September 2004

Risk Management

What to look for in a project feasibility study - Part 2

Here's how to judge the strengths and weaknesses of its technical and economic content

Cooper, H. W., Dynalytics Corp.; Ebin, L. A., Hudson Strategic Partners, Inc.

Project revenues are obtained within the provisions of long-term offtake contracts, or on a merchant basis, or some combination of both. These approaches require different techniques to assess. When assessing a feasibility study, examine how revenues were estimated. Projects with long-term offtake contracts. These require a careful evaluation of the contracts' terms to determine the certainty and consistency of the expected revenue stream. The feasibility study should have reviewed the contract structure for red flag items such as the following, which may limit future revenue payments:       Contract re-openers. Situations may arise that make it i

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