Step 1: Preparation of Terms of Reference for a Feasibility Study

Feasibility studies are generally carried out by engaging consultants. The first step is to prepare ToR for the consultant. The ToR shall describe clear objective(s), scope of works, etc and guidelines

Refer ▬►PWD Part II Procedural Directives, Volume A General Procedures,Chapter2, Feasibility Studies, Pages 2-2, 2-3 .

2.2 Steps in a Feasibility Study

Table 2.1 Steps in a Feasibility Study

Step	Activity	Responsibility	Time *
1	Preparation of Terms of reference for a Feasibility Study	Preparation: Project Manager Approval: Departmental Head	0.5 month
2	Appointment of Feasibility Consultant	Processing: Project Manager Approval: (Refer PWD I-9)	Up to 6 months
3	Development of Project Objectives and Scope	Consultant or Project Staff	0.5 month
4	Data Collection	Consultant or Project Staff	0.5 month
5	Development of Project Works	Consultant or Project Staff	0.5 month
6	Stakeholder Participation	Consultant or Project Staff	2-3 months
7	Preliminary Engineering	Consultant or Project Staff	2-3 months
8	Preliminary Cost Estimate	Preparation: Consultant or Project Staff Approval: (Refer PWD I-9)	1.0 month
9	Economic and Financial Analyses	Consultant or Project Staff	0.5 month
10	Identification of Institutional and Training Requirements	Consultant or Project Staff	0.5 month
11	Proposed Implementation Modalities	Preparation: Consultant or Project Staff in consultation with Project Manager	0.25 month
12	Proposed Funding Modalities		0.25 month
13	Assessment of Project Risks	Executing agency or donor	0.5 month
14	Initial Implementation Plan and Schedule	Executing agency	0.5 month
15	Feasibility Report	Preparation: Consultant or Project Staff in consultation with Project Manager	-
	Total Elapsed Time	All	Up to 12 months

* Time required for a major central level project. Time required for smaller projects should be no more than 1-2 months.

Step 1. Preparation of Terms of Reference for a Feasibility Study

While preparing the TOR for a feasibility study the following guidelines apply:

The objective of the feasibility study shall be to investigate the technical and economic feasibility of the project so that a decision can be made regarding the scope and appropriateness of the project before proceeding with detailed engineering design.
The scope of work for the study shall include the requirement to investigate feasible alternatives taking into account topography, geology, hydrology, environment, geotechnical and socio-economic factors. Alternatives should also be compared for various combinations of level-of-service standards. It is useful to mention in the TOR alternatives identified in the project identification stage.
Order-of-magnitude estimates (±25%) of direct costs (land, construction and maintenance) are sufficient. These can be determined from reconnaissance field surveys and prevailing district rates. Cost analysis shall include standards, initial costs and life cycle costs.
The depth of technical investigations, surveys and analyses shall be prescribed in the TOR. Mountain-specific aspects shall be duly considered for projects in mountainous regions.
The benefits envisaged from the project that need to be evaluated in the economic analysis shall be clearly prescribed in the TOR.
The feasibility study shall investigate other benefits and indirect costs and incorporate these in the economic analysis.
The feasibility study shall include social and environmental assessments unless these are being conducted as separate studies. The findings and recommendations of the social and environmental studies shall be incorporated into the feasibility study cost estimates and economic analysis.

The guidelines in the following sections shall also be considered while preparing TOR for the feasibility study and during supervision of the feasibility study.

Step 2. Appointment of Feasibility Study Consultant

Refer to Part II, Chapter 15 Appointment of Consultants.

Step 3. Development of Project Objectives and Scope

The development of the project objectives should be based on the sector policies of HMG/N and pertinent donor requirements. Usually a single principal objective shall be stated with a number of specific sub-objectives. A logical framework approach may be a useful tool to develop the goals and objectives for the project. While developing the objectives of the project, it is useful to refer to ex-post evaluation reports of similar projects in order to benefit from the lessons learned and recommendations coming out of earlier projects.
The recent policy statement of the NPC states that “all proposals for all new development projects funded by foreign donor agencies and all central level development projects funded by HMG/N shall include a logical framework from the beginning of fiscal year 2000/2001”. An example of the proposed logical framework is presented below:

Table 2.2 Logical Framework for Development Projects

Project Title:
	Narrative Summary	Objectively Verifiable Indicators (OVI)	Means of Verification (MOV)	Key Assumptions
Goal
Purpose
Outputs
Activities
Inputs

The key elements of the logical framework approach are briefly discussed below:

Goal: The ultimate goal or rationale of the project to which the specific project will contribute. The goal may be sectoral or area specific.

Purpose: The immediate objectives of the project. It is recommended that each project component should have only one primary objective.

Outputs: The specific result to be produced by each project component i.e. the project “deliverables”.

Activities: The activities that have to be undertaken by the project in order to produce the outputs.

Inputs The resources needed to implement activities. The inputs of a project are people, budget, materials and information.

Objectively Verifiable Indicators (OVI)
A set of criteria presented in terms of quantity, quality, time and cost which will indicate in concrete terms that the expected results are achieved. The indicators should be presented in measurable terms stating baseline and target values as well as the time frame for their achievement.

Means of Verification (MOV)
The monitoring mechanism in a project such as specific reports and site visits by the Project Manager, donor or other monitoring agencies.

Key Assumptions
External conditions that could affect the progress or success of the project and which are outside of the control of the project. If these conditions change, they may adversely affect the delivery of project objectives. They should be considered as the risk associated with the project and should be evaluated separately.

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