Definition:
A structured evaluation to ensure a project has met all technical, financial, and regulatory criteria before reaching FID.
Key Components:
- Economic Viability Analysis: Ensuring the financial model supports long-term returns.
- Regulatory & Permitting Status: Confirming all environmental and legal approvals are in place.
- Technical Feasibility Review: Assessing engineering, procurement, and construction (EPC) readiness.
- Risk Management & Contingency Planning: Addressing market, cost, and operational risks.
- Stakeholder & Financing Commitment: Securing funding agreements and project partner alignment.
Use Cases/Industries:
- Oil & Gas: Ensuring new exploration and production projects are commercially sound before FID.
- Renewables: Assessing grid integration, subsidies, and long-term power purchase agreements (PPAs).
- Infrastructure: Evaluating public-private partnerships (PPPs) before committing to major developments.
Advantages:
- Enhances Decision Confidence: Ensures all critical factors have been evaluated.
- Reduces Risk of Cost Overruns: Identifies gaps that could impact execution.
- Strengthens Investor & Lender Support: Provides transparency and risk mitigation insights.
Challenges:
- Time-Intensive Process: Requires comprehensive technical and financial due diligence.
- Stakeholder Conflicts: Different parties may have varying risk tolerance and investment priorities.
Related Terms:
Pre-FID Checklist, Capital Investment Screening, Financial Due Diligence
Example:
A refinery expansion project conducted an FID readiness assessment, identifying procurement bottlenecks that were resolved before financial commitment, preventing a $50 million escalation in material costs.
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Synonyms:
Pre-FID Evaluation, Project Investment Readiness Check, Go/No-Go Criteria
