Due Diligence: The Financial Foundation

A strong and stable financial foundation is essential for a new building or major renovation project, particularly if you expect a reasonable return on investment. To get started, answer three questions: (1) Have we truly done our due diligence? (2) Do we have a strategy in place to challenge high costs through a combination of best practices and creative innovation? And (3), Can we maximize revenues to the degree necessary to overcome high construction and operation costs?

These fundamental considerations are illustrated in the “Financial Pyramid” at right. Loosely based on the pyramid found on the backside of the dollar bill, the pyramid denotes stability and points toward financial success (the dollar sign replacing the greenback’s Eye of Providence). The pyramid’s left side is built upon effective planning or due diligence—a foundational construction phase that incorporates research, programming, planning, and preliminary budgeting. The pyramid’s right side is about managing costs.