Project reviews
Review of a Completed Project: Which Metrics to Look At After Exit
After exit you look at the result, plan against actual and the causes of deviations. Two DNPI projects show part of the metrics, and the missing part cannot be filled in. A worked example.
After exiting a project, four groups of metrics are counted: the result after all costs, plan against actual for price, budget and timeline, the causes of deviations, and what changes in the rules for the next project. The published figures of two completed DNPI projects, Sitges and Compte de Urgel, show only part of these metrics: the purchase, the cost of permits or renovation, the sale and the difference before other costs. The rest has to be requested in the project report.
Which metrics to count after exit
| Group | Metrics | What is needed for the calculation |
|---|---|---|
| Result | Sale minus all costs, before tax and after tax | The full list of costs: purchase, taxes and closing, renovation, permits, holding, financing, commission, exit taxes |
| Plan and actual | Purchase price, budget, sale price, timeline: deviation in € and in % | The calculation made before entry |
| Causes | What produced the deviation: price, budget, timeline, taxes | Minutes, records, correspondence on changes |
| Rules | Which criteria or reserves need to change | Comparison with the stop criteria and the contingency reserve |
More on what a report to an investor should show in the article on the project report.
What the two DNPI projects show
Figures from the published cases Sitges and Compte de Urgel:
| Indicator | Sitges (plot) | Compte de Urgel (apartment) |
|---|---|---|
| Purchase | 509,250 € | 410,000 € |
| Project costs | 20,000 € permits and licences | 76,230 € renovation |
| Sale | 760,000 € with a licence | 720,000 € |
| Difference before other costs | 230,750 € | 233,770 € |
| Timeline | 2 years | not stated in the published figures |
| Project costs to purchase price | 3.9% | 18.6% |
The difference here means the sale minus the purchase and the stated costs. Taxes, financing, closing and other costs are not included in it; it is not net profit and not the investor's return. Past results do not guarantee future ones. Details on each project are in the reviews of Sitges and Compte de Urgel.
The last row of the table shows the cost structure: at Sitges permits were a small share of the plot price, at Compte de Urgel the renovation was noticeably larger. This reflects the different character of the projects, not an assessment of efficiency.
What cannot be said from these figures
The investor's return cannot be calculated: there are no taxes, financing, closing or contract terms. The speed of the projects cannot be compared: the timeline is known only for Sitges. Deviation from plan cannot be judged: the publication has no planned figures, and I will not reconstruct them. The result cannot be carried over to the next project: the market, the property and the tax regime are different.
A good review answers four questions: what came out better than planned, what worse, why, and what to do differently. Without a plan from before entry the first two cannot be answered, so the calculation is kept from before the project starts.
How to carry out a review: a worked example
A worked example, not a DNPI project and not a forecast. An apartment is bought for 500,000 €, renovation 60,000 €, sold for 700,000 €. The difference before other costs is 140,000 €. Now the remaining lines (assumptions): ITP 10% of the purchase price, that is 50,000 € (the rate for an amount up to 600,000 € on the ATC scale), notary, registry and gestoría (administrative agent) 10,000 €, holding for 18 months at 1,200 € (21,600 €), a sales commission of 3% (21,000 €).
| Line | € |
|---|---|
| Difference before other costs | 140,000 |
| ITP | −50,000 |
| Closing | −10,000 |
| Holding | −21,600 |
| Commission | −21,000 |
| Result before capital gains tax | 37,400 |
About 73% of the difference went on other costs, and capital gains tax and financing are not yet counted in the table. So in a review you read the full table of costs first, and the result after. The tax side of the exit is checked with an asesor fiscal (tax adviser); a tax map is on the page on the foreign investor's taxes.
How this relates to DNPI's terms
DNPI's fee is 50% of the project's profit, and a top-up out of that fee is paid if the investor's return for the whole project after the fee is below the contractual 10%. It is not a guarantee of capital, and the calculation basis and limits are written in the contract for the particular project. For a review, ask which costs count in the contract's "project profit" and in what form you will receive the final report. The investor has access to a digital cabinet with the budget and the status of works.
Who it does not suit: someone who expects a verdict of "which is better" from a review. Two projects of different nature show a method, not a ranking. The methodology for calculating return is described on the page on the methodology.
Questions and answers
Which metrics should I look at after a property project is completed?
The result after all costs, the deviation from plan for price, budget and timeline, the causes of deviations, and changes in the rules for the next project.
Can return be calculated from the Sitges and Compte de Urgel figures?
No. The difference before other costs is published. Taxes, financing and closing are not included in it, so it is not the investor's return.
Why is the difference between sale and purchase not equal to profit?
Because you have to subtract the purchase tax, closing, holding, financing, the commission and exit taxes. In the worked example above this took about 73% of the difference.
When should a project review be done?
Right after exit, while documents and correspondence are at hand. The calculation from before entry is kept so there is something to compare with.
