Pre-Feasibility Study Guidelines · Pre-Feasibility Study Guidelines 2 2 STARTING POINTS AND LEVEL OF DETAIL OF THE PRE-FEASIBILITY STUDY Ideally, a PFS should be preceded by a process

Cities Development Initiative for Asia

Pre-Feasibility Study Guidelines

April 2016

CDIA

Pre-Feasibility Study Guidelines i

TABLE OF CONTENTS

1 INTRODUCTION ..................................................................................................................... 1

2 STARTING POINTS AND LEVEL OF DETAIL OF THE PRE-FEASIBILITY STUDY ............................... 2

3 GUIDING PRINCIPLES ............................................................................................................. 0

4 STRUCTURE AND SCOPE OF THE PRE-FEASIBILITY STUDY ........................................................ 1

5 MANAGING THE PRE-FEASIBILITY STUDY PROCESS ................................................................. 8

5.1 Key Milestones in the Assignment ................................................................................................ 8

5.2 Preparing for the Post Pre-Feasibility Study Phase ..................................................................... 10

5.3 Counterpart Consultation ........................................................................................................... 11

5.4 Data Collection and Management .............................................................................................. 11

5.5 Capacity Development ................................................................................................................ 11

5.6 Monitoring and Evaluation Framework ...................................................................................... 12

5.7 Quality Standards ........................................................................................................................ 12

APPENDIX 1: INITIAL DEVELOPMENT IMPACT ASSESSMENT (IDIA) ............................................... 13

APPENDIX 2: SAMPLE DESIGN AND MONITORING FRAMEWORK ................................................. 26

APPENDIX 3: QUALITY STANDARDS ............................................................................................ 28

APPENDIX 4: PRE-FEASIBILITY, FEASIBILITY AND PPTA STUDIES – SIMPLE OVERVIEW ................... 30

Pre-Feasibility Study Guidelines 1

1 INTRODUCTION

The Cities Development Initiative for Asia (CDIA) an international partnership initiative, established in 2007 by the Asian Development Bank (ADB) and the Government of Germany, with additional funding support from the governments of Austria, Sweden, Switzerland and the Shanghai Municipal Government.1 The Initiative provides assistance to medium-sized cities2 to bridge the gap between their development plans and the implementation of their infrastructure investment investments.

Figure 1: Cities Development Initiative for Asia – Activity Focus

These guidelines set out the objectives, processes, and techniques required for the second focus area shown in Figure 1—the Pre-Feasibility Study (PFS).

The overarching objective of a PFS is to determine the merit and feasibility of a particular investment opportunity. Specifically, the PFS will determine whether the proposed investment provides sufficient value to warrant the use of scarce resources (e.g. money, skills, time, etc.) and therefore whether it is worth proceeding to the next stage in the development process and conducting a full feasibility study.

In terms of content, a ‘traditional’ PFS will contain a review of sector investment options and priorities, initial scoping and costing of the identified investment project, measures for addressing social, and environmental (e.g. climate change) concerns and designing the governance and financing structures for implementation. The outputs from the PFS provide a technical, financial, environmental, and social assessment of a project at a level of detail sufficient to write the terms of reference for a full feasibility study (FS).3 However, in some circumstances a PFS will be expected to do more – for example, delivering preliminary engineering rather than conceptual design.

The PFS development process requires building a constructive partnership between the city government, relevant stakeholders, PFS consultants, and the CDIA core management team (CMT), working together to identify, conceive, and structure prioritized urban development projects needed to improve living conditions in a city.

These Guidelines are principally designed to assist PFS consulting teams to deliver quality outputs within the specified time and budget to achieve the objectives outlined above. However, they can also assist city governments in understanding and contributing to the PFS process.4

1 Austria joined the program in 2010 and Shanghai’s involvement ended in March 2015. 2 Defined as having a population of between 250,000 and 5,000,000. 3 CDIA Operational Guidelines. See Appendix 4 for an indication of the principal differences between PFS, FS and PPTA reports. 4 City governments undertaking a PFS are advised to review a report available on CDIA’s website entitled”CDIA Pre Feasibility Study User Manual: For Cities and National Partner Organisations” to better understand the objectives and outputs of a PFS from their standpoint.


2 STARTING POINTS AND LEVEL OF DETAIL OF THE PRE-FEASIBILITY STUDY

Ideally, a PFS should be preceded by a process of prioritizing alternative infrastructure investment projects leading to a clearly defined Investment Program.5 The PFS process normally includes an assessment of one or two priority projects within an investment program framework but, ultimately, the content and form of a PFS will depend on what has been agreed between CDIA and the city which feeds into the scope of the Terms of Reference (ToR).

In cases where a City Development Strategy / Master Plan / Investment Program are not sufficiently detailed (or perhaps even absent), it may be necessary to rework investment priorities, including sector reviews, in the early stages of the PFS. The PFS report may therefore include a section on infrastructure investment programming, detailing the outputs of this process and one or more sections assessing priority projects. These guidelines, however, focus on the development of PFSs for selected projects only.

The PFS typically conceptualizes and structures an investment project at conceptual engineering design, a lower level of engineering design typically expected in a feasibility study being conducted for ADB and World Bank (preliminary engineering design). The accuracy margin to final costs in conceptual engineering design will generally be about 20%. Similarly, in the PFS, the level of policy, social, environmental, and institutional analysis is less detailed than at the feasibility study level. Financial and economic analyses in the PFS will contain internal rates of return, but again the expected accuracy margins will be higher (approximately plus or minus 20%, as compared to an FS where a margin of 10% is expected based on preliminary engineering design). However, as discussed above, although a FS is normally expected to follow on from a PFS, much will depend on what has been agreed between CDIA and the city concerning the required content of the PFS.

