When developing a museum or attraction project, sometimes the biggest question is whether it should be developed at all. Even the best intentioned project can fall short if it does not fit the target audience demographic or is not situated in a geographical area with enough of a population to provide consistent attendance. Perhaps the entertainment market in a particular locale is already saturated, making it more practical (and profitable) for an attraction or museum to situate itself elsewhere.
For more than 50 years, our friends at AECOM have been helping attraction museum developers tackle these tough issues and set a course for success. Building off our summary of the AECOM/TEA Theme Index earlier this week, we’ve asked Brian Sands, Vice President / Principal – Economics at AECOM, to deconstruct the feasilbilty step of the project development process. In Part One of our two-part “Feasibility 101” course, Brian will explain the “why” of bringing on a feasibilty consultant, as well as the questions you should ask a firm like AECOM and the questions they will ask you. In next week’s Part Two, he’ll help us get down to the nuts and bolts of feasibility analysis and how a consultant can help you determine the “whether”, “where”, “when” and “how” of your project.
JRA: Thanks for talking with us today, Brian. Let’s start with the obvious – why is a market and feasibility consultant important?
Brian Sands: The primary role of a market and feasibility consultant, also known as an economic consultant, is to provide an independent, experienced, and somewhat conservative assessment of the markets, demand potential, and financial feasibility of the proposed project. Essentially, while every project developer, as well as all of the other parties working on a project, would like to think of themselves as having an unbiased and reasonable view of the potential for a proposed project, experience shows time and again that it is easy for many reasons to overestimate the potential or to mis-position the project, or both. The economics consultant’s role is to help balance the natural enthusiasm brought to the project by the other parties with market realities to ensure financial success.
From left, John Robinett, Linda Cheu and Brian Sands of AECOM summarize their Theme Index Report at the annual TEA Summit Weekend.
JRA: When should clients bring an economic consultant onboard for a project?
Brian Sands: Generally, the time for an economic consultant to start evaluating a project’s potential is relatively early in its development, once the general concept has been determined (at least in outline form) and a specific location (or multiple alternative locations) has been identified. Involvement at this stage provides the opportunity to modify the project in various ways in response to the findings, which might include changes to the concept, location, target visitors, preliminary physical planning, pricing, and the like, and could even affect other key factors, such as the scale, phasing, investment level, land price or lease rate, licensing/branding deal, and management fees. Typically, the economic consultant starts work a few months ahead of the attraction planning/design team, enabling findings from the economic analysis to inform their work.
JRA and AECOM have teamed on over a dozen projects, including Ferrari World Abu Dhabi.
JRA: What questions should they ask you?
Brian Sands: The developers of projects range from relative industry newbies to very experienced developer/operators, but generally they are smart and experienced enough to know what kind of questions to ask. This typically includes questions like the following:
- · What services does your firm offer?
- · How long have you been in the industry?
- · Where does your firm work?
- · What kind of project’s do you analyze?
- · What projects like ours have you recently analyzed?
- · How does your firm approach evaluating a project like ours?
- · Who would likely be working on our project and what are their backgrounds?
- · How long would it take to complete a study for us?
- · What is a ballpark fee to evaluate our project?
- · How quickly can we get a proposal from you?
JRA: What questions do you ask them?
Brian Sands: The exact questions will vary depending on the nature and status of the proposed project as well as the client’s profile, but generally we’d like to know the following before starting to put a proposal together:
- · What is the preliminary concept or alternative concepts for the project?
- · Where is the site and who controls it?
- · Who are the parties involved in the project’s development and operation?
- · What is the preliminary schedule for the project’s development?
- · What studies or other work has been completed to date on the project?
- · What are existing projects in the region and elsewhere that are competitive or comparable with the proposed project?
- · How might the project’s eventual success be measured?
- · What are key potential hindrances to the project’s development and eventual success?
- · What other projects of this type have you developed/operated?
- · By when do you need a proposal?
- · How quickly do you need us to start and finish our study?
So we’ve determined the right questions. Tune in next week as we discover the process for finding feasibility answers.
JRA and AECOM also collaborated on World of Coca-Cola.