What a Bankable Feasibility Study Must Meet
The gap between a feasibility study prepared by the sponsor and a bankable feasibility study lenders will accept usually lies in independence and the provability of the assumptions.
The role of the independent technical advisor
Lenders almost never accept the sponsor's own feasibility study as is; instead they commission a separate assessment from an independent technical advisor of their own choosing (an Independent Engineer).
That advisor's report covers a wide range, from the proven status of the technology to the realism of cost estimates, and becomes the main reference the credit committee relies on when deciding.
The depth of the demand and market study
The market section of a feasibility study must be backed by independent sources not just for current demand, but for how demand will evolve over the project's life.
A report resting on a single optimistic market scenario is usually deemed insufficient; lenders expect at least one conservative scenario to be presented as well.
The classification level of the cost estimate
Cost estimates must be labeled according to an engineering-industry-recognized classification system (e.g. conceptual, pre-feasibility, definitive); lenders generally require a higher-certainty-level estimate before financial close.
Proceeding to financing with a low-certainty estimate is one of the most common causes of unexpected cost overruns during construction.
Integrating environmental and social impact assessment
On projects funded by international financial institutions, the environmental and social impact assessment must be presented as an integral part of the feasibility study.
When this assessment is missing or superficial, a project can stall even at the latest stage of the financing process.
Consistency between the feasibility study and the financial model
The technical and commercial assumptions in the feasibility study (capacity, yield, cost) must match the financial model's figures exactly; any inconsistency raises serious flags before the credit committee.
For this reason, feasibility and financial modeling work is usually carried out in parallel and regularly cross-checked against each other.
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Learn moreFrequently asked questions
Who selects the independent technical advisor, the sponsor or the lender?
The lender side typically selects or at least approves the advisor; even though the advisor's fee is often paid by the sponsor, the appointment process stays under the lender's control to preserve independence.
What's the difference between a pre-feasibility and a bankable feasibility study?
A pre-feasibility study is generally for internal decision-making and less detailed; a bankable feasibility study is built to withstand external scrutiny, includes third-party verification, and reaches a higher certainty level.
How often should a feasibility study be updated?
It's expected to be updated whenever a material assumption changes (cost, technology, market conditions) or as financial close approaches.
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