1. 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

2. 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

3. Project Preparation vis-à-vis Project Cycle
Implementation Phase
Design Phase
Strategic and Sectoral Considerations
Project
Identification
Project
Sustainability
Pre-feasibility
Study, PPD
Project
Execution
Project
Preparation
Feasibility
Study, EIA,
PSD
Feedback
loops
Project Start-up
Implementation
Planning
PIP
Process flow

4. Overview of FS Contents and Outline
Executive Summary (PSD)
Introduction
Project Strategic Context
III. Technical Analysis
IV. Institutional Assessment
FEASIBILITY
STUDY
V. Environmental Assessment
VI. Stakeholder Analysis
VII. Financial and Socio-Economic Analysis
VIII. Conclusions
IX. Project Implementation Plan
IX. Appendices

5. 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.

6. 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)

7. 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

8. Purpose of the financial analysis is multiple:
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

9. Institutional Analysis
Aspects of Feasibility Analysis Input to the financial and socio-economic analysis
Technical
Analysis
Financial
Analysis
Social and
Stakeholder
Analysis
Project Feasibility
Economic
Analysis
Environmental
Analysis
Institutional Analysis

10. 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.

11. 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)

12. Financial Cost-Benefit Analysis
Project Costs
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)
Operation and maintenance costs: labor, electricity, chemicals, materials, overheads, raw water charges, insurance, etc.
Residual values (of project assets at the end of the project life)

13. 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 socio-economic analysis

14. 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)
Both have similar features and estimate net benefits based on project incremental input
Yet, the concept of financial net benefit is not the same as economic net benefit (commercial viability for the utility vs. real worth to the society)
Complementary: For a project to be economically viable, it must be financially sustainable

15. 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

16. 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

17. 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

18. 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