ASSESSMENT TOOL

PROJECT CONCEPT

02

Municipal

02
Public-Private
Partnership
Framework
The Municipal Public-Private Partnership Framework can be found at www.thegpsc.org and www.worldbank.org/ppplrc

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TABLE OF
CONTENTS

1.0 Introduction to and Instructions 02 2.0 The Project Concept 03

for the Project Concept Assessment Tool
Assessment Tool
 Module 2 : Introduction to and Instructions for the Project Concept Assessment Tool 2
Project Concept
Assessment Tool

1.0
Introduction to and Instructions for the
Project Concept Assessment Tool

Project selection is critical to ensuring that limited • Global Infrastructure Hub, Reference Tool
municipal government resources are invested to on Governmental Processes Facilitating
their maximum effect. This entails obtaining and Infrastructure Project Preparation (Global
evaluating data on a project’s technical, financial, Infrastructure Hub January 2019), available
and legal viability. At the same time, completing at: https://www.gihub.org/project-preparation.
a full feasibility study can be costly, such that it is Infrastructure Working Group, G20 Principles
beneficial to undertake a preliminary assessment for the Infrastructure Project Preparation Phase
of a project’s potential based on more limited (July 2018), available at: http://www.g20.utoronto.
information before conducting such a study. ca/2018/principles_for_infrastructure_project_
preparation.pdf.
This module is intended to help practitioners make
an initial assessment of project feasibility as a PPP, • Infrastructure and Projects Authority, Project
based on core project characteristics set forth Initiation Routemap (HM Government June
in Module 3: Project Concept Note. Within each 15, 2016), available at: https://www.gov.uk/
section, there are a series of positive statements government/publications/improving-infrastructure-
that, if true, indicate that the project may be suited delivery-project-initiation-routemap.
for delivery as a PPP. Linked to each of these
statements are a series of questions designed to • The World Bank Group, Success Stories and
help practitioners identify key pieces of information Lessons Learned: Country, Sector and Project
about the project that need to be known and, Examples of Overcoming Constraints to Financing
depending on the response, determine if it is Infrastructure (prepared by the World Bank Group
realistic and desirable to proceed with the project. for the G20 Investment and Infrastructure Working
It is not expected that detailed information on Group January 2014), available at: http://www.
all of the topics covered will be available at this g20.utoronto.ca/2014/WBG_IIWG_Success_
early stage but rather that considering the type Stories_Overcoming_Constrain ts_to_the_
of information a feasibility study would need to Financing_of_Infrastructure.pdf.
produce, and the foreseeable or likely results will
help practitioners determine if it is reasonable to
undertake a feasibility study.

This project assessment tool has been influenced

by the following sources, which will also be helpful
for any municipality in evaluating projects for PPP
viability and preparing PPP projects:

• The World Bank Group, A Checklist for Public-

Private Partnership Projects (prepared by the
World Bank Group for the G20 Investment and
Infrastructure Working Group August 22, 2014),
available at: https://ppp.worldbank.org/public-
private-partnership/library/checklist-public-
thegpsc.org

private-partnership-projects-submitted-world-
bank-g20-investment-and-infras.
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The World Bank
Module 2 : The Project Concept Assessment Tool 3
Project Concept
Assessment Tool

2.0
The Project Concept Assessment Tool

Section 1. Preliminary Considerations

This section addresses threshold issues designed to screen projects for fundamental viability as a PPP. Negative responses
indicate that the project is not a good candidate for a PPP, or that further information needs to be obtained before considering
delivery as a PPP.

Preliminary Considerations

Strongly Somewhat Somewhat Strongly

Agree Agree Disagree Disagree

1. The development • H
 as a project concept note and/or a study
rationale for the been completed for the project?
project is clear.
• D
 oes the project have direct social,
economic, and/or environmental benefits
that are likely to greatly exceed the
project cost?

• Is the project included in, or clearly

in line with, an official development plan
or strategy?

2. D
 elivery of the • D
 o the applicable laws clearly define the
project as a institution or institutions responsible for this
PPP is within the type of infrastructure or service?
municipality’s legal
mandate.
• Is provision of this type of infrastructure or
service the exclusive responsibility of the
municipality, or the shared responsibility
of the municipality and one or more other
readily identifiable entities?

• D
 o applicable laws permit private
participation in this type of infrastructure
or service?