The length of the PFS Report will, of course, vary from project to project depending on the number of sectors covered and the complexity of the proposed investment(s). However, the PFS team should aim to make the report as concise as possible while simultaneously ensuring that the needs of the client city and future financier(s)/investor(s) are fully met, and the tasks set out in the ToR fully completed.

5 CDIA has an Excel based tool called “City Infrastructure Investment Prioritization and Programming” (CIIPP) that can be employed to help define such priorities.


3 GUIDING PRINCIPLES

An underlying objective of CDIA’s work is sustainable urban development and, as such, CDIA’s PFS interventions must address at least two of the following guiding principles:

1. Urban environmental sustainability Projects must aim at safeguarding and improving environmental and health conditions through careful selection and design of infrastructure projects and investments. This implies a keen understanding of the urban morphology and trans-boundary issues during project prioritization and programming. At the PFS stage it also requires taking into account disaster resilience, linking national/regional/city development planning and integrating policy-making, resource efficiency and safety/affordability/accessibility/sustainability of public spaces and services, among others.. Likewise, projects should also, ideally, reduce the ecological footprint of the city while at the same time protecting its cultural and natural heritage.

2. Mitigation of and adaptation to the effects of climate change Projects must be able to demonstrate how they strengthen the cities’ resilience and adaptive capacity to deal with climate-related hazards. Despite chronic stresses and acute shocks due to climate change impacts, the city and its systems must be able to survive, adapt, and grow. Furthermore, projects should be able to improve institutional capacity to manage climate change mitigation and adaptation.

3. Urban poverty reduction and gender equality Infrastructure investments should enhance the access of disadvantaged groups to basic services and contribute to their economic development. PFS teams should work with counterparts in government to identify the poor and vulnerable people, their needs, and the types of investments needed to pull them out of poverty. Equally, the PFS team should take into account the different needs, opportunities, and conditions of men and women so that better preparation, implementation, and operation of infrastructure systems can be achieved. Gender mainstreaming in the PFS process involves both analysis and action to ensure that development policy making, planning, and implementation are sensitive to the needs of women as well as men, and promote greater equality of opportunity and benefit.

4. Good urban governance The project preparation process should be as inclusive, transparent, and accountable as possible and involve multiple forms of civic engagement as well as working closely with stakeholders to identify the city’s investment needs. This process is critical to efficient and equitable functioning of cities in Asia. City infrastructure and service provision is often lacking adequate human resources, organizational mandates and institutional processes, thus hampering the governance of the system in terms of efficiency, transparency and accountability. When participation, civic engagement, and bottom-up planning do not come naturally to public sector organizations, and the ability of cities to prepare sustainable urban development solutions is compromised, what emerges is ad hoc development skewed in favor of the few. The urban poor are often marginalized with resulting social tensions.

The PFS should not limit itself to flagging possible adverse impacts from an infrastructure investment, but actively address crosscutting subjects – such as institutional, environmental and social issues – in an integrated and holistic manner with related impacts clearly identified.

The PFS team should coordinate with, and build upon, other relevant plans, strategies, policies, technical assistance and investment initiatives undertaken by government, development agencies, non-government organizations (NGOs) and/or community based organizations (CBOs), the private sector and the informal sector.


4 STRUCTURE AND SCOPE OF THE PRE-FEASIBILITY STUDY

The specific scope and tasks addressed in a PFS will be set out in the project’s ToR and later agreed between CDIA, the client city and the PFS team. Each PFS will, of course, be different with a principal consideration being what kind of output is required by the funding agency identified to take the project beyond PFS stage. However, Table 1 below summarizes the structure and content of a typical PFS and this framework should be utilized for both the Interim and Final Reports.6 Any significant deviation from this template that is proposed by the PFS consulting team must be agreed with the relevant CDIA project manager.

Some Key points to note with respect to the various sections comprising the PFS:

A comprehensive but succinct (i.e. unlikely to be more than 12 – 15 pages) Executive Summary7 is required for the Interim and Final Reports that covers all the key points identified in the PFS particularly in relation to technical, financial and institutional matters.

Each Section of the PFS needs to be as focused and succinct as possible – supporting material (maps, drawings, detailed data, etc.) should be placed in Annexes,

Clear and rational assumptions need to be made explicit for all major recommendations and forecasts.

There will be some degree of overlap between Sections of the PFS which is fine. However, the authors of such Sections (together with the Team Leader) should agree where summary versus detailed information should be placed to best feature content interrelations and it is important not to simply copy and paste material between Sections. For example, there are important links between the outputs of the sector experts (e.g. water, wastewater, solid waste, etc. technical recommendations) and functional specialists (i.e. finance, institutional, environmental, etc.) in relation to the nature, form, cost and impact of proposed activities.

Close coordination is also needed between the PFS project team and city counterparts as well as between the PFS project team and all potential project funding sources.

Each PFS output (particularly the Inception, Interim, Draft Final and Final Reports) will be subject to feedback provided by CDIA, client cities and other stakeholders. The PFS team is expected to produce a Response Matrix in which all comments received are listed together with a formal reply setting out what, if any, action is to taken in response to the comments.

The structure of the Interim, Draft Final and Final Reports is expected to be the same although the nature and scale of the content will, of course, differ. Specifically, at Interim Report stage there will likely be multiple areas of investigation that are not yet complete particularly in relation to technical options / recommendations as well as the financial / economic analysis / environmental examination. Furthermore, there may be some discrete activities that are expected to be completed by Interim Report stage and that require no further work and hence may warrant limited mention at Final Report stage. The Interim Report, therefore, will typically contain a mix of completed PFS outputs and multiple areas of work-in-progress with any such gaps clearly identified.

The Draft Final and Final Reports ought to focus on presenting all the main outputs expected from the assignment with a lesser emphasis on those elements that have already been presented (and accepted) at Interim Report stage.

