Feasibility Study Guide
SPORT AND RECREATION FACILITIES
Enquiries or comments may be directed to: Link: The Department of Sport and Recreation
This recourse contains comments of a general nature only
and is not intended to be relied upon as a substitute for
professional advice. No responsibility will be accepted by the
Department of Sport and Recreation for loss occasioned to
any person doing anything as a result of any material in this
This guide was prepared with a view to outlining the
Department of Sport and Recreations' requirements for a
feasibility study. However, any opinions, findings, conclusions,
or recommendations expressed herein are guidelines only
and should not be expressly relied on by project proponents.
The second phase in the facility planning process
is the Feasibility Study. The purpose of a feasibility
study is to examine the viability of a proposal so that
any decision can be informed by objective analysis.
Your decision may be to implement, amend, refine or
abandon the proposal. It should thoroughly test the
- Management options
- Facility components
- Location options
- Technical design options
- Social, economic and environmental sustainability
This guide provides practical assistance in undertaking
a feasibility study for a proposed sport or recreation
facility. It highlights the planning issues that need to be
considered, the various ways of gathering information
and the outcomes that should be achieved.
The information provided is not definitive. It does not,
and cannot, outline the correct process of undertaking
a feasibility study for all proposed sport or recreation
facilities. The nature of the proposal, together with
local circumstances, will determine the content and
process of the feasibility study. This is intended to be
a guide and should be used as such. Contact your
nearest Department of Sport and Recreation office if
you require assistance with using the guide.
Remember, a sport or recreation facility should
be about meeting community needs. It should be
designed for and with people, facilitate community
interaction, be a "community hub" and be affordable
to the community. The outcome of any feasibility study
should be tested against this.
This guide is part of a suite of documents that can
assist you with planning, testing and managing
2.0 Facility Planning Process
The five key phases in the Facility Planning Process for a sport and recreation facility are illustrated in the following
Figure 1 Contents
- Phase One
- NEEDS ASSESSMENT
- Identify Key Community Values and
- Review of Existing Provision
- Information Sources
- Determine Needs
- Development Proposal
- Abandon Proposal
- Upgrade Existing Facility
- or Develop New Facility
- Phase Two
- FEASIBILITY STUDY
- Market Analysis
- Draft Management Plan
- Concept Plan
- Financial Viability
- Risk Assessment
- Implement, Amend, Postpone,
- Stage Development or
- Abandon Proposal
- Phase Three
- Management Plan
- Design Brief
- Design Team
- Schematic Design
- Design Development
- Contract Documentation
- Phase Four
- Construction and Handover
- Phase Five
- Facility Operational
- Project Evaluation
In planning a sport or recreation facility, the first step
is to undertake a needs assessment to justify its
provision. The Department's Needs Assessment and
Decision Making Guides can assist.
The second step is to undertake a feasibility study
to assess the viability of the proposal. The feasibility
study should determine:
- The range of opportunities and services to be
offered at the facility
- How the facility should be managed
- The best location for the facility
- What areas and features the facility should
- The practicality of the design and technical aspects
- Whether the community can afford the cost of its
construction, operation and disposal
- The economic, environmental and social impact
that the proposed facility is likely to have on the
Although this planning process may seem lengthy, it is
cost-efficient. It is generally accepted that the feasibility
phase of the planning process may cost up to 10% of
the total cost of the development, but can determine up
to 65% of the final cost of building the project.
As planning advances into the design and construction
phases, it becomes increasingly more difficult to
influence the final cost of the project. Figure 2
demonstrates that the optimum time to reduce life
and project costs associated with any project is at a
feasibility study stage. The cost and time impact is
greatly reduced as the process continues along it's life
cycle. An increased emphasis on the feasibility and
planning stages of a project can greatly improve the
life performance of an asset.
3.0 Preliminary Planning
Corporate Policies and Plans
Before embarking on a feasibility study, the client
should discern the appropriateness of the proposal to
build a facility. Is it the client's core business to provide
this facility or would it be more appropriate for another
agency to provide it? Is there scope to partner the
The client should have a recreation and/or sport policy,
stating its vision, mission and aims for the provision of
facilities and services. This policy may also form part of
a broader corporate plan.
Ideally, the provision of sport and recreation facilities
should be guided by a Strategic Recreation Plan which
establishes a future direction and vision and strategies
for achievement, guiding service and facility provision.
The Local Government [Amendment] Act2 introduced
in 1995, requires local authorities in Western Australia
to develop an overview of the plan for the future for all
major sport and recreation facility or service provision
investments. This plan normally takes the form of a
strategic plan that outlines the aims and objectives
of each project, estimated capital and operating
costs, funding sources, proposed timeframes and
performance indicators . Business plans provide the
specific operational details on how a particular service
will be delivered.
For further information on facility planning please
consult the resource Decision Making Guide.3.
