Project Development – Phases & Stakeholders

Every major infrastructure project goes through a well-defined development lifecycle from initial idea to full commercial operation. Understanding these phases and the stakeholders involved is crucial for successful project execution.

Project Development Lifecycle

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Phase 1: Project Identification

Activities

• Identify infrastructure gap or market opportunity
• Define project objective and scope
• Conduct preliminary market assessment
• Evaluate strategic fit with company/government goals

Key Stakeholders

• Sponsors/Developers
• Government (for PPP projects)
• Sector experts

Duration

1-3 months

Phase 2: Pre-Feasibility Study

Activities

• Preliminary technical assessment
• Site reconnaissance
• Initial cost estimates (±30% accuracy)
• Regulatory framework review
• Alternative options analysis

Deliverables

• Pre-feasibility Report
• Rough financial projections
• Go/No-go recommendation

Duration

2-4 months

Phase 3: Detailed Feasibility Study

This is the most critical phase where the project is evaluated in detail.

3A. Technical Feasibility

• Detailed engineering design
• Technology selection
• Site investigation and surveys
• Environmental Impact Assessment (EIA)
• Procurement strategy

3B. Economic Feasibility

• Demand analysis and traffic/revenue projections
• Economic Cost-Benefit Analysis
• Macro-economic impact assessment
• Alternative analysis

3C. Financial Feasibility

• Detailed financial model (20-25 year projections)
• Sources and Uses of Funds
• Financial metrics (Project IRR, Equity IRR, DSCR)
• Sensitivity analysis
• Bankability assessment

3D. Legal & Regulatory Feasibility

• Land acquisition requirements
• Required permits and clearances (15-25 different clearances)
• Regulatory approvals timeline
• Contractual framework

Deliverables

• Detailed Project Report (DPR) - 500-1000 pages
• Financial Model
• EIA Report
• Market Study

Duration

6-12 months

Phase 4: Structuring & Procurement

Activities

Legal Structuring:

• Create SPV (Special Purpose Vehicle)
• Finalize shareholder agreement
• Determine debt-equity ratio

Financing Strategy:

• Identify potential lenders
• Prepare Information Memorandum
• Approach institutional investors
• Structure security package

Procurement:

• EPC contractor selection (through competitive bidding or negotiation)
• O&M contractor selection
• Equipment supplier selection

Contract Negotiation:

• Concession Agreement (with Government)
• EPC Contract
• O&M Agreement
• Off-take Agreement

Key Advisors Engaged

• Financial Advisor
• Legal Advisors (for each party)
• Technical Advisor
• Insurance Advisor

Duration

8-18 months

Phase 5: Financial Close

Financial Close is the date when all project documents are signed and conditions precedent are satisfied, allowing funds to be drawn.

Pre-conditions for Financial Close

1. ✅ All permits and clearances obtained
2. ✅ SPV incorporated
3. ✅ Land acquired
4. ✅ All project agreements signed
5. ✅ Security documents executed
6. ✅ Conditions precedent in Loan Agreement satisfied
7. ✅ Equity funded into SPV account

Documents Signed (20-30 agreements)

1. Loan Agreement
2. Security Documents (Mortgage, Pledge, Assignment)
3. EPC Contract
4. O&M Agreement
5. Concession Agreement
6. Escrow Agreement
7. Direct Agreements (Lenders' step-in rights)
8. Shareholder Agreement
9. Insurance Policies

Celebration Moment

Financial Close is a major milestone celebrated by all parties - it's the "point of no return" where the project becomes a reality.

Phase 6: Construction

Activities

• Site mobilization
• Construction as per approved design
• Monthly progress monitoring by Independent Engineer
• Disbursement of loans linked to construction progress
• Change management (variations to design)

Key Stakeholders

• EPC Contractor (main responsibility)
• Independent Engineer (monitors for lenders)
• SPV (coordination)
• Lenders (fund disbursement)

Duration

2-5 years (depending on project type)

Risk

Construction Risk is the highest risk period:

• Cost overruns
• Time delays
• Technical failures
• Force majeure events

Phase 7: Commissioning & Testing

Activities

• Mechanical completion certification
• Performance testing
• Provisional Acceptance
• Training of O&M staff
• Final Acceptance (after defect-free period)

Duration

3-6 months

Phase 8: Commercial Operation

Activities

• Revenue generation begins
• Debt servicing starts
• Regular O&M activities
• Monitoring by lenders (DSCR, coverage ratios)
• Dividend distribution (after debt service)

Duration

15-25 years (concession period)

Key Stakeholders in Project Development

1. Sponsors

Role: Initiate project, provide equity, manage execution

Examples: Tata Power, Reliance, Adani, L&T

2. Government

Role: Grantor of concession, regulator, sometimes off-taker

Examples: NHAI, Ministry of Power, State Governments

3. Lenders

Role: Provide debt financing (60-80% of project cost)

Types:

• Commercial Banks
• Development Finance Institutions
• Export Credit Agencies
• Institutional Investors

4. Contractors

Role: Design and build the project

Key Contract: EPC Contract (Engineering, Procurement, Construction)

Examples: L&T, Shapoorji Pallonji, GE, Siemens

5. Operators

Role: Operate and maintain the project post-construction

Key Contract: O&M Agreement

6. Off-takers

Role: Purchase project output (power, tolls, etc.)

Examples: State Electricity Boards, NHAI (for toll roads)

7. Advisors

• Financial Advisors
• Legal Advisors
• Technical Advisors
• Environmental Advisors
• Insurance Advisors

8. Regulators

Role: Issue permits, monitor compliance

Examples: Pollution Control Board, Forest Department, Ministry of Environment

Timeline Summary

Summary

• Project development follows 8 distinct phases from identification to operation
• Detailed Feasibility Study (Phase 3) is the most critical - determines project viability
• Financial Close (Phase 5) is a major milestone when all documents are signed
• Construction (Phase 6) carries the highest risk
• Key stakeholders: Sponsors, Government, Lenders, Contractors, Operators, Off-takers, Advisors
• Timeline from concept to operation: 3-8 years
• Each phase has specific deliverables and decision points

Quiz Time! 🎯

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