6 The Inception Report can adopt any structure providing its output requirements (as summarized in Section 4) are met. 7 Please see the Executive Summary for the Bhopal Solid Waste Management PFS (downloadable from the Resources/Guidelines section

of the CDIA webs ite) as an example of a succinct but mostly comprehensive Executive Summary.


TABLE 1: STRUCTURE AND CONTENT OF A PFS

1 EXECUTIVE SUMMARY

1.1 Objectives Brief information of project objectives and background.

1.2 Project Context Short description of the conduct of the PFS and the current situation and context.

1.2 Key Findings

Comprehensive summary of the main PFS recommendations particularly in relation to technical proposals and recommendations, financial and project funding analysis, institutional implications (both organizational and human) as well as environment, climate and social propositions. The Executive Summary should be clearly broken down into easily comprehensible sub-sections and include key tables and graphics.

2 INTRODUCTION

2.1 Reporting Structure

Brief introduction to the PFS, objectives of the report, and how it is structured.

2.2 Schedule Indicate the schedule of the study.

2.3 Consultant(s) and Counterpart(s)

Involved consultant(s) and counterpart staff.

3 KEY DEVELOPMENT ISSUES IN THE CITY

3.1 Current Situation

Indicate project area, policy and legislation, institutional structure and capacity, finance, analysis and overview of the current situation and its impact (successes and failures).

3.2 Urban Development Context

Analyze previous relevant urban development strategies, master and sector plans, and investment programs.

3.3 Initial Urban Governance Assessment

Examine relationships between key stakeholders including service providers, state/provincial government, private sector civil society and citizens8.

3.4 Legal and Regulatory Assessment

Review existing legal and regulatory policies / frameworks that may have an impact on proposed project development.

3.5

Initial Institutional and Capacity Development Assessment

Outline the relevant institutional sector landscape as well as the relationship, structure and capacity of the organizations within. Identify gaps in human capacity and the extent to which these deficiencies have been dealt with in the past and what capacity development measures are in place to help take the city forward.

3.6 Initial Urban Poverty and Social Assessment

Identify the poor and areas where poverty is concentrated as well as key social issues particularly in relation to gender concerns. Assess the impact of previous and planned investment on reducing poverty and addressing social concerns and assess how social impact analysis is included in decision making and subsequently acted upon.

8 See CDIA’s Guidelines for Urban Governance and Institutional Development.


3.7

Initial Environmental and Climate Change Assessment

Highlight key environmental and climate issues facing the city and identify strategies, regulations and institutional capacity put in place for managing such vulnerability.

4 TECHNICAL OPTIONS AND IDENTIFICATION9

4.1 Recommendations

Study’s recommendations and analysis to improve the urban situation. Description of alternative technical options and conceptual design, and social, environmental, and institutional aspects.

4.2 Project Description

Conceptual level project description for each technical option considered that includes:

- Project title - Sector/Sub-sector - Technical description and aspects of each project component

(as much detail as possible on the scale, content and scope of each project component – assumptions are fine)

- Location (maps, photos as required) - The project’s linkage to other existing or planned urban

projects, possible synergies, innovative technology - Project beneficiaries, benefits and outcomes - Environmental impact and climate sensitivity screening – this

information and analysis needs to link with Chapter 5 - Social, poverty, gender impacts and project design features to

enhance inclusive and local economic development – this information and analysis needs to link with Chapter 6

- Project capital, operation & maintenance cost costs (US$) broken down by major category – this information and analysis needs to link with Chapter 7

- Potential for community involvement/contributions - Implementing agency (institutional, organizational and human

capacity development arrangements) – this information and analysis needs to link with Chapter 8

- Project implementation plan – this information and analysis needs to link with Chapter 9

5 ENVIRONMENTAL IMPACT AND CLIMATE RESILIENCE

5.1 Adverse Environmental and Social Impacts

Assessment of environmental and climate links to the project and how the proposed investment may help / hinder in this regard. Identify potential mitigation measures, their estimated cost and expected impact.

(Refer to ADB checklists on environmental and climate assessments as a guide http://www.adb.org/documents/adb-environmental-assessment-guidelines)

9 CDIA has produced a set of Sectoral Guidelines covering urban renewal, slum upgrading, urban transport, energy efficiency, solid waste management, water supply, wastewater management and flood & drainage management. Upon request, the CDIA project manager can provide the PFS team with copies of these reports to assist with the conduct of the PFS.


5.2 Climate Sensitivity Screening

Examine and assess how climate change affects or can affect existing and proposed infrastructure, and put forward mitigating solutions.

6 POVERTY, GENDER AND SOCIAL IMPACTS

6.1 Urban Poverty, Gender and Social Impacts

Assessment of how the project is linked to urban poverty reduction10 and social and gender specific opportunities and synergies. Elaborate potential mitigation measures and safeguards (including gender specific, indigenous peoples and resettled people protection and representation). (Refer to CDIA Checklist for Inclusive Urban Infrastructure Investments: http://cdia.asia/resources/downloads and ADB Guidance Note on poverty and social assessments: http://www.adb.org/documents/guidance-note-poverty-and-social-dimensions-urban-projects)

7 FINANCIAL AND ECONOMIC ANALYSIS

7.1 Municipal Financial Analysis

Analysis of the current municipal revenues, recurrent internally generated and other revenue (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 and maintenance, possibly electricity, etc.) and development (capital) expenditure.