Assessment of Need
It is essential that a needs assessment be undertaken
before embarking on a feasibility study. In short,
this involves identifying any lack or over supply of
existing facilities and services. The aim of a needs
assessment is to justify provision. It is only when the
needs assessment is completed that a feasibility study
is undertaken to assess the viability of any proposed
For information on undertaking a needs assessment
please consult the resource Needs Assessment Guide
and Decision Making Guide: Sport and recreation
Establishing a Coordinating Committee
A number of different approaches can be used to
undertake a feasibility study:
- Internal approach - the study is undertaken by
members of the client organisation
- External approach - the study is undertaken by a
private consultant giving independence
- Combined approach - the study is undertaken by a
mix of internal and external personnel
For the purpose of this guide, the last option
(combined approach) is discussed below, as this will
achieve a greater commitment from stakeholders and
A combined approach requires the client to appoint
a coordinating committee to manage and control the
feasibility study process. This coordinating committee
should comprise of:
- A project co-ordinator (the in-house officer
responsible for the study)
- Other relevant members of the client agency
- Community/business sector representatives
- Representatives of proposed user groups/tenants
- An experienced facility manager
- Department of Sport and Recreation personnel
The make-up of the committee will depend upon the
type of facility being proposed. Key stakeholders
including Department of Sport and Recreation staff
should be involved from the start. The committee
should have the power to co-opt other professionals
and individuals if and when required.
Ideally the committee should have a diverse range of
- project management
- town planning
- building design
- recreation planning
- business/financial management
- facility management
- community development.
It may not be necessary for the committee to have
knowledge in all of these areas - the specific expertise
needed will be determined by the complexity of
the proposal. However, it would be beneficial if the
committee members had a basic understanding of the
various aspects of planning a facility.
The client should provide the committee with the
- A philosophy/values statement of the organisation.
- An outline of the purpose of the committee.
- The reporting relationship between the client and
- Details of the study budget and other available
Terms of Reference (TOR)
The TOR should be developed by the coordinating
committee and should outline the parameters of
the study. The TOR is what must be investigated
and reported upon. Furthermore it should detail the
- The philosophical base of the client and how this
impacts practically on the proposal
- The aims and objectives of the proposed facility
- What issues need to be investigated and reported
- Expectations regarding community involvement/
- Expectations regarding the outcomes/outputs of the
feasibility study report
Once developed, the TOR should be approved by the
client before commencing the study. This process will
ensure the client retains control over the scope of the
Department of Sport and Recreation staff should
be invited on the coordinating committee, attend
appropriate committee meetings and provide an
advisory or consultation role where DSR provides
funding assistance. The Department may submit
minority reports on the feasibility study if the
department does not agree with the findings of the
TERMS OF REFERENCE EXAMPLES
- To investigate and report on the social and financial
viability of the proposed facility
- To identify a site/s that will maximise access
to the facility
- To investigate management options and
recommend an appropriate facility
- To investigate and report on any special facility
needs that should be incorporated into the design
(e.g. disabled access)
- To analyse planning, construction and management
costs of alternative sites, designs and management
structures and recommend the best
The coordinating committee should decide what
investigative methods will be used in undertaking
the feasibility study. There are a number of different
methods used to identify and gather relevant
information. Choose the most appropriate methods for
your proposal. Some commonly used methods are:
- Literature search
- Community surveys
- Site visits to existing facilities in other localities
- Discussions with experienced facility managers and
peak industry bodies
- Researched information, e.g. technical data, usage
- Public meetings and forums
- Direct interviews with key groups and individuals
- Community workshops with key groups and
- Workshops with expert reference groups
- Liaision with neighbouring local governments
- A spatial (GIS) mapping process
Be aware of all assumptions and limitations
surrounding the methodology you choose. All
assumptions should be clearly stated in the feasibility
study report. Misleading information can be generated
by using inappropriate methods or by asking the wrong
In undertaking a feasibility study, community
involvement will generally strengthen community
ownership and the validity of the findings.
Broad community consultation may identify
opportunities to share resources, extend an
existing service, enter into a partnership or colocate
complementary services. Where appropriate,
a co-operative approach can achieve maximum
effectiveness and efficiency.
The coordinating committee should decide how much
input the community will have into the feasibility study.
They should also consider engaging a skilled facilitator
to assist with coordinating the consultation process.
5.0 Feasibility Study Process
The Process in Brief
It is important to acknowledge the two stages in the Feasibility Study Process. The first stage, Concept Planning,
develops the concept of the facility, while the second stage, Feasibility Study, tests the practicability of the concept.
Ideally, the two stages should be undertaken separately by independent parties to ensure impartial judgement and
Each feasibility study will, and should, vary in process and content. The diagram below illustrates the core elements of
the feasibility study process in a sequential progression.
Feasibility study process diagram contents
- Review background information
- Organisational philosophy
- Market analysis / justification of the proposed facility (needs assessment) / draft management plan
- Concept plan
- Location rationale
- Design / technical evaluation
- Capital costs-life cycle basis
- Staging alternatives
- Re-visit needs assessment
Review Background Information
It is important that any relevant background information
such as existing reports, studies and plans be
identified and reviewed. This background information
- Documentation detailing the history and
development of the proposal, including the
report that recommended the proposal to be
- Previous research/planning exercises (i.e. strategic
plan, needs assessment, etc)
- Any technical reports or plans relevant to the
You should also review studies and reports relevant to
other similar facilities or communities of a similar size
and ideally a similar demographic profile.
It is crucial that the organisational philosophy and
values are determined at the outset of the study
process. Your organisational philosophy should define
the social, financial and environmental outcomes that
could be expected from the facility. It should clarify
your position regarding the following policy issues:
- Financial costs - user contributions to capital,
maintenance and operating.
- Equity/access - community access to the facility
- Multi/single use - usage and programming.
It is important to assess the socio-demographic
characteristics of your community, participation
trends, and the strengths and weaknesses of potential
competitors and partners. It is useful to develop a
spatial locality map to illustrate the results of your
Socio-demographic characteristics can be identified
through statistics obtainable from link: the Australian
Bureau of Statistics and local
government authorities. Other useful sources can
be obtained from the Department of Education
and Training, Department of Social Security and
Department for Planning and Infrastructure.
