Pre-Feasibility Study Guideline

September 2009

CDIA
Cities Development Initiative for Asia

1 5.2 4 5 5.3 6 INTRODUCTION DEFINITION OF PFS NECESSITY AND OBJECTIVES OF PFS CDIA Guiding Principles Bridging the “gap” SCOPE OF PFS KEY STEPS TO UNDERTAKE PFS Initial Consultations Prior Departure to the Project Location Counterpart Consultations Undertaking the Assignment CONTENT OF PFS 3 3 3 3 3 3 4 4 4 5 5 6 Table 1: PFS Checklist 2 .2 5.1 3.TABLE OF CONTENTS 1 2 3 3.

i) Is it worthwhile to proceed with the feasibility stage? And. a PFS can determine the scope of the probable following feasibility study whether. hence section 4 will need to be repeated for each sector while the other sections apply to the Project as a whole. Therefore. and priority-setting among identified investment projects competing for scarce resources. CDIA is committed to addressing them as much as possible across all aspects of CDIA operations. This guide has been developed to clarify the term “Prefeasibility Study (PFS)” and aims to further elucidate the content of PFS primarily for CDIA stakeholders (local governments of medium-sized cities in Asia). 3. CDIA is cooperating closely with bi-lateral and multi-lateral development banks and agencies. Thus.1 INTRODUCTION CDIA’s key operational principle is to provide services up to pre-feasibility level. but have somehow not been able to move forward from these plans. 4 SCOPE OF PFS3 3 3. Typical outputs are descriptions of priority projects for which broad design choices have been made.2 Bridging the “gap” 2 DEFINITION OF PFS1 A PFS is broadly defined as preparatory studies required to enable funders to have a successful feasibility study carried out for a particular investment opportunity. The PFS can also be used to identity and highlight certain development issues and assist the cities and local government to identify prioritized sectors to improve the urban situation. the main purpose of PFS is to ensure that there is a solid base for undertaking a feasibility study and to further defining probable following investment projects. initial scoping and costing of identified investment projects. including prioritization of investment proposals by providing useful pre-feasibility information. ii) Climate change mitigation/adaptation. Generally a PFS undertaken under CDIA umbrella would include the following: • The guiding principles and operational directions for CDIA are addressing four major principles: i) Urban environmental 3 1 2 a review of technical options and features for the potential project(s). sustainability. CDIA was created to bridge these urban governance “gaps” and assist cities to translate their infrastructure needs into projects and programs ready to be financed. and iv) Good urban governance. this generally will comprise investment programming and packaging.1 NECESSITY AND OBJECTIVES OF PFS CDIA Guiding Principles The specific scope and tasks of a PFS will be determined in the Terms of Reference (TOR). a PFS should always upfront emphasize the relevance the proposed infrastructure has for one or more of these guiding principles.com There are usually more than 1 PFS per CDIA study. Reference: CDIA Operational Guidelines BusinessDictionary. ii) What would be the main objective(s) of the feasibility study? In many cases cities do have some type of urban development strategies and/or masterplan. and not at least for the consultants who are hired to undertake and implement CDIA supported assignments.” Hence. at a level of detail sufficient for a Terms of Reference for a feasibility study Another way to define PFS is “a preliminary study undertaken to determine if it would be worthwhile to proceed to the feasibility study stage2. While it is not possible to make a discernable impact across all these dimensions in every project. 3 . iii) Urban poverty reduction.