7.2 Project Financial Analysis

Preliminary estimates and summary of project costs of identified and prioritized projects (and associated project components) based on input from Section 4. Identification of direct and indirect project revenues including proposed tariffs / charges and demand estimates. Review the city’s current investment situation to derive a financial envelope to finance the identified and recommended investment project(s). Undertake financial analysis of the project(s) (including FIIR) and produce financial statements / projections to help evaluate the financial viability of the project(s). (Refer to ADB guidelines on financial analysis for guidance http://www.adb.org/documents/financial-management-and-analysis)

10 The Consulting Team should refer to CDIA’s Nine Step Pro-Poor Project Design approach that may be downloaded from the Resources/Guidelines section of the CDIA web site.

http://cdia.asia/resources/downloads/


7.3 Economic Analysis

This will assess the overall costs and benefits of the project(s). An EIIR analysis is to be prepared in which the social and economic benefits of the investment(s) are assessed together with the financial analysis. Yardsticks used and underlying assumptions should be clearly presented and justified. (See ADB guidelines on economic analysis for guidance projects & http://www.adb.org/documents/guidelines-economic-analysis-projects)

7.4 Linking to Finance

This is a critical element of the PFS. The team leader and financial experts in the consultants’ team should, at an early stage, consider from where the investment(s) might be financed and begin mapping the institutions that may be interested in financing projects or components of projects. The team should elaborate various funding scenarios considering potential loans/grants from development banks, commercial bank debt financing, opportunities for PPP and other forms of private investment as well as national / provincial government contributions. The consultants should set out clearly what needs to be done to secure funding from identified financing institutions.

7.5 Conclusions Conclusion remarks of the current investment situation and the affordability to finance identified investment projects.

8 INSTITUTIONAL ARRANGEMENTS

8.1 Operational Arrangements

Recommend and elaborate adequate implementation and operation arrangements for the potential project(s) which will likely encompass local government, utility service provider and, potentially, private sector partners.

The analysis should assess a range of issues including:

- Governance problems (i.e. accountability and transparency concerns that may impact upon effective and efficient project implementation).

- Institutional weaknesses (i.e. problems in coordinating between relevant agencies).

- Organizational weaknesses (i.e. deficiencies in the operational capacity of the agency directly responsible for project implementation).

- Human capacity deficiencies (i.e. skills, knowledge and experience gaps as well as gender balance and inclusion issues).

and propose measures and a related roadmap to rectify identified problems.


9 IMPLEMENTATION PLAN

9.1 Project Ownership

Investment programs / proposals need to be owned and endorsed by the public, political representatives, and other city stakeholders. This is especially true when national and/or domestic resources are being considered for co-financing program implementation. While this is the responsibility of city authorities and relevant government agencies, the consulting team must communicate the required process to relevant agencies and assist where possible.

9.2 Timeline for Project Implementation

Produce a time line for proposed project implementation together with key milestones and outputs.

9.3 Further Studies

Depending on the nature of the study (i.e. PFS, FS, some hybrid report), the PFS team may need to produce draft terms of reference for the next stage of project development.

Also in relation to the next stage of project development, the PFS team should briefly summarize how to obtain any required data and associated survey needs, support facilities, locations, and institutions to be consulted and highlight the need for gender (or other) disaggregated data / analysis. As part of this analysis, the PFS project team will be expected to Indicate the need and reasons for further studies, if required. Such studies may, for example, be needed to address an important gap or barrier that is presently hindering project development.

10 RISKS

10.1 Risk Assessment and Mitigation

Identify risks to both project implementation and sustainability. These may include technical, political, institutional, social (including gender), financial, economic, capacity and environmental risks. The risk analysis should also examine the major assumptions made for recommended projects identifying any critical factors outside the control of the project developers Indicate risk management strategies, if relevant (i.e. proposed risk allocation between potential implementing entities).

11 ANTICIPATED DEVELOPMENT IMPACT

11.1 Development Impacts per Sector

This Chapter should elaborate all impacts (both positive and negative) expected from project implementation. This will entail identifying and extracting expected results / outcomes from each of the previous Sections of the PFS and so will cover a wide range of factors including infrastructure service impact, economic impact, poverty, gender, climate and environmental development elements, governance, organizational and human capacity factors, etc. It may be advisable to present a summary of these development impacts in a table. The information contained in this Section will help in preparing the Initial Development Impact Assessment (IDIA).


12 CONCLUSIONS

11.1 Conclusion and Impact Summary

The PFS team should draft a short Report conclusion that succinctly draws together the key findings of the study.

13 APPENDICES

12.1 Appendix 1 IDIA including the Design & Monitoring Framework (DMF)

12.2 Other Appendices To be attached as necessary, e.g., data and survey sheets, detailed technical descriptions and costing, project fiches, and key references, etc.


5 MANAGING THE PRE-FEASIBILITY STUDY PROCESS

The PFS is expected to be completed in an inclusive, open, and consultative manner based on a partnership arrangement between the consulting team and the recipient city government or governments in the case of studies being conducted in a simultaneous manner with multiple cities (“cluster” approach). Each party plays a key role in the successful implementation of the process.

5.1 Key Milestones in the Assignment11

The consultants’ TOR will be the principal guide for conducting the PFS assignment. However, to ensure that the process is clear and structured, and the delivered output is coherent, the following steps are suggested (see Figure 2):

a) Pre-Mobilization Phase

A number of important activities will have taken place in advance of the consulting team beginning work. These include: one or more missions by CDIA staff to the city (or cities) to review the situation and carry out initial data gathering (as described in associated mission reports), signing of a Technical Assistance (TA) agreement between CDIA and the city (or cities), and the preparation of logistical arrangements.