Collect the following information to reflect the
uniqueness of the community:
- population size
- age distribution
- gender distribution
- place of residence
- level of education
- income distribution
- employment statistics
- cultural origins
- socio-economic status.
Once this information has been gathered,
the next step is to:
- Plot population distribution and projected
- Evaluate relevant socio-demographic data
to identify the important social and economic
characteristics of the catchment population.
- Identify the existence of any special groups
When used in conjunction with information on
participation trends, socio-demographic characteristics
can highlight the number of potential users for the
proposed facility and identify various target market
groups. Information on participation trends is available
from the Department of Sport and Recreation's
Review information on participation in sport and
recreation to identify current participation trends. What
are the general characteristics of those people who are
likely to participate in the activities you intend to offer?
How does this relate to your community?
Review documentation on trends and issues likely
to impact on the future demand for the proposed
facility (i.e. growth sports, increased home-based
opportunities, ageing population). See Appendix A.
Examine whether existing services are declining,
rising, ageing or developing? Look for patterns/trends/
cycles/seasons in relation to current consumption
of sport and recreation services. Check statistical
information from different sports with information
provided by the Department of Sport and Recreation
Western Australia or state sporting associations.
Identify the size of the catchment area for the
proposed facility. How far does this extend and can
it be increased? What is the competition within the
Ensure regular reviews on government planning
policies are conducted. Changes to policies can
determine or shape the decisions taken within the
It is important to analyse potential competitors and
their customers. Assess both direct and indirect/public
and private competitors. The analysis should answer
- Who are they and what facilities and services don't
- Where are they located?
- Who uses their facilities and services?
- How many people use their facilities and services?
- What are their strengths and weaknesses?
- Are they well managed?
- What rates do they charge?
- What is the size and potential of their market
- How are they likely to respond/react to the proposed
Evaluate each competitor on these factors and look for
an unsatisfied demand which offers an opportunity.
Consider what factors will attract people to the
proposed facility? What will enable the proposed
facility to complement its competitors rather than
compete against them? i.e. price, convenience,
opportunity to mix with others, range of sport and
recreation opportunities, quality of service and
facilities, public access, degree of hospitality,
opportunity to join a club, public transport etc.
It is impossible to offer all services to all market
segments. Decisions need to be made on which
specific market segments will be serviced before the
facility is developed.
Justification of the Proposed Facility
Basic Sport and Recreation Requirements
The need for a facility is crucial to the strength of the
feasibility study. It is not enough to say "We believe
we need this facility" - the need for the proposed
development must be investigated, measured,
documented and supported, so that the client can be
assured that the proposal is justified and sustainable.
Re-visit the basic sport and recreation requirements
of the community, as identified in the initial needs
assessment, and review the investigative methods and
assumptions used to determine those needs.
Examine the different ways of satisfying the basic
sport and recreation requirements of the community.
The provision of a new facility may be only one of a
number of possible solutions.
Consider the following options and select the most
reasonable one for further investigation:
- Employ a co-ordinator to develop programs and
services at existing facilities
- Provide transport to a nearby existing facility, even
if that is run by another LGA
- Amalgamate groups/combine usage at an existing
- Rearrange programming patterns at existing
- Renovate/convert/extend an existing facility
- Develop a joint-use agreement with another
- Lease an existing facility
- Construct a new facility, either in stages or all at
Determine how effective each of these alternatives
will be in meeting the basic sport and recreation
requirements of the community. Decide on a preferred
option. It is possible that you will identify several
The examination of alternative solutions may have
already been completed as part of either:
- A sport and recreation needs assessment
conducted as part of a strategic recreation plan
- A 'facility specific' needs assessment...
- Consideration of a Strategic Facility Plan of the
appropriate State Sporting Association
Where this is the case, it is important for the committee
to review the recommended/preferred option and be
assured that the development of the proposed facility
is the most appropriate response.
It is important to remember that the provision of a
sport or recreation facility is a long-term financial
commitment. Meeting the construction cost is
only the starting point of funding a facility. It is the
ongoing operating and maintenance costs over the
life span of a facility that needs to be considered in
Draft Management Plan
Where the preferred option is to develop a facility,
the next step is to prepare a draft management
plan. This should be done utilising the expertise of
an experienced facility manager (use an in-house
professional or engage an external person/ group such
as the Facility Management Association of Australia).
It is important that management issues are addressed
prior to considering the design of the proposed facility,
ensuring that the end result is a facility that is designed
for effective and cost efficient management.
Decide on the most appropriate management
structure for the proposed facility. Be guided by your
organisational philosophy. A description of alternative
management structures is provided below:
- Direct Management - The owner of the facility
employs the manager in a normal employee
- employer relationship. The owner has full
responsibility for all aspects of the facility's
operations including operating policies, financial
performance and asset maintenance. A
management committee may be established to
advise and direct the facility manager.
