d. Assess deliverability, viability and risks

[Planning authorities] Deliverability of Plans and Policies

  • Sound infrastructure delivery planning
  • Having no regulatory or national planning barriers to delivery
  • Delivery partners who are signed up to it
  • Coherence with the strategies of neighbouring authorities

Supplementing PPS12, the Planning Inspectorate published guidance to local planning authorities providing key questions to consider in relation to assessing whether development plans are deliverable, including:

  • Are the objectives specific to the place; as opposed to being general and applicable to anywhere?
  • Is there a direct relationship between the identified issues and the objectives? Does it explain how its key policy objectives will be achieved?
  • Have the infrastructure implications of the strategy/policies clearly been identified?
  • Are the delivery mechanisms and timescales for implementation of the policies clearly identified?
  • Is it clear who is going to deliver the required infrastructure and does the timing of the provision complement the timescale of the strategy/policies?

[Planning authorities] Financial Appraisal of Policies

This task relates to the formulation of planning obligations policies for contributions to infrastructure such as public arts and public libraries.  
This includes assessing the likely impact on development viability which is particularly relevant in the current market conditions.   

In order to ensure that the expected level of developer contributions is reasonable, the following factors should be taken into account:

  • the financial impact of planning policy on development,
  • spare capacity in local services and infrastructure, and
  • availability of other funding sources.

Example: Greater London Authority Affordable Housing Development Control Toolkit
The Affordable Housing Development Control Toolkit computer model is designed to assist in appraising the viability of residential development schemes in relation to the Mayor's objective for provision of affordable housing. The 2008/09 version has been updated to reflect changes to house prices, development costs, targets and Intermediate rents. A similar approach can be adapted to other planning obligations policies for cultural and sport contributions. Click here to access information on the model.

[Developers] Project Viability

The Financial Appraisal and Project Viability paper of the HCA-ATLAS Guide provides an excellent source for guidance, which recognises which different financial appraisal tools are used and needed at different stages of the development process, and by different stakeholders.

There is no fixed list of contents for a viability assessment, but its scale should be appropriate to the nature of the proposed scheme. It should confirm a need for the scheme and if it will be financially viable. It should also consider whether the scheme would be able to meet the full requirements for planning obligations normally required by the local planning authority. As part of the assessment, developers may use a variety of methods to determine project viability, including the discounted cash flow method.

Undertaking a viability study should include the following information to make the best case for a project:

  • the vision: exactly what the project is and how it will develop,
  • market and demand assessment: what competition exists already, who will use the facility, where they will come from,
  • development of options, and
  • recommended business case: the capital needs, design solution and funding solution.

Example: Viability assessment contents list
Click here to access a sample contents list for a development viability assessment.

Risk Management

This action should be integrated within the viability study and involve:

  • identifying and assessing risks,
  • knowing the risk appetite, that is the amount of risk that someone is prepared to accept, tolerate, or be exposed to at any point in time,
  • assigning ownership,
  • taking actions to mitigate or anticipate them, and
  • mechanisms to monitor and review progress.

Example: Planning Advisory Service, Red, Amber and Green indicators approach
The Red, Amber and Green indicators approach rates the degree of risk for each stage of a project. This assessment should include the level and likelihood of risk; its impact on the project; and possible contingencies or mitigation measures. It is important with this approach to ask who owns the risk e.g. is it internal, or is it external?

Example: Downham Health and Leisure Centre, Lewisham  
The project is a community health, leisure and well-being facility delivered and financed through private finance initiative. As part of the evaluation of the project, a number of risk factors were identified in hindsight. The lesson learnt is that these factors need to be identified and mitigated in the project planning processes, as advocated by this guidance. Click here to access more information on the case study.

More case studies are available in the Joint Facility Provision section of the toolkit.