The initial business plan is a document indicating the overall economic viability of the Project using various standard assumptions of cost and revenue. This is carried out after the Master plan and block planning is completed, such that the indicative area statement of the intended Project is available as the base. The Commercial department shall take the lead in preparing the initial business plan in consultation with the Finance Department.
Rule 6.12
Following best shall be adopted for finalisation of business plan (Rule 6.12)
- The initial business plan or business funding plan shall establish the project's overall viability and mechanism/means to fund the Development Plan activities till the financial closure is achieved.
- Business funding plan (Part of stage A) which is made based on agreed PDG should include initial funding requirements for all the activities from the start of the Development Plan till financial closure is achieved. Towards this, a template of the business plan budget for development plan shall be created based on CDD inputs and made available in the Data repository of the ERP.
- The initial business plan should evaluate and present phasing of the project as possible scenarios such as what is the impact on cashflow for doing only landowner’s buildings as phase 1.
- Since the funds required for Development activities should be made available prior to financial closure, the same should be made available without any conditions or condition precedent, and preferably from Equity.
- The above funding plan shall more specifically include funding availability towards GC on boarding (NSC vendor identification and finalisation), Slipform and structural steel vendor (shop drawings for slipform and structural steel) apart from excavation, consultants, approvals, marketing materials and other preconstruction works.
- Based on approved Budget (Stage B), business funding plan shall be re-aligned and adjusted in accordance with the approved Budget (based on design concluded)
- For the interim period, the Commercial department shall prepare the above plan in consultation with the finance department and CDD.
Rule 6.13
The following process shall be adopted for finalisation of business plan (Rule 6.13)
The business plan shall be prepared in 2 stages.
- On conclusion of the Master plan and block plan, the CDD shall share a copy of the same with the finance department.
- The Pre-contract Team shall present the base budget of the Project using standard co-efficient and standard rates (Refer Budget section). Based on the block plans and master plan, CDD team should be able to provide the coefficients.
- Use the standard norms of project cost, financing and operational assumptions to arrive at a macro level financial projections and economic viability of the Project (Stage 1 business plan)
- The financial projection shall include all the costs to be incurred/spent up to the completion of the Development plan funding, including the availability of funding towards GC, slipform and structural steel vendor for pre-construction works (NSC vendor identification for GC and shop drawings for slipform and structural steel contractor), consultants payments, survey cost, site barricading, soil investigation cost, cost of approvals, cost of various studies, site excavation etc.
- On the closure of design and conclusion of tender packages and project budget by the CDD (i.e. Closure of Gateway), a copy of the same shall be shared with the Commercial Team to update the Business plan with the more realistic quantum of works and actual Budget.
- The Business Development team shall provide necessary inputs to the Commercial team about the likely leasing timeline, assumptions towards potential rental income and other costs/revenue connected to the leasing. Similarly, the Approvals, Facility management and other functional departments shall provide their inputs (on request) about the cost and revenue assumptions concerning their department.
- Budget needs to include proper estimates for basic price increases and an agreed contingency percentage to handle variations.
- The Commercial team at this stage shall recast the business plan (Stage 2 Business Plan)
- The business plan finalized in stage 2 becomes the basis of financial closure, including quantum of Equity to be brought.
- The Business Plan shall be supplemented with a Lenders Budget and documentary evidences for the cost basis with in 90 days of closure of the Gateway. This shall be done post evaluation of the BOQs by the Pre-contract team such that there are no gaps in the quantum of work as assessed by the Consultants and as assessed by the Pre-contract team. The assessment work to be completed by the Pre-contract Team with in 60 days of closure of gateway without waiting for any instructions.
- The stage 2 business plan shall be used as the benchmark for all the future evaluations concerning the Project.
- The Commercial Team with help of the Finance team shall present the stage 1 and stage 2 business plan to the board's executive committee and seek their formal approval.
- The executive committee's formal approval of stage 1 Business plan is essential to move forward on the Development plan's remaining tasks. Similarly, the stage 2 Business plan too needs to be approved with suitable suggestions/recommendations of the executive committee before proceeding further on the Project.
- The Business plan of stage 1 and stage 2 shall be kept only with the Finance team and Executive committee and will not be uploaded in Data repository of ERP.
- The Finance Department shall take suitable actions concerning the availability of cash flow for all the Development Plan activities, sooner the Executive Committee approves the Business plan.
The completion of the above tasks represents the completion of Stage A of the Development plan. Tasks such as AAI approval, Master planning & Block planning, JDA, Core detailing and concept completion have not been considered for process detailing for now, as they are technical in nature.
Now we shall dwell upon the tasks under Stage B of the Development Plan.
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