Is the entity that prepares the feasibility study report responsible for its conclusions?
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I read in the news recently that, at current oil prices and given the constraints related to environmental protection and water resources, most coal chemical projects are now operating at a loss, many of them being projects that have just been completed. So the question is, these new projects were all built in recent years, and before construction, the owners commissioned design firms to prepare feasibility study reports. Upon receiving the commission, the design institute is required to assess the financial and economic feasibility of the project, as well as to forecast market conditions, price trends for products, supply, and demand. 1. So the question arises: with the project suffering heavy losses at present, does this mean that there are serious errors in the feasibility study report prepared by the design institute? Is the entity that prepares the feasibility study report responsible for its conclusions regarding the losses caused to society by the enterprise? 2. Some design institutes are responsible for preparing feasibility study reports, and then these same institutes end up acting as the overall project managers or EPC contractors. This creates a conflict: from an interest perspective, the design institutes want the project to get underway as quickly as possible so that they can benefit from it. So the question arises again: can a design firm that originally intends to carry out this project still conclude that the project is not feasible? 3. Is it permitted for the entity that prepares the feasibility study report to also provide services such as design, construction, procurement, and supervision for the project?
No need. It takes several years between the feasibility study of a large-scale project and its actual commissioning, and many external conditions change during that time; for example, who would have thought three years ago that oil prices would drop to their current levels?
Does this allow the entity that prepares the feasibility study report to also provide services such as design, construction, procurement, and supervision for the project?
Supervision is in conflict with design, construction, and procurement; these four functions cannot be handled by the same entity. In actual project implementation, it is common for feasibility study, design, construction, and procurement to be carried out by the same party, though the legal provisions on this matter are not clear
That’s a good question of yours. I’ve never seen a client ask a design firm to prepare a feasibility study only for that study to conclude that it’s not feasible. . .
In actual project implementation, feasibility study, design, construction, and procurement are often handled by the same party. It is indeed. If feasibility study, design, construction, and procurement can all be carried out by the same party, independence is essentially lost.
Yes. After the feasibility study, the conclusion was that all options were viable, which is quite uninteresting.
They think deeply about issues, are diligent in thinking, good at reading, and think further after reading – truly worth praising
The losses incurred by coal chemical projects are closely related to the drop in crude oil prices, which came as a surprise to many people； What I actually want to ask is, what is the difference between financial feasibility and economic feasibility?
Economic analysis evaluates projects from the perspectives of the industry, society, and region. Consider the project’s contribution to society when allocating resources. For example, in the case of high-speed trains today, from a financial perspective, the railway corporation incurs losses; yet it plays a significant role for society, in terms of logistics, and by saving people time.
Whoever holds the money has the final say; the conclusions in the feasibility study reports are all deemed feasible! !