- Contract Management - The owner contracts
the management of the facility to an individual
manager, a community-based organisation,
or a commercial group. The contract manager
negotiates capital and operating budgets and
is responsible for the financial performance of
the facility. The owner usually contributes to the
maintenance of the facility. The ability to transfer
maintenance responsibilities may be restricted by
- Lease Management: A formal lease details the
rights and responsibilities of the owner and the
manager. The manager has full responsibility for
all aspects of the facility's operations including
financial performance, asset maintenance, and
operating policies. The owner usually receives a
rental income but has no direct control over day-today
- Joint Management: Two or more parties agree
to share the capital cost, usage and maintenance
of a facility. The key elements of the management
agreement (ie cost-sharing, legal and usage
arrangements) are recorded in a legally binding
Determine the most appropriate management
Estimate the amount of usage the proposed facility is
likely to attract using the following methods:
Community Consultation: Seek information
directly from potential user groups and individuals
- What specific facilities, program and
services potential users need/want
- How often they would use them
- Exactly when they would prefer to use them
- How much they are prepared to pay
- How far will they travel to use them
This approach records preferences and expressed
desires as opposed to real needs.
- Comparable Facility Method: Use an existing
facility in an area with similar demographic
characteristics, as a benchmark to estimate usage
for your proposed facility. Define participation rates
in terms of a percentage of the total population
within the catchment area.
- Participation Rate Projection. Obtain sport and
recreation "participation rate" studies which present
participation rates according to demographic
categories. This data can be used to project
participation rates in activities you intend to
offer at your proposed facility. Caution should
be exercised when applying this method
however, since local factors greatly influence
participation and national and state data may
not be applicable regionally or locally.
- Trend Analysis (To be used when replacing an
existing facility). Where participation rates and
facility usage levels have been recorded over time,
anticipated demand can be projected.
Existing usage patterns really only reflect existing
consumption, not real need. Caution should be
exercised when using this method as it usually results
in more of the same programs and facilities.
Other factors to consider when you estimate usage
- Accessibility to the facility
- The impact of the cost of usage fees and the ability
of potential users to pay
- The presence of competitive and complementary
- Vehicle flow patterns
- Climatic conditions
- The quality of the experience being offered
When estimating the usage of a proposed facility:
- Use more than one method - performance
projections should not be based primarily on the
Comparable Facility Method
- Establish a potential range of demand
- Use conservative estimates as there is a tendency
to over estimate
Identify what target groups will be serviced by the
Identify the key target customers along with lower
priority customer groups of the proposed facility.
- The size of each group
- The particular needs of each
- Why they will purchase the proposed programs and
- How much they are able, willing and expect to pay
The sport and recreational needs of the targeted
customer groups will form the basis of the programs
and services to be offered at the proposed facility.
Programs and Services
Describe the programs and services that will be offered
to each target group. A sample program should be
included for each season, along with details of any
permanent bookings which have to be honoured.
Determine the opening hours of the proposed facility.
Consider how future programs will be developed.
The sport and recreation industry is vulnerable to
trends. It is important to be flexible in your approach
to programming to accommodate changing needs and
Staffing costs comprise the largest operating expense
in many sport and recreation facilities. Excessive
staffing will significantly increase your operating costs
while inadequate staffing may result in loss of potential
business, under-utilised facilities, staff stress/ turnover
or non-compliance with legislation.
- Determine the appropriate number and type of
staff required through assessing staff structures at
- For each position, identify the appropriate
qualifications, the hours of work (full-time, part-time
or casual) and the general responsibilities
- Consider relevant award conditions and the scope
for workplace agreements
- Examine structures in other operators facilities as a
A flow chart of the organisational structure could be
Develop a marketing strategy for the proposed facility:
- Programs and services: Consider how the
programs and services to be offered will meet the
sport and recreational needs of the target group(s).
How do these programs and services take
advantage of an opportunity/gap in the
- Price: Consider proposed user fees. Will the target
group(s) be willing and able to afford them? How
do they compare with fees levied by competitors?
- Access: Consider when the programs and services
can be offered. Why are these times practical and
desirable for the target group(s)?
- Promotion: Consider strategies to advertise
and promote the programs and services. Will
these methods be effective in attracting the target
- Customer Service Standards: Consider the
service standards required to attract and retain
In order to develop a preliminary concept of the
proposed facility, first identify the various facility
components, i.e. the different spaces/functional areas
needed within the main structure.
Information on what facility components will be the
most appropriate can be ascertained from:
- Discussions with proposed users/tenants
- Visits to similar facilities where the community is of
a similar size and demographic
- Discussions with facility managers, design
consultants and sport or recreation planners,
industry peak bodies (i.e. LIWA)
Care should be taken to be guided by real needs
as opposed to desires to avoid spiralling capital and
operating costs that create excessive/unsustainable
Outline the specific components of the facility:
- Describe the primary activity spaces required
- Identify the secondary and support areas to
be accommodated ie car park, viewing areas,
reception/ foyer areas, ablutions, kiosk, sports
shop, kitchen, creche, equipment storerooms, etc
Note: Some of these are ineligible for funding
under DSR's CSRFF program or are low priorities.
- Define the functional requirements of each area
ie rough dimensions and capacity requirements
[based on estimated usage], major items of
furniture and equipment to be accommodated,
type of floor surfaces, storage space requirements,
mechanical services, etc
- Define the important inter-relationships between
activity areas. Indicate where activity areas need
to be adjacent (consider flow of internal traffic,
supervision requirements and potential for multiskilling
of staff). Bubble diagrams may be used to
provide a graphic illustration
The above information should provide sufficient details
to enable a cost planner/quantity surveyor to estimate
the capital cost of the proposal.
Remember, the concept design is flexible and will
probably change. Do not spend time and money
developing and discussing alternative layouts at this
stage. Once the proposal is deemed feasible, and has
been approved, it will enter the design phase. It is then
that the skills of a consultant design team are utilised
to develop a schematic design.
