Business case

Business case

One of the tools used by economists to facilitate the preparation of a robust urban plan is the business case. A business case can also be an integrated part of a:

• Social cost-benefit analysis or
• Economic impact study.

A spatial development will not only lead to revenues (exploitation benefits, etc.), but also to investment costs. Costs to prevent future damage or destruction, theft, etc. are summarized by the term ˜economic impacts of security measures".

Definitions

A business case captures the reasoning for initiating a project; it estimates the revenues and costs for the public authorities and identifies changes in demands for government utilities and services resulting from the project development. The core of a business case is the "supporting report", which contains detailed information about the various aspects (costs and revenues) of the planned urban object.

Types of revenues of a development project

Another important goal of a business case is to estimate the project-specific investment revenues of the urban development project. Also these revenues depend on many factors and consists of many different categories.

Types of costs of a development project

One of the most important goals of a business case is to estimate the project-specific investment costs of the urban development project. These costs depend on many factors and consists of many different categories. In general, the most important cost factors are labour costs and material costs. Other important cost factors are: overhead costs, maintenance costs, legal fees, administrative costs, et cetera. Project-specific investment costs are not only influenced by the size of the spatial development, but also by the economies/diseconomies of scale and the length of the construction period, and hence, the exposure to economic uncertainties (changing interest rates, inflation, et cetera). Furthermore, the investment costs are influenced through the relative cost and supply of labour and materials.

Security costs

Damage to or destruction of an urban object can be prevented with the help of security measures in the urban object design (see above).

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