Detailed Feasibility Study
The detailed feasibility study is a more significant and thorough study than the initial feasibility study and requires a much greater degree of commitment by the company. The aim of this study is to arrive at accurate information and results that will allow the company to make firm decisions about the technical, legal, commercial and financial viability of the proposed CHP scheme.
Much of the work is similar in principle to that carried out in the initial feasibility study, and there should be no major change in the overall objective of the CHP evaluation procedure. If there have been such changes, it may be advisable to review the initial feasibility study – and even repeat it to allow for these.
To provide a meaningful result, the level of detail and accuracy must be as high as possible. To this end, most of the tasks carried out as part of the initial feasibility study must be repeated in much greater scope and detail.
Feasibility Study Management
The detailed feasibility study is normally carried out by a team, under the leadership of an appointed project leader. It is helpful to maintain continuity by using the same team members who were involved in the initial feasibility study. Depending on the scale of the project, it is quite common at this stage for the project leader to be occupied full time on the study for up to three months, with specialist input, as necessary, from the other team members.
The study can be approached in several ways:
- The whole study can be carried out in-house if sufficient resources and skills exist that can be dedicated to the work.
- The project leader can appoint specialist consultants to carry out the whole study. This may offer the advantage of greater accuracy and efficiency because of the consultants’ experience of other CHP schemes which, in turn, may give company management a higher level of confidence in the results. This approach can mean that higher apparent costs are incurred although, in many cases, the cost of providing in-house resources is not a financial one alone.
- The project team can be supplemented by the appointment of one or more consultants who can bring particular skills and experience to the team and hence optimise the study’s accuracy and effectiveness. Within such a partnership arrangement, the division of responsibilities must be clearly defined and be appropriate to the skills and expertise of the team members, with the project leader appointed from within the company.
The appointment of appropriate consultants is usually carried out by inviting suitable organisations to submit their proposals against an outline study specification drawn up by the project leader. The responses should cover issues such as experience and expertise, references relating to similar work carried out, costs involved, and nomination of personnel to carry out the work.
It is unusual for a company to identify in-house all the resources and skills necessary for a detailed feasibility study: only companies that already have experience of CHP are likely to be able to carry out a full and effective study of this type without some external support. Furthermore, the time and effort required for in-house staff to acquire the necessary skills and detailed knowledge of all aspects of CHP can be more costly than recruiting external sources of the skills and knowledge.
An important management input to the detailed feasibility study is a decision on the procedure and level of detail that will be required for any financial evaluation of the CHP options. This input will need to include company policy on issues such as discount rate, capital allowances etc.
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