments and housing associations and the
decrease of the possibilities of local governments as well housing associations to reach the aimed
objectives in the governmental housing policy. The hesitation among housing associations to start
their restructuring task is mainly caused by a decrease of the relocation possibilities (due to the
present tightness on the housing market in most cities) and the financial means for the restructuring
task. Nowadays housing associations also face the full financial risk of urban restructuring, which
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dictates a need for greater financial expediency. A housing association now can no longer achieve its
main objective at any cost. It must consider at least the value for money if not the actual expenditure.
Financial expediency is also demanded by the national government in its role as supervisor of social
landlords. The limited financial resources, the increasingly competitive housing market and the
financial criteria of national government force the companies to operate and specifically restructure
their stock in a more cost effective and efficient way.
The above-described context sets considerable challenges towards the sustainable restructuring of
the malfunctioning neighbourhoods. In this, housing associations must be more aware of their
potential markets, delivering better services at lower costs with no direct governmental aid and under
strict supervision of financial institutions installed by the national government. Concerning the
process of urban restructuring, for a successful and sustainable restructuring result it is crucial that
all parties most come to an agreement concerning the urgency notion towards the restructuring task,
the objectives and the approach to apply. In addition, the housing associations have to take most of
the financial risks and this consequently makes them more cautious towards investments in
sustainable restructuring approach. This becomes apparent in the present application of urban
restructuring and in the hesitation among many housing associations in achieving their restructuring
task with all the risks to match.
PROBLEM SITUATION
The need for more cost-efficiency, more transparency and more sustainability in the restructuring
process underlines the notion that as well local governments as the housing associations are coping
with a lack of expertise, necessary for the application of the restructuring task (Rompelberg, 2004;
Laverman, 2004). This expresses itself in a failure among housing associations to provide a more
cost-effective restructuring approach, which copes with all the complexities concerning urban
restructuring and assesses the risks and insecurities in the initiative and preparation stage of the
process. Minimising investment risks and insecurities in urban restructuring has become a necessity
for housing associations to maintain their role on the housing market as social housing providers. It is
out of a need to ensure that the developer receives value for money and minimises investment risk
and insecurities that the techniques of feasibility studies were born (Castell, 2000).
Now, most housing associations mostly apply traditional methods for assessing the feasibility of a
restructuring approach towards a residential area. The current feasibility techniques may be sufficient
for the assessment of the financial feasibility of construction projects, but are not intended to cope
with the complexities associated with area redevelopment projects with non-commercial objectives
such as restructuring projects. These methods are insufficient for the measurement of the project
feasibility of sustainable restructuring projects, partly proceeding from the lack of capacity to valuate
the overall feasibility of these projects. By way of illustration, in order to assess the project feasibility
of a restructuring project, most housing associations suffice with the measurement of the technical
and financial feasibility of restructuring interventions by measuring the financial rate of return of an
intervention (Gruis, 2003). Based on this and the objectives on policy level of as well the housing
association as the local government, the weighing in the decision-making is done. The more social
and organisational insecurities, risks and benefits (the relocation task, market position, support, etc.)
are in most cases not included in the project feasibility study (Gruis: 2003, Nieboer: 2003).
Concerning the weighing of the restructuring interventions (demolishment, construction and high
level renovation), hardly any methods are used (Nieboer, 2003) and the weighing it self often
happens intuitively and does not include risk analyses (Gruis, 2003).
The necessity to perform a more cost-efficient, applicable and sustainable urban restructuring comes
with the need for redefinition of the traditional feasibility assessment approach of most social
stockowners. A project feasibility approach is needed that copes with all the complexities of the
restructuring process and provides the transparency, crucial for the cooperation with other parties.
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RESEARCH OBJECTIVE
This PhD research focuses on the optimalisation of the process of sustainable urban restructuring by
seeking manners to generate methods, sufficient for assessing the project feasibility of sustainable
restructuring projects. The aim of the research is to develop a model for assessing the project
feasibility of restructuring projects that in practice directly applicable is within the project management
structure of restructuring projects. We therefore formulate the research objective as follows:
To analyze and describe project feasibility, the major underlying determining aspects in the
context of urban restructuring and design a model for improving the assessment of project
feasibility in the context of sustainable urban restructuring.