Prior to the Mobilization Phase the Team Leader must consult with the CDIA Project Manager to obtain copies of all relevant documentation and project information, to ensure that the scope and expectations of the assignment has been correctly understood, and to discuss any other matters that may impact upon the conduct of the PFS (e.g. non availability of a team member). It is also recommended that the PFS team study related programs and activities in the country to establish a sound understanding of the urban development situation being addressed. A video conference meeting between key members of the PFS team, the CDIA project manager (and any other relevant parties) prior to Mobilization is also recommended.

b) Mobilization Phase

International and national consultants are mobilized to the project and the city location(s) where initial meetings are held. This is an opportunity for the consultant team, city government representatives, and the CDIA core management team to be introduced to each other. This signals the formal commencement of the assignment. It is essential that the team leader, the deputy team leader, and other team members (where possible) attend these discussions to review TORs, counterpart responsibilities, logistical issues, and expectations from city officials. Experience indicates that a good start sets the tone for the implementation of the assignment. It is also critical during this stage that cross cutting specialists and sector specialists are able to set the rules for collaborating with each other during the study.

c) Inception Phase

An Inception Report is normally produced within 4 to 6 weeks of commencing the assignment. In consultation and partnership with the city government, the consulting team will have done the following:

Conducted a situation and/or gap analysis of specific urban and related sector(s).

Identified potential bottlenecks and/or challenges, highlighting locally available solutions.

11The PFS team may also need to produce other outputs not listed here. For example, CDIA is a partner with the International Infrastructure Support System (IISS) a project development and marketing information platform. Depending on the engagement, the PFS team may need to submit project details to the IISS database. Also, as discussed previously, some PFSs will go beyond their ‘traditional’ form and require additional work / outputs. Appendix 4 gives an indication of the kinds of outputs expected from other study types.


Reviewed state of city’s financial health.

Set the approach for the remaining stages of the study, having defined clear personnel and/or milestone schedules and study boundaries.

Carried out any other tasks prescribed in the ToR for this phase of work.

d) Midterm (Interim) Phase

A Midterm or Interim Report is normally submitted within 2–4 months of commencement. This report will document the situation and/or gap analysis across the key investment sectors and development themes (institutional, public finance, social, economic, environmental, political, and organizational) as required, and if not already described in existing documents, explain the process of identifying project options and sector priorities in consultation with a broad range of stakeholders.

The process of bringing priority projects to pre-feasibility table in terms of financial, economic, and social analysis should be well under way at this stage, and conducted in close consultation with the city government and other primary stakeholders. Experience shows this is to be crucial to broad ownership of investment ideas and projects. Training, organizational and institutional development activities conducted through stakeholder workshops or other similar activities may be under-taken during this phase.

e) Final Phase

A draft final report should be submitted 1 month before the completion date of the assignment. At this point, the consultants’ team and city government counterparts have already agreed on a set of priority projects, which have been subjected to pre-feasibility analysis and preparation (and possibly more detailed investigation and work). ‘Traditional’ PFS outputs include concept (sketch) engineering design, financial analysis and internal rates of return (FIRR), economic analysis and internal rates of return (EIRR), an institutional assessment, social and poverty analysis, and environmental analysis.

The report will describe options, structures and/or scenarios for project implementation. The report findings and proposed project investments will be discussed with stakeholders and submitted to CDIA once consensus between city representatives and other stakeholders is reached.

The draft final report (as well as the final report itself) should include in its Appendices the IDIA including the DMF and any other relevant material that may help the reader to understand how the final set of recommendations has been determined. For example, a long list of technical options may have been considered at interim report stage and it may be worthwhile to present these together with a summary evaluation in an Appendix.

f) Final Report

Once CDIA and city representatives have given the consulting team their comments and feedback on the draft final report, the Final Report should be consolidated and submitted within 2–4 weeks prior to the completion date. The Final Report should include all relevant topics set out in Section 3 and include all relevant material produced in earlier reports so that it can act as a stand-alone document.


Figure 2: Key Milestones in the Pre-Feasibility Study Preparation Process

Source: Cities Development Initiative for Asia

5.2 Preparing for the Post Pre-Feasibility Study Phase

Once the PFS final report has been submitted and the consulting team disbanded, there can be an uneasy vacuum, despite the fact that this is the start of one of the most important phases in the project cycle. This new stage presents a number of challenges and raises several important questions. Specifically, the consultants, city officials and CDIA core management team should consider the following questions and agree on the terms:

First, to which institutions, and in what form, should the final PFS reports be presented?

Which financial institutions have been identified and prioritized as part of the PFS work to fund the next stage of project development?

Who will now lead the process of mobilizing resources to finance the feasibility study?

Who will take responsibility for building political and public support for the investments identified in development strategies, master and sector plans, programs and the PFS?

Who is going to take on the responsibility for the necessary institutional changes to be implemented?

What can CDIA do to facilitate this next stage where feasibility resources have not yet been earmarked?

The consultant team and the concerned CDIA officer(s) should work with staff of potential financing and/or capacity building institutions to ensure a smooth transition. With regard to the capacity development roadmap the consulting team shall support the city in identifying short/medium-term partners to facilitate the process.


5.3 Counterpart Consultation

Counterpart consultation should be seen as a key priority activity. The following steps are recommended:

Establish and formally validate Steering Committee structure and counterpart contribution.

Establish sound working relationship with the city counterpart to strive for efficient team work and good cooperation thereby ensuring that key institutions are at all times engaged in the PFS production process and treated as equal partners. Establishment and utilization of a Working Group for such purposes is typically recommended.

Thoroughly explain and inform the counterpart when, and how many, consultants will be present in the city, especially if intermittent inputs are being used. Ideally this is done by providing a tentative staffing schedule and work plan to the counterpart.

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 impacting on the study and agree on how these issued ought to be addressed.

5.4 Data Collection and Management

In the interest of using scarce resources most effectively, maximum use must be made of existing data in producing the PFS (reasonable data are often available in local reports, but not necessarily in English), rather than generating new primary data, which will require prior approval by the CDIA management team. Consultant teams are expected to use their professional judgment to make appropriate assumptions (and spell these out clearly in their report) in the absence of adequate data and where financial and time constraints prohibit the team from developing such data. Where the need for new data collection has been identified, the team must ensure the inclusion of men and women in participatory and qualitative data collection methods, and gender disaggregation of data.

