While full geotechnical, hydrological, structural, drainage and other technical studies are not required at this stage, sufficient technical work for the prefeasibility study must be undertaken to be able to cost the project (including alternatives) to within ± 20%.
A cost estimate should be prepared for each implementation option that clearly identifies all major elements including engineering works, environmental mitigation works, service diversion costs, accommodation works, land costs, and resettlement costs. A preliminary engineering design (PED) should be undertaken to determine project cost component estimates. These estimates should be based on the actual cost of recently completed projects and other cost databases that may be available.
In making these cost estimates, it is important to ensure that cost data obtained from different sources is converted to the required base year needed for the economic and financial analyses using appropriate inflation indices. For example, all cost estimates should be reflected in 2012 prices.
The operational and maintenance costs should be identified for each element of an implementation alternative. Some maintenance costs will be routine in nature, while others will need to be estimated on a periodic basis. Preliminary cost estimates must also be accompanied by an outline implementation program reflecting the timing and interrelationships of all of the major components of the project. The technical specification must conform to the least cost solution to meet the projected demand (phased if necessary) and other objectives.