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A successful sport or recreation facility is the result of thorough planning. Without adequate planning, the facility will probably fail – fail to meet the current and future needs of the community, fail to meet financial goals or fail to be
A feasibility study should critically assess a proposal to build a facility, and enable the client (the owner) to make an informed decision about whether to proceed with the proposed project.
It should consider all the alternatives within the scope of an identified need in order to establish the most effective investment of funds. It should analyse the social and financial impacts of the proposal and identify the risks involved by studying:
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 for loss occasioned to any person
doing anything as a result of any material in this resource.
This guide was prepared with a view to outlining the department's 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
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 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
The five key phases in the Facility Planning Process for a sport and recreation facility are illustrated in the following
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:
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.
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.
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
A number of different approaches can be used to
undertake a feasibility study:
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:
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
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
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
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
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:
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.
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
It is important that any relevant background information
such as existing reports, studies and plans be
identified and reviewed. This background information
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:
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:
Once this information has been gathered,
the next step is to:
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
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.
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:
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:
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
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:
Determine the most appropriate management
Estimate the amount of usage the proposed facility is
likely to attract using the following methods:
This approach records preferences and expressed
desires as opposed to real needs.
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
When estimating the usage of a proposed facility:
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 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.
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.
A flow chart of the organisational structure could be
Develop a marketing strategy for the proposed facility:
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:
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:
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.
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.
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:
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
Identify potential sources of capital funding such as:
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:
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:
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.
The availability of funds throughout the planning,
design and construction phases are essential.
The following key points need to be determined:
A Sensitivity or "What if......" analysis is used to
identify financial risks".
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:
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:
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.
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
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.
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
Consider the following practical hints when writing the
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.
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 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!
Some of the major trends and issues affecting the development of sport and recreation within Western Australia include:
Refer to Decision Making Guide — Sustainability Matrix Assessment Guidelines for further assistance.
Do not submit enquiries with this form.