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The paper describes the development and application of physical-financialmodelling techniques to the analysis of relations between development design –covering the broad characteristics of a scheme, such as land use mix, developmentdensity and built form – and financial viability. It is divided into two parts

gross floor space is calculated for: each building or part building by use and each type of site treatment. From these data are generated various summary measures, such as site area (using the definition specified in PPS3 Housing), site coverage (%), development density (m2/ha) and floor area ratio (FAR) or plot ratio. Automated manipulation of these data allows them to be input into the land cost, construction cost and valuation sheets, as appropriate.

Cost and value information is automatically generated through the creation of a vba script that cross-references the SketchUp assigned site treatments and buildings/floors/uses to underlying databases. The latter's contents are determined by data availability and cost and by the research or application context. Currently, for example, unit building costs are derived from the BCIS cost database (Q4, 2009, adjusted for Yorkshire and the Humber) and landscaping costs from SPON, while secondary data on residential and commercial prices, rents and yields have been obtained from the Nationwide Building Society, CB Richard Ellis and IPD. These data have been augmented by analyses of local comparables and consultations with Sheffield City Council, local quantity surveyors and a panel of Sheffield property agents. There is also the potential to use probabilistic modelling to generate ranges of costs and values.

The financial analysis of the design is undertaken in three stages. First, a basic representation of the scheme is developed in SketchUp. This covers built form: building use, massing and positioning and amounts and treatment of open space. Next, SketchUp calculates the areas of the various elements (as described above) and transfers them to the spreadsheet via the plug-in. Then the spreadsheet undertakes the financial appraisal and provides an analysis of the financial structure of the development, including three measures of return (developers profit as a % of cost, IRR and NPV) or the development value of the site.

Once set up in this way, the financial implications of significant changes to the design can be assessed quickly and easily. Using facilities in SketchUp, building footprints, heights and positions, and open space areas and treatments may be altered. New financial appraisals are generated almost instantaneously. The extent of the design changes that may be analysed is inversely related to the level of detail to which the scheme is rendered in SketchUp. When changes become too substantial to model with the required accuracy, a new representation that incorporates such changes must be developed for financial analysis.

The next section of the paper considers the ways in which physical-financial modelling may be used to explore the relationship between development design and financial viability.

The Application of Physical-financial Modelling

Theory, Analysis and Policy

"Urban design objectives […] can only have any impact if they are translated into fact through the development process." (Syms, 2002, page 235)