3. The estimated • Is the approximate investment cost known

investment cost or reasonably estimable?
(capital expenditure) o For example, there are comparable
is known, or can projects in this or similar jurisdictions,
be reasonably a technical study has estimated the cost
approximated, and
is suitable for a PPP.
• Is the investment cost reasonably
predictable?
o For example, unlikely to change
significantly as engineering designs
are completed and construction is
under way

• D
 oes the estimated investment cost
exceed US$1 million?

4. T
 he proposed • D
 oes the project entail delivery of public
duration of the infrastructure and continuous service, and
project (for example, so involvement by the PSP (PPP), for at
PPP agreement least five years?
term) is suitable
for a PPP.
 Module 2 : The Project Concept Assessment Tool 4
Project Concept
Assessment Tool

Preliminary Considerations

Strongly Somewhat Somewhat Strongly

Agree Agree Disagree Disagree

5. Funding is or will be • H
 as the municipality or other government
available for project authority budgeted funds, or does it have
preparation. access to funds, to complete project
preparation?
o For example, preparing feasibility
studies, acquiring land, environmental
and social impact cost mitigation

Section 2. Financial Considerations

This section addresses fundamental aspects of a project’s financial viability, that is, whether project revenues are sufficient to
cover costs and provide a reasonable rate of return. Positive responses, or reasonable expectations that a feasibility study will
provide positive responses, generally indicate that a project may have sufficient commercial appeal for delivery as a PPP.

Financial Considerations

Strongly Somewhat Somewhat Strongly

Agree Agree Disagree Disagree

1. There is clear • D
 oes the project deliver public
demand for the infrastructure or service for which there is
project. an obvious need?
o That is, have end users expressed a
demand for the infrastructure or service
to be provided?

• Is there a clear and measurable demand

for the infrastructure or service?
o For example, location, target population,
and offtaker

• C
 an the demand for the infrastructure
service be reasonably and credibly
forecast over the proposed term of
the project?

2. T
 he project • D
 o end users or offtakers pay for the
will generate infrastructure or service provided by
predictable and the project?
sustainable o For example, tolls, parking fees, ticket
revenues. fares, housing rental payments, and
supply of clean water to a distributor

• If end users pay, are projected end user

fees likely to be reasonably within the
target population’s ability and willingness
to pay?

• A
 re there additional market-based
revenue streams?
o For example, advertising and lease of
commercial space
o See Module 16 on Harnessing Land
Value Capture and Module 17 on
Capturing Commercial Value

• C
 an revenues from end users and other
market-based sources be reasonably
thegpsc.org

estimated and reliably forecasted?

o For example, offtake charge or user
charge and volume assumptions
backed by surveys or forecasting
from historical data, market value
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Module 2 : The Project Concept Assessment Tool 5
Project Concept
Assessment Tool

Financial Considerations

Strongly Somewhat Somewhat Strongly

Agree Agree Disagree Disagree

• A
 re government (national, state/provincial,
and/or municipal) funds, payments, or
subsidies available to help pay for
the project?

3. The approximate • Is the approximate cost of operation and

cost of operation maintenance/service delivery over the
and maintenance/ term of the project known or reasonably
service delivery estimable?
is known, or can o For example, there are comparable
reasonably be projects in this or similar jurisdictions;
approximated, and a technical study has estimated the cost
might be reduced
by the PSP.
• Is the estimated cost of operation and
maintenance/service delivery predictable?
o For example, unlikely to vary
significantly as the project develops and
over the term of the PPP agreement

• Is there potential for the PSP to operate

and manage the project more efficiently
than the public sector?

4. T
 he cost of • H
 ave comparable projects reached
financing can financial close in the region or country?
be reasonably
approximated
• Is long-term, non-recourse financing for
and is likely to be
infrastructure likely to be accessible for
affordable.
the project?

• Is there an indicative or preferred type

of financing?
o For example, private equity, commercial
bank loan, multilateral, bilateral or
national development bank loan, or
bond issuance

• C
 an financing assumptions be made
based on similar projects, prevailing
rates, or general practices of indicative or
preferred lenders?
o For example, debt-to-equity ratio,
interest rate and tenure of debt, and
cost of equity

• If foreign financing may be sought, are

there any restrictions on foreign exchange
or capital movements that may limit the
project’s access to finance?
o For example, restrictions on repatriating
profits and lack of foreign exchange risk
hedging tools
 Module 2 : The Project Concept Assessment Tool 6
Project Concept
Assessment Tool

Section 3. Technical Considerations

This section addresses core technical aspects of the project, such as those related to land acquisition, engineering design,
construction, and operation. Positive responses, or reasonable expectations that a feasibility study will provide positive
responses, generally indicate that the project may be technologically feasible as a PPP or otherwise.