Note: If a design consultant is employed to draw
up footprint plans/ illustrations of your concept plan,
it is important to ensure their engagement will not
compromise your choice of consultants later in the
design phase, should this proposal proceed.
Joint Use and Co-location
Consider whether existing facilities could be extended
or upgraded for use on a shared basis. If this is not
possible and a new facility is required, you should plan
in consultation with other facility providers to ensure
minimum duplication and maximum use of resources.
Consider the possibility of co-locating the proposed
facility with other community or commercial facilities. If
properly integrated, this approach can work to create a
"hub" within your community, centralising facilities in a
village concept. Co-location with other major providers
will maximise service and social outcomes and provide
opportunities to reduce capital and operating costs.
Discuss your proposal with the Department of
Education and Training, local agencies and
groups, commercial organisations, neighbouring local governments and other State and Federal
government agencies to explore opportunities to colocate
and share provision and/or use of facilities.
Site Suitability and Specifications
Usually, location and cost will dictate the choice of
site. However, when considering a site for a sport or
recreation facility, you should assess site suitability.
The following considerations should be addressed:
- If you intend using an existing building, assess its
capacity and suitability for conversion. This may
require a Building Surveyors Assessment.
- For a new facility, carry out a site analysis to
- Zoning regulations and LGA planning
- Ownership of the land and cost to purchase
or lease the site
- Historical value or heritage significance
- Any bearing to aboriginal sites legislation
- Accessibility for motor vehicles, public
transport, pedestrians and cyclists
- Visual exposure
- Social impact - opportunities for integration
with community and commercial facilities
- Proximity to the catchment area and
potential user groups
- Size - provision for car parking, potential for
- Existing structures and their usage
- Surface and sub-surface conditions (geo
technical, acid sulphate soil, contaminated
- Environmental considerations
- Meteorological conditions
- Availability of building materials and
- Road use impact
- State government planning restrictions
(i.e. bush forever)
- Carry out a site survey to determine:
- Site specifications
- Existing pollution and/or contamination
- Location of utilities and services
- Assess the preferred orientation for the facility
within the site boundaries.
- Match the building to the site, ensuring the desired
activity inter-relationships can be accommodated.
Note: It is acknowledged that the site for the proposed
facility may be predetermined due to the limited
availability of land. However, it is still recommended
that the above considerations be addressed to ensure
the best use is made of the site.
It is important to test the practicability of the technical
aspects of the concept design. This will ensure that
energy use/consumption, maintenance of all technical
systems and utilities (i.e. lighting, airconditioning,
heating, sanitation and filtration systems for swimming
pools, reticulation, water pumps and bores) and
ongoing operational costs are investigated and that the
most practical and cost effective options are selected
based on Life Cycle Costing guidelines.
When undertaking this exercise, engage the expertise
of an engineer to provide professional assistance and
discuss the proposal with industry peak bodies.
Refer to existing facilities for relevant performance
and maintenance records. This process will ensure
that you are aware of the financial, management and
maintenance implications of the technical design
aspects of the proposed facility.
Note: A comprehensive energy audit should not be
undertaken until the project enters the design phase.
For further information refer to the Department of Sport
and Recreation publications Life Cycle Cost Guidelines
and Asset Management Guide.
Detail the estimated capital costs of the proposed
options for the facility. A cost planner or quantity
surveyor should prepare a cost plan showing the
- Acquisition of land and site surveys
- Site preparation
- Construction costs including provision for cost
- Technical systems and utilities
- Fixed equipment and furniture (non-fixed items are
- Access roads and support facilities
- Consultants' fees and planning costs
- Administration and legal costs
Sources of Capital Funding
Identify potential sources of capital funding such as:
- Local government funds
- State and commonwealth government grants
- Sale of land or existing facilities
- Contributions from potential user groups
- Debt funding
- Joint development and management agreements
- Fund-raising activities
- Donations of materials and services
- Private sector developers (PPP's)
For further information refer to the Department of Sport
and Recreation publication Life Cycle Cost Guidelines.
Operating income should be estimated based on
usage estimates (refer page 10) and anticipated
enrolments in programs (refer page 11).
To estimate operating income, include revenue from:
- Program fees
- Facility hire charges
- Membership fees
- Kiosk and sports shop sales
- Equipment rental
- Vending and game machines
- Advertising space within the proposed facility
- Grants and donations
- Council operating subsidy
Note: In order to estimate income and operating costs,
obtain the above information from other similar sport
or recreation facilities. Be conservative in estimating
income and liberal in estimating expenses.
Operating expenses should be broken down into fixed
costs and variable costs.
Fixed costs: Incurred whether the facility is being
used or not, (i.e. permanent operational staff,
insurance, taxes, interest and depreciation).
Variable costs: Expenses that are incurred when the
facility is being used, ie utilities, program staff, fuel and
Financial projections should be made for a five to 20
year period (five years for small and medium size
projects and 20 years for larger projects). To estimate
operating expenditure, include costs relating to:
- Staff salaries/wages and on-costs (for all nonprogram
- Programs (include instructors' wages, equipment
- Auditing and insurance
- Depreciation and loan servicing costs
- Advertising and promotion
- Technical systems and utilities
- Cleaning/minor building maintenance/maintenance
of surrounds (allow additional funds for minor
alterations in the first 12 months of operation)
- Major building maintenance
- Cost of goods to be sold
- Contribution for centralised administration services
NOTE: In general, building maintenance costs to
meet changes in legislation are difficult to predict
and should be included in revised budgets when
they become apparent.
