How do you calculate true development profit?

True development profit is the sale proceeds from the project minus every project-level cost required to create and sell it. That usually includes land, hard construction costs, soft costs, financing fees, interest carry, insurance, taxes, sales costs, and closing costs. The calculation is only useful when the same cost categories are included every time.

A project can look profitable before financing, carry, concessions, or closing costs are included.

Using the same definition across projects helps builders see which projects actually produced margin and which only looked strong during underwriting.

If a project sells for $1,250,000 and the net project cost is $1,125,000 after land, construction, soft costs, financing, carry, and sale costs, the project profit is $125,000.

If the same project took 20 months instead of 14, the profit may still be positive, but the return on time and cash may be materially weaker.

Illustrative numbers only. Not Bivvit benchmark data.

• Whether land basis is included at cost or another internal value.
• Whether financing cost includes fees, interest, extensions, and unused-line charges.
• Whether sales concessions and closing costs are captured separately or netted against revenue.
• Whether the project includes multiple units with different sale dates.

Bivvit separates land, hard costs, soft costs, financing, carry, sales, and timing before calculating profit.

When a document is missing, Bivvit states what cannot be supported instead of filling the gap with an assumed number.

• Financing carry
• Completed-project review
• Budget variance