Note: For certain questions about environmental and social aspects of the project, a negative response indicates agreement
with the positive statement. This should be clear from context and these questions have been identified with underlined font.

Technical Considerations

Strongly Somewhat Somewhat Strongly

Agree Agree Disagree Disagree

1. There is a clear • H
 as an intended site for the project been
idea of the project’s identified?
location, scope,
design, and
• Is there a clear conceptual vision for
outcomes.
the project?
o For example, facilities to be constructed
or services to be delivered

• A
 re project outcomes identifiable,
definable, and measurable?
o For example, number of people/
households served, amount of clean
water supplied, and size of facility
constructed

• D
 oes the project include a mechanism
to involve poor communities near to or
affected by the project?

• D
 oes the project include a strategy that
allows women to receive information and
share their views and concerns about
the project?

2. T
 he project concept • Is the intended project site readily
is realistic and the available and likely to be suitable for
preferred solution the project?
to the identified o For example, necessary land has
deficiency. been obtained, is easily or reasonably
accessible, can be used for the
intended purpose, and is free of all
encumbrances (for example, liens,
easements, rights-of-way) that could
impede the project

• If the land for the project site has not been
obtained, can it be realistically obtained,
free of all encumbrances that could
impede the project, before tendering bids
for the PPP?

• H
 as this type of project been done before,
in this or comparable jurisdictions?

• Is the project likely to rely on available,

proven, and tested technology?

• H
 as there or will there be an assessment
of all reasonable technical solutions to
address the need fulfilled by the project?
thegpsc.org

• Is the proposed technical solution likely to

address the need in a cost-effective and
affordable manner?
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Module 2 : The Project Concept Assessment Tool 7
Project Concept
Assessment Tool

Technical Considerations

Strongly Somewhat Somewhat Strongly

Agree Agree Disagree Disagree

3. There are no • D
 oes the project present a significant
substantial risk to any natural resources or protected
environmental risks, lands?
or any such risks
are likely to be
• Is the project operation likely to be net
manageable in an
carbon negative or neutral, in terms of
effective and cost-
greenhouse gas emissions?
efficient manner.

• C
 an the project design suitably address
the impact of potential natural or human-
induced hazards in the region?

• Is the project design likely to be resilient

and adaptive to evolving conditions
resulting from climate change or
other significant long-term changes in
operational or environmental conditions?

• Is the preparation of an environmental

management strategy, or obtaining related
approvals, likely to result in uncertainties or
delays that could impede the project?

4. T
 here are no • D
 oes the project present any significant
substantial social risk to the health or quality of life of users,
risks, or any such workers, or the local population?
risks are likely to be
manageable in an
• Does the project require resettlement?
effective and cost-
efficient manner.

• Is there or will there be a plan for

communicating with and involving affected
communities and key stakeholders during
preparation of the project?

• Is there known, or likely to be, opposition to

the project from affected communities and/
or key stakeholders?

• Is addressing community or stakeholder

opposition likely to result in uncertainties or
delays that could impede the project?

Section 4. Legal Considerations

This section addresses some of the key legal issues for delivering the project as a PPP, such as the municipality’s authority
to execute the PPP agreement, prerequisites and approvals, and legal restrictions on the PSP’s participation in the sector.
Positive responses generally indicate that there are likely no significant legal barriers to implementing the project as a PPP.

Legal Considerations

Strongly Somewhat Somewhat Strongly

Agree Agree Disagree Disagree

1. The existing • Is there a generally applicable PPP law/

legal/regulatory regulation that applies to this sector?
framework for the
project’s sector is
• Is there an infrastructure- or sector-specific
supportive of PPPs.
law/regulation that addresses private
participation in this sector?

• Is there a procurement law/regulation that

applies to PPPs?
 Module 2 : The Project Concept Assessment Tool 8
Project Concept
Assessment Tool

Legal Considerations

Strongly Somewhat Somewhat Strongly

Agree Agree Disagree Disagree

2. T
 he municipality has • D
 oes the municipality have a clear legal
clear legal authority basis for entering into long-term contracts?
to enter into a long- o For example, contracts that extend past
term PPP agreement the term of office of the municipality’s
for the project. chief officer

• Is it clear which officials need to sign the

actual PPP agreement on behalf of the
municipality to create a legally binding
contract?