Financial forecasts are required to determine whether
the proposed facility will be financially viable. For small
and medium size projects financial statements for the
first five years of operation are required. For large
scale projects additional financial statements for years
four to 20 are required (see Appendix B).
Prepare the following financial forecasts. Where
necessary, engage the expertise of a financial/legal
advisor for professional assistance.
Profit and Loss and Cash Flow Statements -
Prepare monthly statements for year 1, quarterly for
years 2 and 3, and annually thereafter (see Appendix
C and D).
Sensitivity Analysis - Prepare annual statements for
years 1, 2, 3, 4 and 5.
Break Even Analysis. Prepare annual statements for
years 1, 2, 3, 4 and 5.
Cash Flow Considerations
The availability of funds throughout the planning,
design and construction phases are essential.
The following key points need to be determined:
- The accuracy of your estimated capital costs
- When capital expenses will be due for payment.
Project your cash flow requirements for the design
and construction phases
- The impact of foreseen increases in construction
costs on cash flow
- How a debt will be retired
- The capability of the community to meet fundraising
targets (the expertise of a professional fundraiser
may be engaged to determine this) and timeframe
- The reliability of volunteer resources
- When grant funds will be required
A Sensitivity or "What if......" analysis is used to
identify financial risks".
- What if... attendance is only 40%, 50% or 60%
of the projected amount.
- What if... the staff costs increase by 20%
- What if... the major competitor drops its prices
This exercise is crucial in assessing the financial
viability of the proposal. The worst-case scenario
needs to be budgeted for. Computer software is
available to undertake sensitivity analysis. Summarise
all forecasts and decide if the project is financially
It is cheaper to construct a facility in one stage.
However, if the capital and/or operating costs of the
proposed facility are beyond the means of your funding
sources, consider reducing the scale of the proposal,
or staging construction.
By staging the development, priority services can be
established first and their performance monitored
before committing additional funds. Additional services
and facilities can be provided when funds become
available. Staging is also a viable option when not all
desires/needs have demand at the same time.
Consider developing the proposed facility in stages
and assess the cost/ benefit implications of this
approach. State whether staging the development is
an appropriate option and why.
NOTE: DSR grant applications should identify priority
Sustainability is about making sure what you plan
to do today has a positive impact on the economic,
environment and social aspects of future generations.
Ideally, when all three aspects are weighed up, the
net result should be seen as a benefit as opposed to
a cost. In other words, it should be expected that the
proposed facility would enhance the community in all
three sustainability elements.
The economic impact of developing the facility needs
to be considered. Is it likely to reduce/increase the
financial viability of another facility, club or business?
Are there external forces within the surrounding
environment which could inhibit/ enhance the facility's
financial performance? Consider the following factors:
- Existing and future competition
- Economic cycles
- Social trends
- Emerging population demographics
Consider any proposed industrial and commercial
developments which may influence the demand for the
proposed facility and the types of opportunities it will
offer. Information may be obtained from:
- Local government Authority development and
- Department of Commerce and Trade
- Australian Bureau of Statistics
- Department for Planning and Infrastructure
- Research undertaken by Universities and
Refrain from using outdated information when making
Undertake a risk assessment to evaluate the degree of
risk associated with developing the proposed facility in
light of predicted economic forces. When undertaking
this exercise professional assistance should be sought.
Will the new facility consider the principles of shared
use and co-location? Will global sustainability
benchmarks be met in the planning and development
of facilities? Responding to energy, waste and water
conservation issues needs to also be considered,
preferably using an ecological footprint or sustainability
Consider the impact a new facility will have on existing
social and leisure patterns (i.e. is it likely to create a
new focal point for community activity? Is it likely to
create new demands or trends? Will it impact on the
culture of the community?) Consider potential areas of
competition and complementation.
Revisit the Needs Assessment
Re-visit the findings of the needs assessment to
confirm that the finished proposal will meet the basic
sport and recreation requirements of the community. It
is not difficult for a proposal to get "off-track" during the
course of its development and stray from its original
Consider the relationship of the proposal to the future
development of the municipality, sport or region.
Critically examine how the facility will assist the client/s
group to achieve its vision.
Check that any other developments that may have
occurred since the feasibility commenced will not
detract from the success of your proposal.
The information that has been gathered and assessed
should be summarised to enable an objective decision
regarding the proposal.
The summary should include the following
- State the most appropriate response in meeting
the sport and recreation requirements of the
- State the recommendations of the draft
- Outline the details of the concept design and the
- State the capital cost of the project and possible
sources of capital funds.
- Outline the financial viability of the proposed facility.
- Detail the economic, environmental and social
viability of the proposed facility.
- Recommend to implement/amend/postpone/stage/
abandon the proposal.
- Recommend time frames for the project's next
stage/s and outline why these have been chosen.
6.0 Writing the Feasibility Report
Components of the feasibility study
Record the details of the study process in the order
in which it was done. Use the headings of the key
components to set out your report.
- Executive summary
- Background and methodology
- Organisational philosophy
- Market analysis
- Justification of the proposed facility
- Draft management plan
- Concept design
- Location rationale
- Design/technical evaluation
- Capital costs
- Staging Alternatives
- Re-visit the Needs Assessment
The executive summary is usually found at the
beginning of the report or may be presented as a
separate document. It should be able to stand alone
from the rest of the report. The executive summary
- An overview of the proposed development
- A summary of the major findings of the feasibility
- A suggested future direction and proposed action.
Consider the following practical hints when writing the
- Present information in a logical order.
