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680 W. Shaw Ave, Suites 101 & 301
Fresno, California 93704
Phone (559) 229-9553
Email // //]]>

Incc fgv abril

The decisions of buying land and carrying out enterprises are crucial for the real estate companies. These decisions must be grounded by dynamic feasibility studies. Small variations in the cost of a construction may endanger the profitability of enterprises. The financial result of a single enterprise can determine the continuity, the growth or even the bankruptcy of a developer or a construction company.

According to Gonçalves (2014) [1] , in Brazil, the net margin of real estate enterprises varies between 9% and 13% of its revenue (General Sales Value-GSV) while the cost of its construction ranges from 40% to 50% of GSV. In a hypothetical situation, 5% of error on a construction cost estimation, if associated with additional overcosts of other 5% because of inefficiency in the construction process, can take the total variations in the cost of the construction to around 10%, accounting for about 5% of the revenue (GSV) and eventually involving more than 50% of the net margin: a very undesirable but yet possible and even common situation.

Considering the urge with which most of real estate investment decisions need to be taken, it is expected that the construction costs estimation can be quickly provided only on the basis of either architectural study or from legal projects even before construction has been fully studied, designed, detailed and specified. Smith (2007) [2] states that:

680 W. Shaw Ave, Suites 101 & 301
Fresno, California 93704
Phone (559) 229-9553
Email // //]]>