Kill the project
I had a finished design project in hand. Nikita delivered it on time, I paid for it — two months of work and several tens of thousands of dollars. The project went in the bin. All of it.
Throwing away something finished, paid for and workable turned out to be a very hard decision. Everything inside me resisted; I felt sorry for the money and the time. And there was fear, the most honest kind: the new project means a big hotel and big capital expenditure, a more aggressive sales plan. Much bigger investment. I was fighting with myself😳
What was wrong:
Besides the bigger risk of a bigger building, there was one more downside, which at the start had seemed like a core idea: I wanted every room to have at least a partial ocean view. That won't happen now😒
My model includes fairly large operating and admin expenses, and with a bigger building they get spread much thinner per square metre, which will have a very positive effect on the financial model.
A big hotel means big upfront capex and a different scale of financing. On the other hand, big money is easier to raise.
The most expensive thing in a project isn't the money you've already spent. The most expensive thing is the decisions that money stops you from making. Everything that went into the finished project is a sunk cost, and it shouldn't factor into calculations about the future. Knowing that in theory is easy. Throwing away a folder with a paid-for project is hard.
Could you throw away something finished and paid for, for an option that's better on the numbers but scarier on risk?
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Throwing away something finished, paid for and workable turned out to be a very hard decision. Everything inside me resisted; I felt sorry for the money and the time. And there was fear, the most honest kind: the new project means a big hotel and big capital expenditure, a more aggressive sales plan. Much bigger investment. I was fighting with myself😳
What was wrong:
1. Under the PPC, 24,000 m² can be built on the plot; I had about 7,000 m². I know developers usually squeeze the maximum out of the permits they get. I was really worried about this.
2. Parking was eating up land. I planned to turn it into a public space after completion, but I drove around other developers' projects and realised nobody had done that
3. Not two small common areas — at ground level and on the roof — but one big one on the roof. One strong public space beats two weak ones.
4. The sea view only opens up from the 4th floor. So the rooms need to be pushed up, above that mark.
Besides the bigger risk of a bigger building, there was one more downside, which at the start had seemed like a core idea: I wanted every room to have at least a partial ocean view. That won't happen now😒
My model includes fairly large operating and admin expenses, and with a bigger building they get spread much thinner per square metre, which will have a very positive effect on the financial model.
A big hotel means big upfront capex and a different scale of financing. On the other hand, big money is easier to raise.
The most expensive thing in a project isn't the money you've already spent. The most expensive thing is the decisions that money stops you from making. Everything that went into the finished project is a sunk cost, and it shouldn't factor into calculations about the future. Knowing that in theory is easy. Throwing away a folder with a paid-for project is hard.
Could you throw away something finished and paid for, for an option that's better on the numbers but scarier on risk?