Developer Calculation

Definition: What is a Developer's Calculation?

The Developer Calculation is a central instrument in project development, used for the simplified assessment of the economic viability of a construction or real estate project. It enables project developers to evaluate economic success at any time based on relevant key figures. At its core, it involves precisely determining the expected profit in relation to the required investment, as well as its impact on the overall project portfolio.

Significance of Developer Costing

For project developers and property developers, developer cost estimates are essential for assessing the viability, profitability, and progress of projects at an early stage. They ensure transparency in documentation and serve as a key basis for decision-making for investors, banks, and internal stakeholders. Benefits include:

• Early Profitability Assessment: Even in early project phases, it becomes clear whether a project is worthwhile and how construction progress and costs impact the outcome.
• Investment Security: Reliable key figures and transparent accounting reduce the risk of misinvestments.
• Comparability: Projects can be compared using standardized calculations and templates.
• Communication and Reporting: Clear key performance indicators and structured monitoring facilitate discussions with financiers, investors, and tenants.

Typical Contents of a Developer's Calculation

A developer's calculation encompasses various economic parameters, cost types, and assumptions that are crucial for evaluation:

• Total Investment Costs: Land, construction costs, ancillary construction costs, development costs, and other cost categories.
• Revenue Streams: Sales revenues, rental income, subsidies, and other income
• Financing Structure: Equity, debt capital, interest, and their impact on liquidity.
• Key Figures and KPIs: Profit, Return, Net Present Value, Internal Rate of Return (IRR), as well as Cash Flow and Contribution Margin Analyses

Application Examples in the Real Estate and Construction Industry

• Project Evaluation: Assessment of whether a project idea is profitable and should be realized, based on a thorough calculation.
• Financing Negotiations: A foundation for discussions with banks, investors, and tenants, enabled by transparent calculation and documentation.
• Project Control: Ongoing monitoring of construction progress, costs, and revenues to ensure balance between planning and implementation.
• Scenario Comparison: Simulation of various market, cost, and financing developments using templates and workflows.

Related Terms

• Economic Viability Calculation
• Investment Appraisal
• Project Costing
• Profitability Analysis
• Project Controlling

Developer Calculation in PROBIS

In PROBIS, the developer calculation is integrated into the calculate module. This module offers:

• Automated Calculations: Rapid and precise determination of relevant key figures and KPIs.
• Scenario Analyses: Comparison of alternative project progressions for risk minimization and improved monitoring.
• Real-time data: Continuous updates based on current construction progress, costs, and revenues.
• Transparent Reports: Clear presentation for project developers, banks, investors, and tenants for informed decision-making.

Thus, the developer calculation in PROBIS becomes an indispensable tool for reliably evaluating projects and making informed decisions.

Conclusion: What is a Developer Calculation?

The developer's calculation is the central basis for assessing the economic viability and profitability of real estate and construction projects. It illustrates expected profits relative to investment, considers the impact of construction progress and financing, and provides project developers and building owners with certainty in planning, cost control, financing, and implementation. With the 'calculate' module, PROBIS provides a powerful tool that offers precise, transparent, and efficient support.