www.pppinindia.gov.inPPP TOOLKIT
PPP TOOLKIT for Improving PPP
Decision-Making Processes

Sector: State Highway  |  Module 2: Work through the PPP process

Full feasibility study and PPP due diligence

For projects that have internal clearance for further evaluation as PPPs the next, more detailed, stage of analysis incorporates a full feasibility study and PPP due diligence.

The purpose of the feasibility study is to investigate in detail whether the project is a desirable, viable and achievable investment. The ‘full’ feasibility study will expand on the preliminary scoping in the Pre-Feasibility Report to enable a more thorough assessment of project costs, benefits and risks, and further refine its development as a PPP.

The feasibility study will assess and describe the technical, social, environmental, legal, financial, economic and risk characteristics of the project and produce a project implementation schedule. It will also specify the particular PPP mode for the project.

The actual contents of the feasibility study will depend on the type of potential PPP project under analysis. A more comprehensive analysis is required for capex projects, in which design, planning and construction are major components.

The FSR will provide crucial information for the drafting of key project documents, including the RFP. It will also help with the evaluation of bids if the project continues to the PPP procurement phase. The aim at that stage is to help the public sector sponsor to negotiate and sign a PPP contract with confidence.

Several aspects of the project must be considered specifically from a PPP point of view. A PPP due diligence analysis of the project should be carried out as part of the feasibility study.

Due diligence simply means taking the full level of care to be sure the project has been well developed and planned. Of course, this level of care should be applied to all parts of the PPP process. However there are several stages where particular PPP due diligence activities need to happen, specifically:

  • Risk analysis and risk allocation, which contributes to the detailed specification of the PPP mode
  • Financial viability, which includes the essential financial assessments of the selected PPP mode and of the conditions under which the project can be financially successful
  • Value-for-money analysis, using quantitative evidence if available
  • Checks that the project has been well prepared through the PPP development process and is ready for the in-principle clearance process

This toolkit includes tools developed to help with PPP due diligence. These tools include:

Case study example
The Vadodara Halol Toll Road project case study provides examples of the difficulties that can be encountered when sufficient due diligence analysis of the project risks is not carried out.

The output of the feasibility study is a Feasibility Study Report (FSR). The FSR is the ‘business case’ that will support the application for in-principle clearance for the PPP to proceed to procurement. It should contain all the information that the approving authority needs to make its decision.

The Sponsoring Authority will in most cases engage specialist advisors to conduct a feasibility study. See Guidance on Use of Advisors.

Standard tables of contents for feasibility study TORs are available in the document templates section of this toolkit and are also produced by the Central PPP Cell and many State Cells.


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