social costs. 5. • • • 4 Safeguarding the environment. These templates will be reviewed and adjusted to specific city circumstances to meet the actual requirements depending on which sector to support. flag these issues for the anticipated Feasibility Study. i. preliminary assessment of possible adverse environmental and social impacts and how to mitigate by safeguards4. civil society and private sector. minimize. Identify investments with the counterpart through participatory processes and in partnership with citizens. Thoroughly explain and inform the counterpart when and how many consultants will be present in the city.e. flagging of issues to be considered in detail in the ensuring Feasibility Study including review of the process why the specific infrastructure has become a priority. 5 KEY STEPS TO UNDERTAKE PFS • Depending on the nature of the PFS below are standard steps the study team should take into consideration. The following steps are recommended: • • • CDIA has developed ToR templates for consultants in specific areas of work. i) TOR template to undertake PFS(s). • • • • • 5. i. and marginalization of vulnerable groups that may result from development projects. Establish sound working relationship with the city counterpart to strive for efficient team work and good cooperation ensuring that key institutions are at all times engaged in the process of the assignment as equal partners.1 Initial Consultations Prior Departure to the Project Location Consult the CDIA nominated Core Management Team member who will supervise the Consultants work. preliminary assessment of probable development impact objectives of the project(s) in terms of urban environmental improvement. urban governance improvement and social and gender impacts. • Formally validate Steering Committee structure and counterpart contribution. especially if intermittent inputs are being used.2 Counterpart Consultations • Counterpart consultations should be seen as a key priority activity. Study related programs and activities in the country to establish a sound understanding of the urban development situation being addressed. urban poverty reduction. Undertake field visits to locations of proposed activities to reach a full understanding of the development issues. 4 . to ensure that the scope and expectations of the assignment has been correctly understood. For example. preliminary estimates of project costs and of financial sustainability. Together with the counterpart discuss and identify the key issues of the study and agree on how to address those. recommend likely implementation and operation arrangements for the potential project(s) including possible public-private partnership (PPP) potential. providing the basis for negotiation with potential financers. undertake financial and/or economic analysis based on available information. and ii) TOR template for urban infrastructure investment planning and programming.• brief assessment of potential economic and social benefits. Ideally this is done by providing a tentative staffing schedule and workplan to the counterpart.e. to prevent. Indigenous Peoples and resettled people. or mitigate harmful environmental impacts.

Throughout the assignment hold regular meetings (besides steering committee meetings) with relevant stakeholders in the counterpart institution and the city administration to update on progress of the study and create ownership. urban transport. Recommend environmentally and socially responsible techniques and strategies for urban infrastructure investment. urban governance improvement and social and gender impacts. systems. sewage water and drainage etc. and further need for data collection and analysis for. Recommend likely implementation and operation arrangements for the potential project(s) including possible potential of public-private partnership (PPP). if available. Conduct preliminary estimates of project costs and of financial sustainability. as appropriate. Relevant parts shall apply depending on the nature and scope of the PFS. urban planning. • • • • • Conduct preliminary assessment of possible adverse environmental and social impacts and how to mitigate by safeguards. Identify alternative solutions including assessment of local financing capacity and the likely need for external funding and support.g. flag these issues for the anticipated Feasibility Study. Project Programming & Prioritisation Toolkit and PPP Manual Quick Start Guide 5 . Assess the organizational and institutional issues in the provision of basic urban services (e. solid waste.g. define issues to be addressed in.3 Undertaking the Assignment • As mentioned under Para 4 the TOR should be the guiding instrument for the assignment. Identify possible solutions and measures to improve the urban management situation. including the role of the private sector. however to ensure a successful study the below steps should be taken into account. CDIA has developed a detailed checklist containing the standard requirements and content of a PFS (refer to Table 1 overleaf). stakeholder analysis. urban poverty reduction. • 5. • • • • • • • • • • Jointly with the counterpart define the geographical scope of the study area. Conduct preliminary assessment of probable development impact objectives of the project(s) in terms of urban environmental improvement. Flag issues to be considered in detail in the anticipated Feasibility Study including review of the process why the specific urban infrastructure has become a priority. business processes. Undertake an initial assessment of major risks including political.which are pro-poor focus and mitigate climate change. Throughout the assignment discuss with and inform potential funding partners of the progress and likely need for future investments. Review of previous studies on the referred development issues. 5 This PFS Guideline. a potential Feasibility Study. Make use of CDIA developed toolkits and guidelines5. 6 CONTENT OF PFS Depending on the nature of the PFS the content of the report(s) will naturally vary. land use. If applicable. including new institutional delivery mechanisms for improved service provision.) and design within the city. internal/external relationships and political economy). Study the current development issues (e.

