Case Studies

Economic Feasibility - Arkansas Arts Center, USA

Challenge

Arkansas Art Center is a non-profit art museum located in the State capital of Arkansas. As part of their strategic plan, the client needed to evaluate the market and financial feasibility of a planned major expansion and redevelopment of their museum school which is one of the nation’s top six.

The Work

The overall approach to the feasibility study needed to address the following objectives:

1. It must build a case for renovating or expanding the Museum School (or not) and demonstrate how this would work.
2. It must answer the question “Is there a market and how much of one?”
3. It needed to identify what the community needs were in relationship to the Museum School offering.
4. It needed to identify how to maximize revenues while still remaining true to AAC’s mission.
5. Create a shared vision for the Museum School project through a facilitated session with members of the task force. In addition and in the same session, assess the strengths, weaknesses, opportunities and threats in order to help build the case.
6. Undertake a feasibility study as detailed below.
   1. Institutional Context – a process identifying how the Museum School fits into the overall context of the museum as well as the needs of the community. In addition, it will identify opportunities for collaboration and partnership. This is done through interviews of potential users and stakeholders.
   2. Market Definition and Analysis - The market areas were defined and demographic characteristics for the resident market were analyzed to provide an indication of support. This included:
      1. Size of market
      2. Population growth and patterns
      3. Age composition
      4. Income distribution
7. Competitive analysis – looking at key factors such as pricing, positioning, hours, programming, etc.
8. Stakeholder Interviews – interviewed key stakeholders in the community such as the Mayor and City Council members to ascertain the reputation and current positioning, obstacles and challenges to the proposed expansion of the museum school.
9. Evaluation of Comparable Museum Schools – selected museum schools were examined in light of key elements such as budgets, financial performance, operating support from private and public sources, curriculum, pricing, hours of operation, etc.
10. Site and Area Evaluation – a site evaluation included factors such as market proximity, access routes, visibility, parking, surrounding development, physical limitations and constraints. This would include sizing parameters in order to meet the need.
11. Program Plan – This identified various programming options that included creative out-of-the-box approaches to maximizing revenues and adding service lines.
12. Space Plan – This will set out how the facility space could be utilized and whether to renovate, expand or plan for new construction.
13. Financial analysis and projections – By analyzing not only the current Museum School budget and actual financial results but also by identifying market potential (in steps 2 - 4 above), projections were forecasted. In the end the client had:
    • Revenue and recommended approaches to maximizing revenues.
    • Operating expenses and recommended approaches to maximize efficiency

Financial estimates for the next 5 years of operations.

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