Many countries require PPP projects to meet feasibility and economic viability criteria. Often this is because meeting these criteria is a requirement for all major government projects, as described above. Other times the requirements are defined specifically for PPP projects. Either way, the content of the appraisal is typically the same. For example:
• In the Philippines, all major infrastructure projects are required to pass through a well-structured feasibility and viability assessment process, set out in a detailed reference manual [#205]. The same process is generally required for PPP projects
• In Chile, the 2010 Concessions Law states that the social evaluation of a potential PPP project must be approved by the Ministry of Planning. This is one of the documents that the Concessions Council must review before allowing a project to be implemented as a PPP
• In Indonesia, guidelines issued by the government-owned Indonesia Infrastructure Guarantee Fund specify criteria by which requests for guarantees to PPP projects will be assessed. The criteria include technical feasibility, economic viability, and environmental and social desirability.
Common challenges in project appraisal-such as optimism bias-also apply when assessing PPPs (see Section 1.3.2 Poor Planning and Project Selection), and should be addressed. The United Kingdom Treasury has published guidance material on overcoming optimism bias.
Implementing agencies should also bear in mind that the work done in assessing project viability also lays the foundation for the rest of the PPP appraisal. The project definition provides the basis for developing the PPP financial model and commercial and fiscal viability analysis, as well as any quantitative value for money analysis. Assessment of technical feasibility, social and environmental sustainability will provide a basis for the risk analysis. Cost and demand estimates developed for the economic viability assessment will also provide initial inputs to the financial modeling, and value for money analysis.