1. Pre-Feasibility Study Guideline
September 2009
CDIA
Cities Development Initiative for Asia

2. TABLE OF CONTENTS
1 INTRODUCTION 3
2 DEFINITION OF PFS 3
3 NECESSITY AND OBJECTIVES OF PFS 3
3.1 CDIA Guiding Principles 3
3.2 Bridging the “gap” 3
4 SCOPE OF PFS 3
5 KEY STEPS TO UNDERTAKE PFS 4
5.1 Initial Consultations Prior Departure to the Project Location 4
5.2 Counterpart Consultations 4
5.3 Undertaking the Assignment 5
6 CONTENT OF PFS 5
Table 1: PFS Checklist 6
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3. 1 INTRODUCTION sustainability, ii) Climate change
mitigation/adaptation, iii) Urban poverty
CDIA’s key operational principle is to provide reduction, and iv) Good urban governance.
services up to pre-feasibility level. This guide While it is not possible to make a discernable
has been developed to clarify the term impact across all these dimensions in every
“Prefeasibility Study (PFS)” and aims to project, CDIA is committed to addressing
further elucidate the content of PFS primarily them as much as possible across all aspects of
for CDIA stakeholders (local governments of CDIA operations. Thus, a PFS should always
medium-sized cities in Asia), and not at least upfront emphasize the relevance the
for the consultants who are hired to proposed infrastructure has for one or more
undertake and implement CDIA supported of these guiding principles.
assignments. 3.2 Bridging the “gap”
In many cases cities do have some type of
2 DEFINITION OF PFS1
urban development strategies and/or
masterplan, but have somehow not been able
A PFS is broadly defined as preparatory
to move forward from these plans. CDIA was
studies required to enable funders to have a
created to bridge these urban governance
successful feasibility study carried out for a
“gaps” and assist cities to translate their
particular investment opportunity; this
infrastructure needs into projects and
generally will comprise investment
programs ready to be financed, including
programming and packaging, initial scoping
prioritization of investment proposals by
and costing of identified investment projects,
providing useful pre-feasibility information.
and priority-setting among identified
CDIA is cooperating closely with bi-lateral and
investment projects competing for scarce
multi-lateral development banks and
resources. Typical outputs are descriptions of
agencies.
priority projects for which broad design
choices have been made, at a level of detail Therefore, the main purpose of PFS is to
sufficient for a Terms of Reference for a ensure that there is a solid base for
feasibility study undertaking a feasibility study and to further
defining probable following investment
Another way to define PFS is “a preliminary
projects. The PFS can also be used to identity
study undertaken to determine if it would be
and highlight certain development issues and
worthwhile to proceed to the feasibility study
assist the cities and local government to
stage2.” Hence, a PFS can determine the
identify prioritized sectors to improve the
scope of the probable following feasibility
urban situation.
study whether; i) Is it worthwhile to proceed
with the feasibility stage? And, ii) What would
be the main objective(s) of the feasibility 4 SCOPE OF PFS3
study?
The specific scope and tasks of a PFS will be
determined in the Terms of Reference (TOR).
3 NECESSITY AND OBJECTIVES OF PFS
Generally a PFS undertaken under CDIA
umbrella would include the following:
3.1 CDIA Guiding Principles
• a review of technical options and
The guiding principles and operational features for the potential project(s);
directions for CDIA are addressing four major
principles: i) Urban environmental
3
There are usually more than 1 PFS per CDIA study,
1
Reference: CDIA Operational Guidelines hence section 4 will need to be repeated for each sector
2
BusinessDictionary.com while the other sections apply to the Project as a whole.
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4. • brief assessment of potential economic 5 KEY STEPS TO UNDERTAKE PFS
and social benefits;
• preliminary assessment of probable Depending on the nature of the PFS below are
development impact objectives of the standard steps the study team should take
project(s) in terms of urban into consideration.
environmental improvement, urban
5.1 Initial Consultations Prior
poverty reduction, urban governance
Departure to the Project Location
improvement and social and gender
impacts; • Consult the CDIA nominated Core
• preliminary assessment of possible Management Team member who will
adverse environmental and social supervise the Consultants work, i.e. to
impacts and how to mitigate by ensure that the scope and expectations
safeguards4, flag these issues for the of the assignment has been correctly
anticipated Feasibility Study; understood;
• preliminary estimates of project costs • Study related programs and activities in
and of financial sustainability; the country to establish a sound
• recommend likely implementation and understanding of the urban
operation arrangements for the development situation being addressed.
