It is the number clients reach for first and the measure most likely to be excluded. Both facts have the same cause.
Start a conversation with Cournot, the Institute’s damages concierge, already scoped to lost profit on an unbuilt project. Pick a starting point, or describe the dispute directly.
Of all the measures in this area, development profit on an unbuilt project is the one clients name first and the one experts approach most carefully, and the reason is the same in both cases: it is the biggest number and it rests entirely on a chain of projections about a business that never existed. Consider what has to be established. That the project would have been approved, in the form assumed, rather than in a reduced or conditioned form. That financing was actually available on the terms the model assumes, from a lender who would in fact have lent, at a moment in the credit cycle that is now known rather than forecast. That construction would have completed on the assumed schedule and within the assumed budget, in a market where neither is reliable. That the completed units would have sold or leased at the assumed prices, absorbed at the assumed pace, into the market as it actually turned out rather than as it was projected to turn out. And that the developer would have executed all of it, which is a claim about capability as much as about economics. Every one of those links is a place for the speculative profit objection to land, and courts in many jurisdictions treat unbuilt-project profits with particular caution for exactly that reason. None of which makes the measure unavailable. It makes it evidence-hungry. A developer with a documented track record of comparable completed projects, a committed financing term sheet rather than an indication, pre-sales or pre-leases with real counterparties, and a design far enough advanced to be costed reliably stands in a fundamentally different position from an applicant with a concept and a proforma, and the analysis should say plainly which of those two the claimant is. The discipline that separates a survivable opinion from an excluded one is refusing to project past the evidence: modelling what the record supports, showing the sensitivity of the result to the assumptions that carry it, and conceding openly where a link is thin. It is also why this measure should rarely be the only one in the case. The carrying costs and escalation claim is documented and comparatively robust, and a matter that leads with it and reaches for profit second is in a stronger position than one which stakes everything on the projection.
Each link is a projection, and each is a place to be excluded.
That the project would have been approved in the form modelled, not a reduced or conditioned version of it.
That a lender would in fact have lent, on terms evidenced rather than assumed, at that point in the cycle.
That construction would have completed when and for what the model says, in a market where neither is dependable.
That finished units would have sold or leased at the assumed prices and pace, into the market as it turned out.
That this developer would have executed this project. A claim about track record, not only about economics.
For hold products, the terminal value and cap rate; for sale products, the sales pace and price curve.
How the Institute approaches a development profit question.
The largest number in the case and the most exposed.
A developer proforma prepared to raise money is an argument about the best case, and one prepared after the dispute began is an argument about the claim. Neither is the same as evidence that the project would have been approved, financed, built and absorbed as modelled. The most useful document in these cases is almost always the pre-dispute one nobody wrote for the litigation.
When the links are evidenced rather than assumed, and the honest answer is that this is a minority of cases. The strong profile has several features together: a developer with completed comparable projects in the same market, so capability is a matter of record rather than assertion; financing evidenced by a term sheet or a lender relationship rather than a general statement that money was available; a design advanced enough that construction cost is a real estimate rather than a per-square-foot rule of thumb; and demand evidence with counterparties attached, pre-sales, pre-leases, a letter of intent from a real tenant. Where several of those are present the projection is doing much less work than it appears to. Where none is, the claim is a proforma with a lawyer attached, and it should be assessed as one, because the opposing expert certainly will.
Presenting revenue rather than profit, and it is remarkable how often it survives into a self-prepared estimate. A gross revenue figure, whether monthly or in total, ignores every cost that would have been incurred to earn it: construction, financing, marketing, sales commissions, taxes, insurance, and the carrying costs of the units before they were absorbed. The corrected figure is frequently a fraction of the headline. A close second is applying an income capitalization approach with cap rates and rent comps to product that was going to be sold rather than held, which values a perpetual income stream that was never going to exist in that form. Both defects are visible in the first ten minutes of a competent review, and both damage the credibility of everything else in the opinion, including components that were sound.
The economics change materially and usually favourably for tractability, because the counterfactual is no longer a project that never existed but the same project on a different clock. Where the project was ultimately approved and built, the analysis can compare the actual outcome against the outcome on the earlier schedule, which converts a pure projection into a comparison with one real leg. The components then become the escalation in construction cost between the two periods, the difference in the financing environment, the difference in the market the units were absorbed into, and the time value of the deferred profit rather than the whole of it. That last point is worth stating plainly, because it is often missed on both sides: where a project is merely delayed rather than prevented, the profit was frequently not lost but deferred, and the measure is the cost of the deferral, not the profit itself.
A development economist or a real estate economist with underwriting experience, rather than a general forensic accountant, and often working alongside a construction cost estimator and an appraiser. The questions are about how projects actually get capitalized, phased, built and absorbed, which is domain knowledge that does not transfer from general commercial damages work: an expert who has never underwritten a deal will struggle under cross on absorption assumptions, on the difference between a term sheet and an indication, and on what a lender would actually have required. Where the matter also involves a takings measure, an appraiser is doing the property valuation work, and where it involves construction escalation, a cost estimator is doing that. Assembling those into one coherent damages opinion, without double counting between them, is itself a distinct skill and the reason these matters usually need a team rather than a single name.
Describe the project, the record behind it, and where it stopped. The Institute will help you see which links the evidence actually carries.