Feasibility Study of Construction Project Using Sensitivity Analysis

Residential apartment and commercial schemes are being adopted in India by project promoters. Before commencement of any project it is very essential to perform feasibility study. Project cash flow affected by many factors during construction period. Those factors can be identified by risk assessment and known as ‘Critical factors’. Considering those critical factors and their combinations will form possible situations, which may occur during the construction period. We can compare the value of internal rate of return after analyzing of each possible situation with cost of capital of company; and able to determine the practical feasibility of residential and commercial project for each situation. Each possible situation must have greater value of IRR as compare to Cost of capital of company for the feasibility of project.Only feasible projects are beneficial for a company. For improving decision making how sensitivity analysis is advantages for exploring model is to aid the decision maker.