potential project(s) including possible 5.2 Counterpart Consultations
public-private partnership (PPP)
potential; Counterpart consultations should be seen as a
key priority activity. The following steps are
• undertake financial and/or economic
recommended:
analysis based on available information,
providing the basis for negotiation with • Formally validate Steering Committee
potential financers; structure and counterpart contribution;
• flagging of issues to be considered in • Establish sound working relationship
detail in the ensuring Feasibility Study with the city counterpart to strive for
including review of the process why the efficient team work and good
specific infrastructure has become a cooperation ensuring that key
priority. institutions are at all times engaged in
the process of the assignment as equal
CDIA has developed ToR templates for partners;
consultants in specific areas of work. For • Thoroughly explain and inform the
example, i) TOR template to undertake PFS(s), counterpart when and how many
and ii) TOR template for urban infrastructure consultants will be present in the city,
investment planning and programming. These especially if intermittent inputs are
templates will be reviewed and adjusted to being used. Ideally this is done by
specific city circumstances to meet the actual providing a tentative staffing schedule
requirements depending on which sector to and workplan to the counterpart;
support. • Undertake field visits to locations of
proposed activities to reach a full
understanding of the development
issues;
• Together with the counterpart discuss
and identify the key issues of the study
and agree on how to address those;
4
Safeguarding the environment, Indigenous Peoples • Identify investments with the
and resettled people, i.e. to prevent, minimize, or
counterpart through participatory
mitigate harmful environmental impacts, social costs,
and marginalization of vulnerable groups that may processes and in partnership with
result from development projects. citizens, civil society and private sector,
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5. which are pro-poor focus and mitigate • Conduct preliminary assessment of
climate change. possible adverse environmental and
social impacts and how to mitigate by
5.3 Undertaking the Assignment
safeguards, flag these issues for the
anticipated Feasibility Study;
As mentioned under Para 4 the TOR should be
• Conduct preliminary estimates of
the guiding instrument for the assignment,
project costs and of financial
however to ensure a successful study the
sustainability;
below steps should be taken into account.
• Recommend likely implementation and
• Jointly with the counterpart define the operation arrangements for the
geographical scope of the study area; potential project(s) including possible
• Review of previous studies on the potential of public-private partnership
referred development issues, if (PPP);
available; • Flag issues to be considered in detail in
• Study the current development issues the anticipated Feasibility Study
(e.g. urban planning, land use, urban including review of the process why the
transport, solid waste, sewage water specific urban infrastructure has
and drainage etc.) and design within the become a priority;
city; • Undertake an initial assessment of
• Assess the organizational and major risks including political;
institutional issues in the provision of • Throughout the assignment hold
basic urban services (e.g. systems, regular meetings (besides steering
business processes, stakeholder committee meetings) with relevant
analysis, internal/external relationships stakeholders in the counterpart
and political economy); institution and the city administration
• Identify possible solutions and to update on progress of the study and
measures to improve the urban create ownership;
management situation, including new • Throughout the assignment discuss with
institutional delivery mechanisms for and inform potential funding partners
improved service provision; of the progress and likely need for
• Identify alternative solutions including future investments;
assessment of local financing capacity • If applicable, define issues to be
and the likely need for external funding addressed in, and further need for data
and support, including the role of the collection and analysis for, a potential
private sector; Feasibility Study.
• Make use of CDIA developed toolkits
and guidelines5, as appropriate;
• Recommend environmentally and 6 CONTENT OF PFS
socially responsible techniques and
strategies for urban infrastructure Depending on the nature of the PFS the
investment; content of the report(s) will naturally vary.
• Conduct preliminary assessment of CDIA has developed a detailed checklist
probable development impact containing the standard requirements and
objectives of the project(s) in terms of content of a PFS (refer to Table 1 overleaf).
urban environmental improvement, Relevant parts shall apply depending on the
urban poverty reduction, urban nature and scope of the PFS.
governance improvement and social
and gender impacts;
5
This PFS Guideline, Project Programming &
Prioritisation Toolkit and PPP Manual Quick Start
Guide
5

6. Table 1: PFS Checklist
1.0 EXECUTIVE SUMMARY
Brief information of project objectives and
1.1 Objectives ( )
background.
Summarize the stages of the PFS, brief description
1.2 Summary of analysis of current situation and recommended projects and ( )
strategies including tentative cost estimate.
2.0 INTRODUCTION
Brief introduction to the PFS, objectives of the
2.1 Reporting structure ( )
report and how it is structured.
2.2 Schedule Indicate the schedule of the study. ( )
Consultant(s) and
2.3 Involved consultants(s) and counterpart staff ( )
Counterpart(s)
3.0 ANALYSIS OF DEVELOPMENT ISSUES
Indicate Project area, policy and legislation,
3.1 Current situation institutional structure and finance, analysis and ( )
overview of the current situation and its impact.
