When calculating finance cost in feasibilities, you have two approaches:
Option 1: Apply a factor (simplified)
- Use an interest factor to approximate the effect of a construction cashflow (S-curve)
Option 2: Use a cashflow forecast (recommended where possible)
- Base interest on an actual projected cashflow
In my experience, the cashflow method is more accurate, especially on larger or more complex developments.
The good part is:
- Buildprax can generate a cashflow forecast very quickly once you input the key project data.