PURPOSE OF FEASIBILITY STUDY

The purpose of the feasibility study is to provide an analysis of the technical, economic, contractual, governmental, and market aspects of the proposed project. It is useful as a report for the project sponsor in determining the best allocation of resources among proposed projects competing for limited developmental funds. Externally, the report is used by the project sponsor to explain the project to potential lenders, government officials, and potential equity investors.

In providing the relevant information, different reports might be prepared for each of these audiences. This allows for protection of the confidential information of the project sponsor, which might not be appropriate for disclosure to all recipients.

GENERAL DESCRIPTION

The feasibility study generally begins with an overview description of the project. The location is specified, usually including a map of the project site, with details about the surrounding topography, weather, drainage, major landmarks, population density, access to transportation and housing, water and wastewater treatment facilities, and similar information that might affect cost, public support (or opposition), and environmental effects of the project.

PROJECT SPONSORS AND PROJECT COMPANY

The project sponsors are described in the report. Ownership interests as well as management control in the project company are specified in detail.

The background and experience of the project sponsors are also important. Among the relevant discussions are experiences in the underlying industry or service area of the project, success in similar projects, credit ratings and access to capital, financial and operating performance and projections, and management experience.