To operationalise the research objective, we formulate the following problem proposition:
“ In what way can a innovative approach for assessing the project feasibility contribute to the
optimisation of the practicability of sustainable restructuring projects? ”
PROJECT FEASIBILITY ASSESSMENT
The definitions of feasible handled by Castell and Gruneberg & Weight (2000) generate a wide range
of aspects from which criteria can be selected for the determination of the feasibility of a project.
However, in both definitions the terms practicable and possible are mentioned. Based on these terms
can be concluded that feasible at least must be defined as “capable of being accomplished” and “to
all appearances practicable” (Castell, 2000).
In practice however, the definitions of the terms feasibility and feasibility studies in theory concerning
construction are not necessarily directly applicable. In literature in which feasibility concerning urban
restructuring or feasibility concerning strategic spatial policy appear, the terms possible and
practicable are not directly mentioned. Most of the time, the terms costs and means on one hand and
qualities and objectives on the other are related to feasibility. In the article “The surplus value of the
existent,” (De meerwaarde van het bestaande) for example, the author reduces the purpose of
feasibility studies in the context of urban regeneration to “the weighing of qualities and costs” (2003).
Compared to the above-described definitions of Castell and Gruneberg & Weight we can conclude
that this definition does not cover the whole by only mentioning the weighing component, which is
insufficient for a project to “be able of being accomplished” (Castell, 2000).
Castell concludes based on as well The American Heritage Dictionary of the English Language as
Webster’s Dictionary of Synonyms that “..a feasibility study therefore looks at both the possible and
practical aspects of a project and ascertains by financial analysis whether the project is capable of
being accomplished” (2000). According to this description, a feasibility study exists of an evaluative
component and a weighing component, based on financial analysis. Castell proceeds that the
feasibility of a project, with the determination criterion “capable of being accomplished”, is determined
by financial analysis. He acknowledges that this is only applicable when “the use of a feasibility study
is seen in purely financial terms” (2000).
In the context of project management, the terms practicable and possible are more related to the
term project feasibility. Project feasibility can be defined as the overall feasibility of a production
project (Farrell, 1995). Project feasibility assessment distinction itself (in practice) of feasibility
assessment by the questions, which are asked. Feasibility assesses if the input = the output, project
feasibility on the other hand assess: can it work, can it be executed?
Implementing this in the context of sustainable urban restructuring, we come to the following
definition of project feasibility:
“ The ability to execute urban restructuring projects, with all available tools and with the support
among the most important participants concerned (read: to all appearances practicable).”
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For the use of feasibility study in a broader perspective (project feasibility), the definition of NPWC
and Amanor-Boadu is more appropriate. NPWC defines a feasibility study as:
“A systematic investigation involving problem definition, the general analysis of alternatives, and
an appraisal and recommendation to determine the form in which a project may proceed ensuring
it is feasible functionally, technically and financially. It may embrace wider economical aspects,
environmental or social issues” (Castell, 2000).
Amanor-Boadu defines in his paper “Assessing the feasibility of Business Propositions” (KSU,2003)
feasibility assessment as:
”..the disciplined and documented process of thinking through an idea from its logical beginning to
its logical end and determine its practical viability potential, given the realities of the environment
in which it is going to be implemented. (Amanor-Boadu, 2003).
Based on these definitions and literature review of several governmental guidelines for project
feasibility assessment, can be concluded that project feasibility assessment is conducted at four
levels:
1. The first level involves operational feasibility and the question that is asked at this level is “will it
work?”. The natures of the aspects that determine the operational feasibility are technical,
financial, regulatory, and organisational.
2. The second level is economic feasibility and the question asked is “will it make economic
sense if it works and is built?”
3. The third level involves the mobilisation of the amount of support among the most important
participant necessary for the execution of the project. The question asked at this level is “is their
sufficient support for the project?”.
4. The last and final level is the risk analysis, which brings al levels together into a common unit
by asking, “what are the various risks involved in the project?”
