Land selection is of prime importance for embarking upon any activity. It is an indispensable resource required for conducting any activity. Objectively speaking any piece or parcel of land under consideration for any proposed or finalized project can be referred to as site. Although, broadly speaking site can be referred to some area in sea or glacier as well. However, we will analyze some very important factors that go into consideration for the selection of land. It is to be noted that our preference for these factors of selection will vary with respect to the nature of the project to be undertaken. For example, an upcoming school project will give preference for a cleaner environment, drainage, transportation facility, water availability, nearness to the city, etc. At the same time, a petroleum refinery will be situated as away as possible from the city, labour availability, water facility, etc.
Let’s get acquainted with these in a very simple language-
- Market for end-user– This is to ascertain the forces of demand and supply for the product or service. It must be properly researched whether or not our products and/or services to be offered in the selected area at the site under consideration will find reasonable profit-making demand or not. If the research bends more towards the cons then it is ideal better not to take the risk.
- Accessibility- In a very simple term, it means if the prospective site is easily accessible to the targeted segment of the market. If there are no proper roads, public transport facilities, example- buses, cabs, metro, etc. then obviously our proposal may find a dead end. On the contrary, if the site is properly connected and accessible it will bolster the supply of products and services.
- Competition in the market- It must be borne in mind, there are various internal and external factors that govern the functioning of a market. The most pertinent of them all is PRICE. Thus, it becomes imperative to study the level of competition in the area for the prospective product or service. Even if we are eyeing upon a land for building up our own sweet abode, we have to be vigilant enough to access the value and demand for similar properties. We must analyze our opportunity costs and scrutinize strengths and weaknesses of both ourselves and competitors and then only proceed ahead for a better decision making.
- Cost of Land- This is somewhat related to the above factor. But since it involves maximum investment, it has been considered altogether as an independent factor. It takes a lot of efforts and hard work to earn money. Therefore, once that hard-earned money is invested, we tend to lose some proportion of our liquidity. Land of course is a capital-intensive resource. Its fair value must be assessed and only then a decision should be taken for sealing the deal as per our budget’s scope.
- Power availability- Electrical power supply has become an inevitable means for sustenance of any form of settlement- residential, commercial, industrial, etc. Our electrical load i.e., amount of electrical power required for the running of daily electrical appliances, any machinery, etc. must be calculated. This requirement must be compared with the supply. Also, the source of power supply, its cost and duration of supply should be recorded. Example- A town named Saidpur, Ghazipur in Uttar Pradesh barely receives 15 hours of electrical power supply. It won’t be a good idea to purchase a DG and burn cash to keep it running in the absence of electrical supply.
- Frontage- This is primarily the boundary between the plot/ site and the road onto which the site abuts. Its utility and its preference for its utility depends from project to project. Having a frontage for shops is ideal to allow for some temporary parking space which can help attract and hold some more customers.
- Topography- Study of the topography of the area in which the prospective site is situated is a very much recommended advice. It entails the study of both natural and man-made features on the land, such as- hills, valleys, water-bodies, roads, bridges, parks, wetlands, etc. It helps us with information regarding the viability of the site with respect to our utility, supply and demand of any product or service. Example- A site situated on a mountainous region of Kodaikanal can be ideal for setting up of a resort or a hotel. A site in the centre of a city will be ideal for opening up of a banquet and conference centre.
- Water Supply- Just like electricity, water is a must. Water is needed for construction, for conducting any industrial activity and for human sustenance. The source of water- submersible, municipal supply must be ascertained. Moreover, the potability of water should also be tested by checking its- TDS, alkalinity and E.Coli count. Water must be fit for human consumption. A lot of capital investment goes into setting up of a borewell and subsequent installation of RO plants. If there are any issues with water availability, it is better to drop the site.
- Drainage- Site drainage is a very perspective before finalizing any site. It is the removal of both surface and sub-surface water either by artificial or natural means. It is studied in depth for a prospective site for- development of a golf course/ refinery/ water amusement park, etc. Any form of water stagnation will ultimately result in a catastrophe both economically and hygienically.
- Government policies and subsidies- Government acts as a watchdog to regulate the market forces of demand and supply operating in the market. It tries its best to act in the best interest of its citizens. Thus, there are several schemes- taxation, rebate, subsidy, loan, etc. under implementation or under the prospect of implementation by various government organization. It is imperative to get a track of all those and study their pros and cons for better evaluation of the site. Example- Uttar Pradesh government is now working out towards land allotment in its state for setting up of manufacturing units of various companies to alleviate the economic slowdown owing to lock down and take advantage of company’s prospects of leaving China.
- Impact of neighbouring areas– A well behaved and cooperative neighbour is a blessing in disguise. It helps establish a symbiotic relationship between the two parties. In pure economical terms, the two neighbours must either be a substitute or a complement of each other. Again, the same will come into force to enable an entity to decide what best use can be made of the site under consideration. Example- it will be an added advantage to set up a RO water plant in Kalindi Kunj on the selected land as there is no availability of potable drinking water, the demand for which is very high. Likewise, the yellow line of metro in New Delhi was to be diverted from Mehrauli to preserve the famous Qutub Minar.
- Raw material availability- A detailed analysis must be done with respect to the availability of raw materials for the business concerned. It must not happen that after launching the project the execution is getting doomed because of delay or unavailability of suitable raw materials. Example- A restaurant must ascertain the timely availability of clean and fresh edibles. Even though, the source of supply might be located far but the means of supply i.e., the transportation system must be robust enough to take care of the same.
- Manpower availability- No activity can be sustained without any human effort. Human resource at all the levels of management- top, medium and bottom is essential for conducting any activity. We must consider the factors affecting their availability, skill sets required and compensation rate for harnessing their skills. Example- Gurgaon is a home to a huge number of- carpenters, masons, electricians and plumbers that migrated from Bihar and Orissa. Local population of Gurgaon is both insufficient and incompatible with respect to the skills required for a- carpenter, mason, electrician, plumber, etc.
A comparative analysis for the same has been shown above for two sites. Here each of the factors has been given a weightage out of 100. Each factor has been rated out of 10. Product of weightage and rating awarded is the score scored by that particular site. Please note, the weightage is subject to the type of project under consideration and is decided in consultation with team members both on the ground and off ground. Here Site 1 scores 700 points as compared to Site 2 that scored 623 points.
There might be many other technical and managerial factors that come into deciding the prospectus of site selection. But, the same is again dependent upon the type of project we are dealing with.