Precisely Wrong Or Roughly Right? An Evaluation Of Development Viability Models

In the UK, the financial viability of real estate development has become increasingly central to planning policy formation and implementation. As the range of users that relies on viability appraisals has widened considerably, viability modelling has become increasingly contested and the composition of viability models has come more detailed scrutiny. Development appraisal techniques are recognised to contain a number of unrealistic and flawed assumptions. Essentially, this paper investigates the extent to which these limitations of development viability models matter. We examine whether model composition in terms of the complexity of information content and choice of development viability approach has significant effects on models outputs. In the first section, viability models are briefly discussed in the wider context of model formation. In the second part, drawing upon a review of the literature, the composition of viability models is critically evaluated and previous research in this area is reviewed. In the empirical section of the paper, simulation techniques are applied to a range of viability models in order to assess the extent to which choice of model affects the output or decision.