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PPP TOOLKIT for Improving PPP
Decision-Making Processes
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Sector: State Highway  |  Module 2: Work through the PPP process

Pre-feasibility checks and analysis

Pre-feasibility analysis is a necessary stage in the evaluation of a PPP project. This toolkit starts with pre-feasibility analysis of the PPP itself. This is followed by standard project pre-feasibility:

PPP pre-feasibility
Question focus: is this project suited to being a PPP?

Project pre-feasibility
Question focus: is the project itself feasible?

The PPP feasibility checks for the presence of certain conditions in the supporting environment (such as legal, institutional and market capacity) that should be in place for a PPP to be successful. The main tool for this is the Suitability Filter. The purpose is to weed out poorly suited projects early, before more resources are used on developing them as PPPs. If a project achieves a satisfactory result in the Suitability Filter then it can proceed to a standard pre-feasibility analysis of the project itself.

The Suitability Filter in the PPP pre-feasibility checks is a crucial gateway to the PPP pipeline. If the outcome of the Suitability Filter is that the project is unlikely to be well suited to development as a PPP then the project should exit the PPP process. The project might be redesigned on the basis of the findings and re-appraised for its PPP suitability. Alternatively, the project may still be developed through the public-sector route but it is not appropriate to use any more of the limited resources available for PPP development. The Project Officer might then restart Phase 2 with another potential project taken from the Phase 1 analysis.

In cases where the Suitability Filter supports a go-decision for PPP development the project would continue to a project pre-feasibility analysis and Readiness Check 1. If the Readiness Check shows the project is ready and suited to development as a PPP it would proceed to the more detailed analysis in the Full Feasibility Study.

The timing of the project PPP pre-feasibility analysis depends on the options open to the public sector. If the project can only be procured as a PPP then the Suitability Filter analysis should be carried out before the project pre-feasibility (for example, public sector budget limits might mean that if a PPP is not possible the project won’t be carried out).

If either public or private options are available for procurement then it may be better to carry out the project pre-feasibility analysis first, as some of the information discovered in the study may be useful for answering questions in the Suitability Filter.

Once the PPP and project pre-feasibility analysis has been done the results are summarised in a Pre-feasibility Report.

 

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