5.5 Capacity Development

The transfer of skills and technology from the PFS team to city government counterparts is an important element in the PFS process, even though constrained by the limited PFS preparation time in the consultant teams’ assignments. The following directions are consistent with the CDIA Capacity Development Strategy:

1. Joint working activities with city counterparts provide opportunities for transfer of skills, technology, and knowledge from the technical experts to their colleagues. Examples might include skills to design and conduct field surveys, project prioritization and design, economic and financial analysis, presentation skills, and report writing, to mention a few. This methodology requires counterparts to be integrated into, and play an active role in, project teams.

2. Training sessions can be organized by either experts in the team or by CDIA-contracted staff—normally related to one of the number of tools developed in- house to build capacity within cities, for example, to prepare urban infrastructure investment planning and programming. The need and timing should be determined jointly by the city and consulting team.

3. Capacity development measures regarding organizational structure and institutional cooperation should be based on the institutional assessment and capacity development roadmap produced by the consultant.

4. CDIA has identified potential national partner organizations (NPOs) in the region, which have aims compatible with its mandate. NPOs offer cities the opportunity to access technical resources for preparing investment programs and developing organizational


capacity in this field. For example, an NPO specializing in financing feasibility studies through private sector participation could be linked with a city government to build public–private partnership capacity.

With the help of the CDIA core management team, PFS teams and the city government need to assess where NPOs could best add value to the PFS process and how they can be involved with the city in the short, medium, and long term.

5. The PFS process should recommend capacity development measures, which will need to be taken up by the feasibility study team or might be linked to other short/medium-term partners for support. A draft scope of work and/or terms of reference outline should be prepared if possible.

5.6 Monitoring and Evaluation Framework

The Initial Development Impact Assessment (IDIA) presented in Appendix 1 will be a key output of the PFS. It serves to ensure that the PFS intervention addresses the guiding principles introduced in Chapter 3 and should be attached to the final report.

One component of the IDIA is a design and monitoring framework (DMF)/log frame matrix. The DMF summarizes key expected outcomes, impacts, and activities; provides indicators for monitoring; flags risks; and describes proposed project activities for the investment. The development of the DMF, starting with a “problem tree,” is a very useful exercise in integrating team perceptions with those of city agencies and civil society stakeholders, thus, providing a shared vision of the task.12 Similarly, the team must ensure the inclusion of gender indicators, or provide justification for exclusion. A sample DMF is provided in Appendix 2.

The IDIA and the DMF also enable CDIA to monitor during post-PFS stage whether crosscutting themes and development objectives are addressed in the feasibility and subsequent implementation phase of the projects as envisaged in the PFS.

5.7 Quality Standards

CDIA expects the highest professional standards from its consulting teams. This applies to outputs and inputs of national and international experts. Failure to meet these standards undermines CDIA’s credibility as an institution at the forefront of sustainable urban development in Asia. Appendix 3 to these Guidelines sets out the minimum input and quality standards that must be applied in producing the PFS.

12 Reference ADB guidelines on DMF preparation, http://www.adb.org/sites/default/files/pub/2007/guidelines-preparing-dmf.pdf


APPENDIX 1: INITIAL DEVELOPMENT IMPACT ASSESSMENT (IDIA)

CITY PROFILE

SOCIO-ECONOMIC-ENVIRONMENTAL-GOVERNANCE CITY PROFILE

Year

YYYY

YYYY

YYYY

YYYY

YYYY

YYYY

YYYY

YYYY

YYYY

The Initial Development Impact Assessment (IDIA) helps to monitor and evaluate the impacts and relevance of

the Pre-Feasibil ity Study components for CDIA's four development impact areas, which are (i) environment, (i i)

cl imate change adaptation and mitigation, (i i i) poverty reduction and inclusiveness, as well as (iv) good

governance. Please fi l l out all four sections for each PFS component (of particular importance are anticipated

positive impacts and safeguard measures for possible negative impacts). For each development impact area,

the IDIA asks for a description of the relevant design features of the infrastructure component (e.g. gender

separated seating in public transport) as well as the direct impacts of the infrastructure project (e.g. increased

safety for vulnerable groups on public transport).

Date:

Country:

…

PRE-FEASIBILITY STUDY …

City:

Infrastructure Sectors:

…

(e.g Solid Waste Management / Transportation etc)

…

…

Briefly describe the profile of the city and peculiarities relevant for the PFS project (e.g. geographic location in flood

prone area, city divided into subunits, name of the region/province etc):

Value

#DIV/0!

City Land Area (in km2)

$ -

$ -

$ -

0%

$ -

0%

Local Government Expenditures (in USD)

Data

City Population (absolute number)

City Population density (per km2)

City Population Growth (in %)

City Average Income (in USD per capita)

City Poverty Incidence (in %)

Local Government Revenues (in USD)

Source

Capital Investment Budget (in USD)


SHORT PROJECT DESCRIPTION

STAKEHOLDER PARTICIPATION DURING THE PFS PROCESS AND PROJECT DESIGN

PROJECT COMPONENT(S) OF THE PFS

Sector Project Estimated

No. of Beneficiaries

(e.g Solid Waste

Management)

(e.g 2 million)

(e.g Solid Waste

Management)

(e.g 1.5 million)

(e.g Transport)(e.g 800,000)

Estimated

Investment Value

(USD)(e.g 1,000,000.00)

(e.g 1,000,000.00)

Project Component

(e.g Door-to-door Waste Collection System)

(e.g Landfill)

(e.g Bus Terminal)

…

Briefly describe the involvement of the city counterparts, the main political stakeholders, additional stakeholders

(NGOs, communities, private sector, etc.) and target group in regard to the PFS process and project design.

For example: A Medium Term Investment Program for Environmental Infrastructure and Pre-Feasibility Studies for

Solid Waste Management and Drainage and Flood Protection.

