Market sounding refers to the practice of soliciting opinions from the private sector as to the potential viability and attractiveness of particular projects. Feedback from this process should not be restricted to gauging market interest in the project as it stands but should also seek views on the conditions that would attract greatest private sector attention to the opportunity. Market sounding may need to cover issues such as risk allocation, management and mitigation, cost estimates, and project structure.
Selective market sounding may need to be undertaken to assist with the development of the public sector comparator and partnership model. Market sounding should canvass a broad cross section of the market. Industry representative bodies may be useful vehicles through which market sounding may be undertaken.
In most instances, the government project team's financial adviser would assist in the market sounding even in respect of non-financial matters, reflecting the fact that any technical solution must also be bankable.
Market sounding should occur on a 'without prejudice' basis, and commence only after consultation with the legal advisor. All parties should be cognisant of probity issues throughout this process.