Full feasibility study and PPP due diligence

Contents of the full feasibility study

The analysis and information contained in a feasibility study will in general include those listed below. Each of these is a detailed separate section of the toolkit. Sector specific contents of feasibility studies are given in the tools section.

The general contents of a feasibility study include:

• Market analysis and project scope, to assess the need for and appropriate scope of the project, building on the work already done at the strategic planning and pre-feasibility stage. This would include:
  • Needs analysis – does the project meet an end-user need? Does it contribute to meeting the objectives of the sponsoring authority? Who will the users be?
  • Options analysis – what is the best option for meeting the service need: a no-asset solution, existing assets, or new assets?
  • Define the output – what services will the project provide?
  • Estimate and forecast demand – what level of demand is there for the outputs / services from the project, and how much are users willing to pay (what is the value of the demand)?
• Social and environmental feasibility, including the requirements for impact assessments and for the associated mitigations
• Technical feasibility and technical parameters based on the market analysis, including specification of required facilities and scenarios of project size, for use in preliminary project design
• Risk studies and refined PPP mode – Assessment of the risks associated with the project, study of which party is best able to bear each risk, and refinement of the PPP mode selected at the pre-feasibility stage
• Preliminary cost assessment, to within a sufficient ±% range based on the technical specification and assessed project risks
• Financial analysis and due diligence, incorporating a projected revenue structure (eg. Proposed tariff, required annuity) and assessing any need for financial support from the public sector
• Economic feasibility – Assessment of overall net economic benefit of the project, incorporating estimated project benefits and costs including non-market factors such as those from the social and environmental assessment.
• Other PPP due diligence activities, including value-for money analysis if data is available
• Project implementation schedule, including an outline of the proposed PPP procurement and award process through to technical and financial close, an outline of the construction schedule and target operation date, and any phasing that is planned for project extensions or ongoing development.