(e.g 500,000.00)

Please list down all project component(s) that is/are included in the PFS (including the name of the project, sector,

EIV, no. of beneficiaries etc). Please insert/delete row when necessary.

…


PROJECT DESIGN AND MONITORING FRAMEWORK (DMF)

For additional information on drafting the DMF please refer to ADB Guidelines for Preparing a Design and

Monitoring Framework, http://www.adb.org/sites/default/files/pub/2007/guidelines-preparing-dmf.pdf

Please insert the DMF for the proposed infrastructure project from the PFS report.

Project Impact

Development goal or higher-

level objective to whic h the

project contributes at the

national and/or sectoral level.

Outputs

Facilities, goods and services

delivered by the project that

are necessary to achieve the

project outcome.

Project Outcome

Direct effects or benefits

(positive changes for the

target group and/or area)

that the project intends to

accomplish by the end of

project implementation.

Design Summary

Activities with Milestones

Key actions or tasks that need to be undertaken using project inputs to produce or

deliver the desired outputs (Include projected completion dates and/or important

milestones for each activity)

Assumptions and risks

External factors or

conditions necessary to

sustain the achievement of

project impact

External factors or

conditions to be met achieve

the project outcome

External factors or

conditions to be met achieve

the project outputs

Inputs

Physical, financial, and

human resources to carry

out project activities

Performance

Targets/Indicators

Quantitative and qualitative

measures for judging whether

or not the project has

contributed to the achievement

of the development goal.

Quantitative and qualitative

measures for judging whether

or not the project outcome has

been achieved

Measures of the quality and

quantity of outputs and the

timing of their delivery

Means of

Verification

Sources of

information and

methods used to

collect and report

on the project

impact

Sources of

information and

methods used to

collect and report

on achievement of

project outcome

Sources of

information and

methods used to

collect and report

on achievement of

project outputs












APPENDIX 2: SAMPLE DESIGN AND MONITORING FRAMEWORK

Wastewater Management Project in ABC City

Design Summary Performance

Targets/Indicators

Data Sources

Reporting Mechanisms Assumptions and Risks

Impact

Sustainable wastewater

services for residents of ABC

City

By 2020:

% increase in population

connected to wastewater

network (xx% are from poor

and vulnerable groups; xx%

are from female-headed

households)

Improvement of water quality

to national effluent standards

of XYZ River

For all indicators:

Annual reports of ABC City

Department of Environment

Assumption:

Government commitment to

improving wastewater

services is sustained

Risks:

XYZ River Action Plan is not

implemented on schedule;

solid waste problems remain

unresolved

Outcome

Improved access to efficient

wastewater services for the

residents of ABC City

By end of project (2020)

% increase in sewage

collection through sewerage

network

Increase in wastewater

treatment capacity

% of effluent samples from

wastewater treatment plants

complying with national

effluent standards

Number of households with

new sewer connections (xx%

of new beneficiaries are from

poor households; xx% of

female-headed households

in service area benefitted)

For all indicators:

Annual reports of ABC City

Department of Environment

Assumption:

Capacity building activities

for ABC City Department of

Environment are

implemented as planned

Risks:

Construction of ancillary

facilities for the wastewater

treatment plant is delayed

Outputs

1. Sewerage network

rehabilitated and

expanded

By end of project (2020)

1.1 Length (km) of sewer

interceptors constructed

along riverbanks

1.2 Length (km) of new

sewers laid in uncovered

areas

1.3 Number of residents

from low-income groups

employed during

construction work

1.4 Number of schools

covered by public

education activities (xx%

of participants are

female)

For all indicators:

Project progress report

Assumption:

Asset condition survey is

completed on time

Risk:

Delay in construction work

2. Wastewater treatment

plans are modernized and

expanded

a. Volume (ML/day) of

wastewater treated to

acceptable effluent

standards

b. Amount (kW) of power

generated from sludge

and used for operating

the treatment plants

Project progress report

Assumption:

Continuous power supply to


is ensured

Risk:

Resistance to construction of



c. Number of decentralized

wastewater systems

constructed in low-

income areas

in populated areas

3. Operational and financial

reforms institutionalized

and capacities

strengthened

a. Sewerage asset

management plan is

made operational

b. Monitoring of wastewater

quality and customer

grievance redress

system put in place

c. Improved financial

management system is

installed

d. At least xx% of

participants in trainings

and at least xx% of

trainers are women

Project progress reports Assumption:

Continuity of employment of

trained project personnel

Risk:

Sewerage tariff not

increased to meet O&M cost

Activities with Milestones Inputs

1. Output 1: Sewerage network rehabilitated and expanded

1.1 City government and ADB agree on advance actions by ___(Date)

1.2 Mobilize design and supervision consultant by ___

1.3 Award all contracts by ___

1.4 Complete sewer inventory, repair and rehabilitation by __

1.5 Complete all construction and commission all facilities by ___

1.6 Complete sewerage asset management plan by ___

2. Output 2: Wastewater treatment plants modernized and expanded

2.1 Mobilize design and supervision consultant by ___

2.2 Award all contracts by ___

2.4 Complete all construction and commission all facilities by ___

3. Output 3: Operational and financial reforms institutionalized and capacities

strengthened

3.1 Finalize wastewater master plan by ___

3.2 Operationalize wastewater monitoring and quality control system by ___

3.3.Prepare annual training program and conduct training by ___

3.4 Hold participatory community monitoring meetings by __

3.5 Conduct project orientations for local community groups by ___

ADB: $xxx million

Consulting services (xxx

PMs): $xxx million

Civil works: $xxx million

Equipment: $xxx million

Training: $xxx million

Contingencies: $xxx million

Government: $xxx million

Personnel (xxx PMs): $xxx

million

Transport and logistics:

$xxx million

Operating expenses:

$xxx million


APPENDIX 3: QUALITY STANDARDS

The following minimum input standards apply:

a) PFS Consulting Teams

1. All national and international experts must provide their inputs in the project location/site. Inputs to be made away from the project site must be clearly justified.