e.Project benefits and outcomes ( ) .3 3. typically 5 – 10 years’ projections and estimates. environmental.2 3.2 2. Alternative broad technical ( ) solutions and preliminary design.0 4.Project Costs (US$) .1 Recommendations 4. poverty. point out why the project appears as it does etc. brief description of current situation and recommended projects and ( ) strategies including tentative cost estimate. social-.Recommended implementation schedule .0 1.Environmental impacts . Summarize the stages of the PFS. Stakeholders’ perceptions of the conditions and how they were obtained.Sector / Sub-sector .Location (maps. i. policy and legislation. Analysis of future requirements and demand analysis.2 Project Descriptions Study’s recommendations and analysis to improve the urban situation.3 3. 2. ( ) Involved consultants(s) and counterpart staff ( ) ANALYSIS OF DEVELOPMENT ISSUES Current situation Indicate Project area. Indicate the schedule of the study. analysis and overview of the current situation and its impact.0 3. ( ) 3. gender impacts .Beneficiaries . institutional structure and finance.0 2.Implementing agency .Operation and Maintenance Cost . Project description to include: .Potential for private investment 6 . Indicate considered institutional and financial options.Table 1: PFS Checklist 1.Social.1 2. objectives of the ( ) report and how it is structured.2 EXECUTIVE SUMMARY Objectives Summary of analysis Brief information of project objectives and ( ) background. photos as required) .4 Development need Stakeholders’ views Institutional and financial options considered PROJECT IDENTIFICATION ( ) ( ) ( ) 4.Project title .Technical description and aspects .1 INTRODUCTION Reporting structure Schedule Consultant(s) and Counterpart(s) Brief introduction to the PFS.and institutional aspects. public funding versus PPP.1 1.

3 Municipal expenditure ( ) 6.1 5. Adverse Environmental indigenous peoples and resettled people). Analysis of the current municipal revenues.2 Preliminary assessment of likely development impact objectives of the project(s) in terms of urban Assessment environmental improvement. In addition. Analysis of the current investment situation to derive a financial envelope to finance the identified investment projects.4 Economic and Financial Analysis ( ) 6.2 Municipal revenues ( ) 6.0 DEVELOPMENT IMPACT OBJECTIVES community 5.1 6.0 IMPLEMENTATION ARRANGEMENTS Recommend and elaborate likely implementation Implementation and and operation arrangements for the potential ( ) Operation Arrangements project(s) including possible potential of publicprivate partnership (PPP). producing projections of financial statements as required to evaluate viability. possibly electricity etc) and development (capital) expenditure. Preliminary estimates of project costs.1 7 . urban governance improvement and social and gender impacts. ( ) 6. recurrent internally generated and other revenue (funds from irregular sources that can vary significantly from year to year). Elaborate various funding scenarios considering potential loans/grants from development banks. Flag ( ) and Social Impacts these issues for the anticipated Feasibility Study.Potential for involvement/contributions 5.0 6. possible private investments and government contribution. (Refer to ADB’s checklists on social and environmental assessments) FINANCIAL ANALYSIS Project Costs Preliminary estimates and summary of project costs of identified and prioritized projects. analysis of grants and loans situation. Preliminary assessment of possible adverse environmental and social impacts and how to mitigate those by safeguards (environment. (Refer to ADB guidelines on economic and financial analysis) Conclusion remarks of the current investment situation and the affordability to finance identified investment projects.. Undertake financial and/or economic analysis of the project. other expenditure (operation & maintenance. urban poverty ( ) reduction. Analysis of recurrent expenditure. Indicate possible 7.5 Conclusions ( ) 7.

( ) project fiches. locations. study support facilities.1 Conclusions and Recommendations Summarize the conclusions and recommendations from the study. ( ) if relevant.3 Risks 9.g. key references etc.0 CONCLUSIONS AND RECOMMENDATIONS 10. 8 . Highlight key issues and suggested ( ) way forward for the local government and/or city. Indicate if there are any circumstances outside the control of the recommended project. and institutions to be ( ) consulted.2 Assumptions 8. if they occurred.0 9. skills required on the team and time requirements. Briefly summarize the requirements to indicate likely data and survey needs. 9. Identify broad risks to both implementation and sustainability.0 8. 11.institutional weaknesses and suggested measures to rectify the situation. data and survey sheets. To be further developed at the feasibility stage.0 APPENDICES 11. would ( ) prevent the achievement of the main objectives. 8. required expertise.1 RISKS Assessment Initial assessment of the key risks for each proposed ( ) project.2 Feasibility requirements 10. if ( ) required.1 FORTHCOMING FEASIBILITY STUDY (if required) Further studies Indicate the need and reasons for further studies.1 Appendices To be attached as necessary e. Identify the major assumptions which are made for recommended projects. These assumptions would be analyzed further at the feasibility stage. Indicate risk management strategies. 8. detailed technical descriptions and costing.

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