• If the PSP will be involved in service

delivery (for example, clean water supply),
does the municipality have explicit
authority to delegate responsibility for
providing this service to the PSP?

3. Legal prerequisites • Is the municipality aware of the legal

are known or requirements, if any, that need to be met
identifiable and or fulfilled in preparing, procuring, and/or
unlikely to present a implementing the project?
significant barrier to o For example, required contents
the project. of feasibility studies, competitive
procurement, review and approval by a
national or state/provincial authority

• C
 an the project proceed without approval
from any legislative body?

• Is the municipality aware of the

requirements and processes for obtaining
all necessary licenses, approvals, and
permits for the project?

4. T
 he municipality has • Is there a legal and institutional framework
clear legal authority for charging tariffs, with transparent and
over tariffs paid by well-defined methodologies for tariff
end users, if any, adjustment?
consistent with the
project concept.
• D
 oes the municipality or offtaker have
clear and exclusive authority to collect,
keep, and adjust the price of fees charged
to end users?

• If appropriate in view of the project

concept, can the municipality delegate
the collection of fees paid by end users to
the PSP?

• If appropriate in view of the project

concept, can the municipality delegate to
the PSP some repricing authority?
o For example, in case of delays in
demand growth, can the PSP be given
some flexibility in repricing to offset
demand shortfalls
thegpsc.org

• C
 an the municipality lawfully promise to
share all or a portion of revenues collected
from end users with a third party in the
future?
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Module 2 : The Project Concept Assessment Tool 9
Project Concept
Assessment Tool

Legal Considerations

Strongly Somewhat Somewhat Strongly

Agree Agree Disagree Disagree

5.Applicable laws • D
 oes the municipality have clear authority
confer rights that to enter into a direct agreement with the
enable a lender to lender that includes rights of substitution,
recover outstanding step-in rights, or other applicable
loan amounts in case remedies?
of default.

Section 5. Miscellaneous Considerations

This section addresses topics that do not directly fall within the financial, legal, or technical assessment of the project but
nonetheless bear on whether the project is suitable for delivery as a PPP. Positive responses generally indicate that the
project may have promise for implementation as a PPP.

Note: For one question regarding contingent implications, a negative response indicates agreement with the positive
statement. This should be clear from context and this question has been identified with underlined font.

Miscellaneous Considerations

Strongly Somewhat Somewhat Strongly

Agree Agree Disagree Disagree

1. It is reasonable to • H
 ave similar PPP projects achieved
expect that private financial close locally, regionally,
investors will be or nationally?
interested in the
project.
• Is there reason to expect a favorable
response from the private sector toward
the project?
o That is, have private investors expressed
an interest in the project and does the
municipality expect that there will be
multiple bids for the project submitted
by credible bidders?
o For example, based on known market
actors, preliminary market consultations
or similar investor interactions

• H
 ave there been any discussions or
other interactions involving parties with
an interest in implementing the project,
whether within the government or
between government officials and private
parties, that might discourage bidders
from participating in the tender process
or otherwise undermine an open and
competitive bidding process.

• Is the proposed public partner (that is, the

municipality, publicly owned utility or other
offtaker) creditworthy?

• A
 re credit enhancements available
to compensate for any poor
creditworthiness?
o For example, insurance, guarantees

2. T
 he fiscal and • A
 re any payments required by the
contingent municipality as envisioned in the project
implications for the concept able to be adequately planned,
municipality are budgeted, and accounted for in advance?
understood, limited
and manageable.
• A
 re there other significant projects or
activities that will depend on this project,
or on which this project will depend?
 Module 2 : The Project Concept Assessment Tool 10
Project Concept
Assessment Tool

Miscellaneous Considerations

Strongly Somewhat Somewhat Strongly

Agree Agree Disagree Disagree

• If this is a brownfield project, does

the municipality anticipate how it will
compensate for any foregone revenue,
if any?

• A
 re the contingent liabilities created by
the project understood and likely to be
manageable?
thegpsc.org
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Module 2 : The Municipal Readiness Tool 11
Project Concept
Assessment Tool
 Module 2 : 12
Project Concept
Assessment Tool
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