- Use headings and sub-headings throughout the
- Keep it simple, concise and easy-to-read. Where
possible, refrain from using industry jargon.
- Don't be selective and don't repeat information
- Support your claims and use examples.
Include any survey results, interview results, site visit
reports, minutes of public meetings, technical reports,
professional advice and/or other research, which is
referred to, or support claims made within the study.
Independent peer review
It is desirable to obtain an independent review/
assessment of the feasibility study, especially if
considering a large-scale project. The review should
be undertaken by an independent (unrelated) person
or organisation with relevant expertise and experience
and should address the following points:
- The rationale behind the justification for
the proposed facility
Is the provision of the proposed facility the
best way of meeting the community's needs for
sport and recreation services? Has the merit
of other feasible options been objectively and
- The practicability of the draft
Is the proposed management approach workable,
achievable and cost effective? Does the
management plan target the findings of market
- The suitability of the concept design and
Does the proposed concept design and site
accommodate the management plan in the best
possible way? Within the design, have the most
practical and energy efficient technical systems
been chosen? Does the building structure suit the
- The validity of the assumptions/
projections included within the study
Are there risks concerning the assumptions upon
which the usage and financial projections are
based? Is the degree of risk significant? How can
the risk be mitigated?
- The economic, environmental and social
viability of the proposal
What impact will the proposed facility have on
external economic, environment and social
systems? Will the net affect benefit the community?
- The recommendations
Are the recommendations supported by the
findings of the study?
The feasibility study should provide all the information
required to make a decision to support or reject a
proposal to develop a sport or recreation facility. This
decision will have long-term ramifications for the
community and, therefore, it is important that the study
is comprehensive and objective.
The feasibility study is a means to an end. That end is
the involvement of the community in determining how
and when collectively owned funds are going to be
spent to provide opportunities for sport and recreation
Through undertaking a feasibility study the chances of
developing an unsuccessful facility are minimised, and
the potential for efficiency is increased.
A good feasibility study is the client's best
insurance against a poor investment!
8.0 Further Reading
- Daly, J. (2000). Recreation and sport planning and design. Human Kinetics.
- Department of Sport and Recreation. (2004). Asset management guide: sport and recreation facilities. Perth, Western
Australia: Western Australian Government.
- Department of Sport and Recreation. (2007). Decision-making guide: sport and recreation facilities. Perth, Western
Australia: Western Australian Government.
- Department of Sport and Recreation. (2007). Facility planning guide: sport and recreation facilities. Perth, Western
Australia: Western Australian Government.
- Department of Sport and Recreation. (2005). Life cycle cost guidelines: sport and recreation facilities. Perth, Western
Australia: Western Australian Government.
- Rawlinsons. (2007). Australian construction handbook 2007. Perth, Western Australia: Rawlhouse Publishing Pty Ltd.
- Ballesty, S., Orlovic, M. (2004). Life cycle costing and facility management. Facility Management 12 (2) p.32.
- The Local Government Act [Amendment] 1995 (WA)
- Department of Sport and Recreation. (2005). Life cycle cost guidelines: sport and recreation facilities. Perth, Western
Australia: Western Australian Government.
CURRENT TRENDS AND ISSUES IN SPORT AND RECREATION
Some of the major trends and issues affecting the development of sport and recreation within Western Australia include:
- Changes in the nature of international and national
economies, creating major challenges for the
Commonwealth and States in improving program
managements and funding flexibility.
- Individuals recognising the importance of sport and
recreation within their lives and making choices
based on a sport and recreation lifestyle.
- Increasing expectation by the community for
Government to provide leadership and stability.
- People looking for new challenges and
opportunities that add quality to their lives.
- Increased participation in sport and a range of
recreational activities which require less structured
and alternative delivery systems. This provides
challenges and opportunities for established sport
associations and groups.
- The need for agencies to become more efficient
and effective in their operations.
- The demand on sport to meet changing community
needs which requires sport associations to be
more responsive and flexible and to improve
their management structures, capabilities and
- Pressures on volunteer managed sport clubs and
competition from professional providers.
- An increase in co-operative and integrated
approaches to the planning and provision of
services and facilities.
- More sophisticated and costly facilities being built,
older facilities being regenerated and more colocated
and jointly provided facilities.
- Greater competition among providers for the same
- The need for sport, recreation and physical
eduction to have a priority in the education system.
- An increase in entertainment and spectator sport,
eco-tourism and adventure-based activities and a
demand for facilities and services that offer value
- The need for providers to incorporate and cater to
the many interests and needs of a multi-cultural
- A greater awareness of legal rights and the
importance of safety, public liability and risk
- Local communities wanting and having more say in
the decision-making processes.
- The impact of National Competition Policy and the
requirements of the WA Local Government Act.
- Address the growing needs and requirements of
the ageing "baby boomers" population.
- The requirement for an improved strategic
approach to regional sport and recreation planning
- Government planning policies such as Liveable
Neighbourhoods, Network City, Bush Forever are
having negative outcomes for sport and recreation
- Inflexible and inappropriate access restrictions
such as water catchments, bush forever are
reducing the recreational access to the natural
- Land-use planning is providing inadequate priority
to recreational needs, particularly in urban growth
- Access to existing school facilities is difficult to
achieve compared to planning for new schools.
- Increased densities in inner urban areas placing
pressure on existing sport and recreation facilities.
FEASIBILITY STUDY CONTENT AND RESEARCH REQUIREMENT GUIDELINES FOR DIFFERENT
Refer to DSR's Decision Making Guide - Sustainability Matrix Asessment Guidelines for further assistance.