The project feasibility study assesses, based on these feasibility criteria, to what extend an
alternative is feasible. There can be three possible outcomes for a feasibility assessment: (1)
Feasible; (2) Feasible with changes; (3) Infeasible. (Amanor-Boadu, 2003)
Alternative A:
Operational:





Technical
Financial
Regulatory
Market
Organisational
Feasibility:
Economic:
Input =output
Support:
 Intern
 Extern
1
Risks:
1
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Figure: 1 Conceptual project feasibility assessment model
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DESCRIPTION OF THE RESEARCH APPROACH
The objective of this PhD research is to identify and design a model for assessing feasibility more
effectively in the context of sustainable urban restructuring. The focus of the research approach lays
therefore for a main part on the analysis and description of various feasibility assessment methods
and the aspects that determine the feasibility of a sustainable restructuring project. In order to design
this model data concerning the content and process of urban restructuring projects, feasibility and
feasibility studies and feasibility assessment in construction and restructuring processes must be
collected. Finally, the designed theoretical model must be tested empirically on the implementation in
practice (see figure below).
2004
Problem
orientation
Current bottlenecks in urban restructuring
Brief survey of project feasibility study techniques
Theoretical analysis
Framework
2005
Exploration /
Description
State of the art on FS:
 FS techniques
 Literature review of
(project) feasibility
studies
Pilot case study Fannius Scholten:
 Selection criteria cases
 Research design Case studies
 Readjustment Anal. Framework
Analysis Framework
Case studies:
 State of the art project FS in
urban restructuring
 Aspects determining the project
feasibility
Designing the
model
Conceptual model
2006
EMPIRICAL
TESTING
Empirical testing of the applicability of the model in the form of
action research in two cases
Definitive model
2007
Conclusions
Thesis
To carry out the various modelling steps of the research strategy different research instruments are
needed. There is a variety of instruments available to conduct research into feasibility study methods
and sustainable urban restructuring. Based on the objective and the research strategy the research
instruments selected are: literature review, case study and action research. Each of the selected
research instruments will shortly be described below.
Exploration/ description stage:
Literature review: At first, literature review will be applied for refinement of the problem definition and
improvement of the research strategy. Further, literature review will be applied to get a better
understanding of the theories concerning construction and restructuring processes and feasibility
study techniques. This literature review allows us to compose the theoretical framework for the
research.
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Case study: In addition to the literature review, field research in the form of case study will be carried
out. The case studies help us to get a general view of on one hand the techniques used by stock
owners to assess the project feasibility of construction and restructuring projects and on the other
hand the complexities and risks that occur at restructuring projects.
Empirical testing stage:
Action research: The last research instrument, action research, will be used in this PhD research for
the accomplishment of the research objective, by testing empirically the model on the
implementation in practice. Action research consists of a family of research methodologies, which
pursue action and research outcomes at the same time (Dick, 1993). The researcher does not only
observe, like within a case study, but gets also involved in theory application and testing
improvements. Whereas case studies focus on ‘how and why’ questions, action research additionally
focuses on ‘how to’ questions (Dick, 1993). In this PhD research, action research will be used for
actual intervention within restructuring projects to constitute the conceptual model. The objective will
be to improve the effectiveness of the feasibility assessment of the restructuring project by using the
conceptual model. Subsequently, the results will be analyzed to evaluate the usefulness of the
conceptual theoretical model. The results will be applied for refinement of the model.
Research question
Research method
1. State of the art concerning feasibility assessment :
 Which methods in various fields for assessing project feasibility of
projects are in general applied and what are the advantages and
disadvantages of these methods towards urban restructuring?
 Which methods for assessing (project)feasibility in construction can be
distinguished and what are the advantages and disadvantages of these
studies towards urban restructuring?
Literature review
2. Aspects that determine the feasibility of restructuring projects:
 What implies sustainable urban restructuring concerning the project
scale, the process, the products, the parties, the complexities, etc.?
 Which aspects determine the feasibility of sustainable restructuring
projects?
 How are the major determining aspects weighed among one and other?
Pilot case study
Case study
3. Feasibility assessment by housing associates:
 In what way do housing associations assess, currently, the feasibility of
their restructuring projects?
Case study
4. Theoretical feasibility assessment model:

How should the (project) feasibility of sustainable restructuring projects
be assessed?
Literature review
Case study
Action research
Figure 9: the relations between the research questions and the research methods