Analysis of future requirements and demand
3.2 Development need analysis, i.e. typically 5 – 10 years’ projections and ( )
estimates.
Stakeholders’ perceptions of the conditions and
3.3 Stakeholders’ views ( )
how they were obtained.
Indicate considered institutional and financial
Institutional and financial
3.4 options, public funding versus PPP, point out why ( )
options considered
the project appears as it does etc.
4.0 PROJECT IDENTIFICATION
Study’s recommendations and analysis to improve
the urban situation. Alternative broad technical
4.1 Recommendations ( )
solutions and preliminary design, social-,
environmental- and institutional aspects.
Project description to include:
- Project title
- Sector / Sub-sector
- Location (maps, photos as required)
- Implementing agency
- Technical description and aspects
- Project benefits and outcomes
4.2 Project Descriptions ( )
- Beneficiaries
- Social, poverty, gender impacts
- Environmental impacts
- Project Costs (US$)
- Operation and Maintenance Cost
- Recommended implementation schedule
- Potential for private investment
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7. - Potential for community
involvement/contributions
5.0 DEVELOPMENT IMPACT OBJECTIVES
Preliminary assessment of likely development
impact objectives of the project(s) in terms of urban
5.1 Assessment environmental improvement, urban poverty ( )
reduction, urban governance improvement and
social and gender impacts.
Preliminary assessment of possible adverse
environmental and social impacts and how to
mitigate those by safeguards (environment,
Adverse Environmental
5.2 indigenous peoples and resettled people). Flag ( )
and Social Impacts
these issues for the anticipated Feasibility Study.
(Refer to ADB’s checklists on social and
environmental assessments)
6.0 FINANCIAL ANALYSIS
Preliminary estimates and summary of project costs
6.1 Project Costs ( )
of identified and prioritized projects.
Analysis of the current municipal revenues,
recurrent internally generated and other revenue
6.2 Municipal revenues (funds from irregular sources that can vary ( )
significantly from year to year). In addition, analysis
of grants and loans situation.
Analysis of recurrent expenditure, other
expenditure (operation & maintenance, possibly
6.3 Municipal expenditure ( )
electricity etc) and development (capital)
expenditure.
Preliminary estimates of project costs. Analysis of
the current investment situation to derive a
financial envelope to finance the identified
investment projects. Undertake financial and/or
economic analysis of the project. Elaborate various
Economic and Financial
6.4 funding scenarios considering potential ( )
Analysis
loans/grants from development banks, possible
private investments and government contribution,
producing projections of financial statements as
required to evaluate viability. (Refer to ADB
guidelines on economic and financial analysis)
Conclusion remarks of the current investment
6.5 Conclusions situation and the affordability to finance identified ( )
investment projects.
7.0 IMPLEMENTATION ARRANGEMENTS
Recommend and elaborate likely implementation
Implementation and and operation arrangements for the potential
7.1 ( )
Operation Arrangements project(s) including possible potential of public-
private partnership (PPP). Indicate possible
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8. institutional weaknesses and suggested measures
to rectify the situation.
8.0 RISKS
Initial assessment of the key risks for each proposed
8.1 Assessment ( )
project.
Identify the major assumptions which are made for
recommended projects. Indicate if there are any
circumstances outside the control of the
8.2 Assumptions recommended project, if they occurred, would ( )
prevent the achievement of the main objectives.
These assumptions would be analyzed further at
the feasibility stage.
Identify broad risks to both implementation and
sustainability. Indicate risk management strategies,
8.3 Risks ( )
if relevant. To be further developed at the feasibility
stage.
9.0 FORTHCOMING FEASIBILITY STUDY (if required)
Indicate the need and reasons for further studies, if
9.1 Further studies ( )
required.
Briefly summarize the requirements to indicate
likely data and survey needs, required expertise,
Feasibility study
9.2 support facilities, locations, and institutions to be ( )
requirements
consulted, skills required on the team and time
requirements.
10.0 CONCLUSIONS AND RECOMMENDATIONS
Summarize the conclusions and recommendations
Conclusions and
10.1 from the study. Highlight key issues and suggested ( )
Recommendations
way forward for the local government and/or city.
11.0 APPENDICES
To be attached as necessary e.g. data and survey
11.1 Appendices sheets, detailed technical descriptions and costing, ( )
project fiches, key references etc.
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9. Cities Development Initiative for Asia
Suite 202-203 Hanston Building, Emerald Ave.,
Ortigas Center, Pasig City 1600,
Metro Manila, Philippines
Phone: +63-2 631-2342 • Fax: +63-2 631-6158
Website: www.cdia.asia
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