SAMPLE PROJECTED PROFIT AND LOSS PRO FORMA
| ||1st Qtr ||2nd Qtr ||3rd Qtr ||4th Qtr ||Ongoing |
|INCOME || || || || || |
|Program Fees || || || || || |
|Room Hire || || || || || |
|Kiosk / Bar sales || || || || || |
|Proshop Sales || || || || || |
|Vending Machine Sales || || || || || |
|Pay Phone || || || || || |
|Fundraising || || || || || |
|Sponsorship || || || || || |
|Donations || || || || || |
|Grants || || || || || |
|Other || || || || || |
|Total Income/Gross Profit [A] || || || || || |
|EXPENSES || || || || || |
|Employees' wages || || || || || |
|Equipment || || || || || |
|Advertising || || || || || |
|Stationery/Office Supplies || || || || || |
|Printing and Postage || || || || || |
|Telephone/fax || || || || || |
|Power || || || || || |
|Kiosk/bar stock || || || || || |
|Proshop stock || || || || || |
|Vending machine stock || || || || || |
|Freight || || || || || |
|Building maintenance || || || || || |
|Vehicle || || || || || |
|Security || || || || || |
|Insurance || || || || || |
|Loan/lease repayments || || || || || |
|Other || || || || || |
|Total Expenses [B] || || || || || |
|Net profit/loss [A-B] || || || || || |
|Depreciation || || || || || |
|Net profit/loss after depreciation || || || || || |
GLOSSARY OF PLANNING TERMS
|TERM ||DEFINITION |
|Capital Costs ||Costs associated with planning, establishing and
constructing the facility |
|Client ||The owner of the facility |
|Co-Location ||Locating/integrating two or more facilities on the
same or adjacent sites |
|Community Consultation ||The process of involving/communicating with
stakeholders, potential user groups and other
community groups and individuals within the
facility planning process |
|Concept Design ||Preliminary drawings/illustrations of the facility
which convey the concept of the project. Indicates
facility components, approximate dimensions and
technical systems |
|Concept Plan ||The phase of the feasibility study which develops
the concept of the project. Includes: facility
justification; market analysis; draft management
plan; concept design and location rationale |
|Contract Documentation ||The various legal documents and briefs which
detail the contractual agreement between the
client and the builder/construction company |
|Design Brief ||A set of instructions from the client to the
designer/design team outlining what the client
expects the facility to provide. It governs the
design and construction of the facility |
|Design Development ||The detailed development of the schematic
design of the facility. Includes an independent
energy audit, 'firming up' capital costs and a
comprehensive design development report. |
|Facility Components ||The various spaces/functional areas within the
main structure of the facility |
|Facility Planning Process ||The entire/complete process of planning a
facility, incorporating the five key phases: needs
assessment; feasibility study; design; construction
and post-occupancy evaluation |
|Facility Specifi c Needs Assessment ||An 'in-depth' assessment of the need for a
particular type of recreation facility. Usually
required to justify the need for large complex
facilities. Undertaken prior to embarking on a
feasibility study |
|Feasibility Analysis ||The phase of the feasibility study which tests
the workability/practicability/cost effectiveness/
economic and social impact of the concept plan |
|Feasibility Study ||A critical assessment of a proposal to build
or upgrade a facility. Incorporates concept
planning and feasibility analysis. Enables an
informed decision about whether to proceed with
developing the proposed project. |
|Location Rationale ||The process of assessing and selecting the most
suitable site for the facility. Includes a site analysis
and a site survey. |
|Management Plan ||An outline and discussion of management issues
providing direction on how the facility will be
managed and utilised. Can be prepared for a
proposed or existing facility. In the case of the
proposed facility, a draft management plan is
prepared as part of the Feasibility Study. The
management plan is further developed if and
when the project enters the design phase. |
|Market Analysis ||An analysis of the social and economic fabric
within the facility's catchment area. Includes an
assessment of socio-demographic characteristics,
participation trends and of other providers of
similar services/facilities. |
|Needs Assessment ||A research study which aims to identify any lack
or over supply of recreation facilities and services,
to indicate what is required. May be generic or
facility specific. |
|Organisational Philosophy ||The values of the client organisation which
support the provision of the facility |
|Post Construction Analysis ||A study undertaken once a facility is operational.
Its purpose is to compare projections/assumptions
made in the Feasibility Study against the actual
performance of the facility and to explain any
|Risk Assessment ||The process of identifying, rating and evaluating
risks with a view to eliminating or reducing them. |
|Social Viability ||An assessment of the social impact of the facility
with a view to achieving a net gain/benefit. |
|Schematic Design ||Scaled detailed working drawings produced by a
professional designer/architect. Usually includes a
cost plan - details of associated capital costs. |
|Stakeholders ||Those parties which have an interest in the facility. |
|Strategic Planning ||An organisational planning approach which
identifies a future direction and vision, and
strategies for achievement. |
|Strategic Recreation Plan ||A clearly documented and approved plan of
intentions that will guide policy and programs
achieving sport and recreation provision. Includes
corporate aims and objectives, a review of
existing provision, an assessment of needs and
opportunities, and proposed developments. |
|Technical Systems ||Those engineered aspects of the facility design
which control the various functions of the facility
[ie lighting, airconditioning, heating, sanitation and
filtration, reticulation etc]. |
|Terms of Reference ||The parameters/limitations of a study or contract. |