2. Consultant teams must provide inputs to and participate in steering committee meetings and periodic stakeholder consultations. Their participation ensures quality, anchors the pre-feasibility study findings, and represents important milestones in the PFS process. This applies especially to team and deputy team leaders.

3. The CDIA sees relationship management as a critical element in the PFS process. Team and deputy team leaders are expected to foster positive relations with their respective city counterparts. Failure to achieve this can undermine the credibility of the PFS process and products, and ultimately the CDIA. The CDIA core management team (CMT) will facilitate this process as may be required.

4. Consultant teams must work closely with their counterparts in local government and, where applicable, in CDIA national partner organizations, to integrate and institutionalize PFS processes and outcomes into the planning and development processes of the client city government.

5. In the unlikely event of conflict between the PFS team and the city government, or failure to deliver outputs to international standards, the CDIA will hold the lead firm responsible for discharging the assignment and the project director and/or team leader accountable for performance deficiencies. In such an instance, standard ADB contract terms will apply.

6. The CDIA management team must review the integration of crosscutting issues, including gender, in the consultants’ report.

b) City Governments

1. City governments that have agreed to work with CDIA must do so within the framework of a technical assistance agreement with CDIA. The agreement governs the relationship between CDIA, the city government, and the PFS consulting teams on the ground. To ensure a successful PFS outcome, CDIA expects that city governments will meet the commitments set out in the agreement and provide any other reasonable requests for assistance.

2. City governments are expected to deliver on their agreement to provide counterpart contributions and information stipulated in the technical assistance agreement in a timely manner, so as not to delay the implementation of the study. City governments are required to nominate officers from relevant departments to work with the consulting team during the study, and ensure they are available at reasonable notice.

3. City governments must constitute a project steering committee and facilitate its operation. The steering committee is the structural mechanism by which CDIA, the PFS consulting team, and the city government are able to assess progress, determine direction, and ensure that quality is maintained during the study. Timely guidance from the steering committee is crucial to a successful outcome of the PFS.


c) CDIA Management Team

1. The CDIA management team will provide oversight and quality assurance to the PFS process and support from Manila where deemed necessary.

2. The team leader will maintain regular contact with the assigned CDIA management team member and provide regular progress updates (frequency to be agreed).

3. The CDIA management team will monitor progress against the agreed-upon terms of reference and deliverables. All payment invoices will be approved only upon delivery of agreed outputs to the satisfaction of CDIA and the city government.

4. The CDIA management team will provide the PFS consulting teams with support, where necessary, to execute the assignment successfully.


APPENDIX 4: PRE-FEASIBILITY, FEASIBILITY AND PPTA STUDIES – SIMPLE OVERVIEW

Document Type Content & Purpose Summary

Pre-Feasibility Study (PFS) Rapid assessment of project merit conducted in a 3-6 month period

Provide a range of technical options and associated analysis based

on an evaluation of practical feasibility, affordability as well as

financial and economic viability together with a summary of the

advantages and disadvantages identified for each option

Preliminary environmental, social, poverty and institutional /

governance assessments and a capacity development roadmap

Give a recommendation of the most feasible option in

consideration of mid- to longer-term implications

Elaborate a strategic investment plan for the short, medium and

long-term including possible links to financing

A good PFS will significantly enhance the quality of a subsequent FS

20% accuracy/error margin

PFS cost ~USD $250,000-350,000

Feasibility Study (FS) Considerably more in-depth project analysis that takes at least 9

months

Detailed technical design produced in relation to each investment

Highly detailed financial, environmental, institutional and social

analysis also conducted on selected sector-specific option

Detailed investment plan with clearly defined outputs / milestones

Explicit links to financing (including, potentially, draft / template

contracts)

10% accuracy/error margin

FS cost ~USD 1,000,000-1,500,000

Project Preparation Technical Assistance (PPTA)

A PPTA is usually produced to help governments identify and prepare feasible projects. As such, they vary from presenting relatively general project descriptions if no specific intervention has been identified ahead of time to (more usually) providing very detailed project analysis if a particular activity or undertaking has already been specified. Elements that you would expect to find in a PPTA include:

A technical assistance report that will contain a more detailed

technical, institutional economic financial, social and

environmental analysis than you would find in a PFS but not quite

as detailed as would be found in a full FS.

Poverty and social analysis to identify those people who may be

beneficially or adversely affected.

Safeguard assessments if the project requires resettlement of

people or might adversely impact the environment, or indigenous

peoples. The results of these assessments are disclosed and made

available to affected people and other interested stakeholders.

Detailed funding proposal for carrying out the project together

with a Financial Management Assessment concerning the recipient.

Procurement plan in support of the funding proposal.

http://www.adb.org/projects/documents/search/subtype/technical-assistance-reports-1223

http://www.adb.org/projects/documents/search/subtype/initial-poverty-and-social-analysis-1196

http://www.adb.org/site/safeguards/involuntary-resettlement

http://www.adb.org/site/safeguards/involuntary-resettlement

http://www.adb.org/site/safeguards/environment

http://www.adb.org/site/safeguards/indigenous-peoples

http://www.adb.org/site/safeguards/indigenous-peoples

Cities Development Initiative for Asia

Room 7504–7506. Asian Development Bank Building, 6, ADB Avenue, Mandaluyong City 1550,

Metro Manila, Philippines Phone: +63 2 631 2342 • 633 0520 • 633 2366

Website: www.cdia.asia

Documents

Pre-Feasibility Study Guidelines · Pre-Feasibility Study Guidelines 2 2 STARTING POINTS AND LEVEL OF DETAIL OF THE PRE-FEASIBILITY STUDY Ideally, a PFS should be preceded by a process