Bridging Partners, Regions and Concepts…
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Transcript Bridging Partners, Regions and Concepts…
Feasibility Study Preparation
Venelina Varbova
Session Overview
Purpose of the Feasibility Study
The Feasibility Study process according to
international standards
The Feasibility Study outline
Discuss the challenges faced by many SEE
consultants and local governments in preparing
projects
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The Feasibility Study:
something we already know
Feasibility study as project plan - assumes the
project concept is feasible and maps out the
course for project implementation
Focus on engineering aspects – low attention to
social, institutional, environmental aspects
Economic and/or financial analysis limited to
budgeting exercise and some cash flow
Feasibility analysis as part of the process is
missing
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The Feasibility Study:
international standards
Feasibility study is the result of feasibility analysis
Convince the reader (financing entity) that the
project is worth funding
Document relevant information and aspects
regarding the project
Assess whether the project is relevant, viable and
implementable
Enable the project proponent to prepare financing
application and present the project to sources of
financing
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Project Preparation vis-à-vis
Project Cycle
Strategic and Sectoral Considerations
Project
Sustainability
Project
Preparation
Project
Execution
Feedback
loops
Process flow
Pre-feasibility
Study, PPD
Project
Identification
Project Start-up
Feasibility
Study, EIA,
PSD
Implementation
Planning
PIP
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Overview of FS Contents and Outline
Executive Summary (PSD)
I.
Introduction
II. Project Strategic Context
III. Technical Analysis
IV. Institutional Assessment
FEASIBILITY
STUDY
V. Environmental Assessment
VI. Stakeholder Analysis
VII. Financial and SocioEconomic Analysis
VIII. Conclusions
IX. Project Implementation Plan
IX. Appendices
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Project Strategic Context
Strategic goals; priority programs at local/regional
level
National policies: National, regional or sectoral
goals which the project supports
Project environment issues: policy, legal and
regulatory, institutional framework, environmental, etc.
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Technical Assessment
Several subsequent assessment levels:
Technical assessment of existing services, physical
system, and treatment, and measures for their
optimum use
Demand (wastewater flow) analysis and
forecasting
Establish gap between the current level service
and future demand
Develop technical alternatives for the project
required outputs (design, technology, process,
scale)
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Technical Assessment - Illustration for
scope of wastewater project
Wastewater services:
Determine service area and coverage
Identify consumers per categories
Develop scenarios for future service development
Wastewater system:
Description of existing system and facilities
Evaluate the system components and its operation
Wastewater treatment:
Describe and assess existing facilities
Describe and assess present environmental
impacts of untreated wastewater/sludge discharges
into surface water bodies
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Financial and Socio-economic Rationale of
environmental investment project
Purpose of the financial analysis is multiple:
Assessment of project viability and implementability
for the municipal utility and the local community and
economy
A tool for analyzing, structuring and selecting
different project options
Assessment of project returns on overall investment
and capital
A tool for identifying appropriate types of project
financing
Analysis of project broader socio-economic impact to
the community
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Aspects of Feasibility Analysis
Input to the financial and socio-economic analysis
Technical
Analysis
Social and
Stakeholder
Analysis
Financial
Analysis
Project
Feasibility
Economic
Analysis
Environmental
Analysis
Institutional Analysis
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Financial Cost-Benefit Analysis of a
Project
The unit of analysis is the project, not the
company
Evaluates and calculates the project’s financial:
Revenues
Costs
Net benefits (of revenues over the costs)
Project revenues, costs and net benefits are
determined on a with-project and without project
basis.
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Financial Cost-Benefit Analysis
Project Revenues
Only the project contributed revenues, i.e.
water/wastewater sales to the utility are
estimated:
The project revenues are determined for different
groups of users (different tariffs):
Households
Government/public institutions
Commercial/industrial users
Other (connection fees)
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Financial Cost-Benefit Analysis
Project Costs
1. Investment costs:
Capital costs: land, civil works, equipment, studies
Education programs, lab equipment & training,
Institutional Development (consulting services,
capacity building programs, M&E of benefits)
2. Operation and maintenance costs: labor,
electricity, chemicals, materials, overheads, raw
water charges, insurance, etc.
3. Residual values (of project assets at the end of
the project life)
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Conclusions of the Financial Analysis
Selection of options and technology
Overall project profitability and sustainability
Financial impact on the utility
Final phasing of investments and priorities
Financing Plan and application requirements
Tariff setting and proposal to the municipality
Responsibility chart
Project cash flow skeleton for conducting socioeconomic analysis
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Economic Cost-Benefit Analysis of a
Project
Purpose: To assess the project economic worth
to the country
Evaluates and calculates the project’s economic
benefits and costs to the whole economy in
constant economy prices (adjusted financial prices)
including external benefits:
Environmental benefits
Health effects
Non-technical losses (UFW)
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Social and Stakeholder Analysis
Local Government
Consumers
Operator/Utility
Vulnerable groups
Wider community
Financier
Ultimately all ventures
are about people!
It’s more important to
understand the people
than the technology:
Who gains? Who loses?
Social and distribution
analysis of project effects
(different beneficiaries)
Poverty Impact Analysis
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Environmental Impact Analysis
Assessment of project impacts to physical and
also non-physical environmental aspects:
Physical (water, air, land)
Biodiversity
Nuances (noise, odors)
Safety
Aesthetics, cultural and historical heritage
Two possible levels of assessment:
Preliminary (Initial) Environmental Review
Full Environmental Impact Assessment
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Institutional Analysis
Assessment of legal and institutional framework
Relationship and independence of the water
company from the municipality in setting tariffs
Capacity of the project entity to: implement,
manage and maintain the project
Financial sustainability of the project entity
Adequate project management processes,
including procurement and human resources
Capacity building programs
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Sensitivity and Risk Analysis
A technique for investigating the impact of
changes in project variables
Identify key variables which influence project
costs and benefits
Investigate the consequences of likely adverse
changes
Identify mitigation actions
Qualitative Risk Analysis at the: project level,
sector level and national level
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Summary
The feasibility analysis is an internationally
accepted process used to evaluate various
project dimensions important for achieving
the desired project benefits.
An effective tool for appraising the project
from standpoints of all project stakeholders
It is not a waste of time. It significantly
reduces the risks in project implementation
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