Chap3. Project identification and PPP screening

Why is a preliminary analysis performed before the Appraisal Phase in the PPP Process?

• a. There may not be time to complete a full analysis in the Appraisal Phase

• b. To avoid the risk of sinking resources into the analysis of non-feasible projects

• c. To convert weak projects into valuable or optimal solutions

• d. To confirm that a PPP will deliver the best Value for Money

Answer explanation

Which is NOT a task within the Project Identification and Screening Phase of the PPP Process?

• a. Conduct a comercial feasibility assesssment

• b. Use a Cost Benefit Analysis to ensure a project has sufficient economic merit to proceed

• c. Determine if a project is suitable for delivery as a PPP

• d. Select the preferred technical solution

Answer explanation

Which of the following statements about a government’s project pipeline is true?

1.         A government’s project pipeline should only contain its major PPP projects.

2.         Unsolicited proposals, regardless of procurement method, should not be included in the project pipeline. 

• a. Only 1 is true

• b. Only 2 is true

• c. Both 1 and 2 are true

• d. Neither 1 or 2 is true

Answer explanation

Which statement about the prioritization and selection of projects is true?

• a. An individual user-pays PPP project that is economically and technically feasible should be prioritized

• b. Government-pays PPP projects should be prioritized before user-pays PPP projects 

• c. Projects that produce the highest benefit for society should be prioritized

• d. User-pays PPP projects should be prioritized before government-pays PPP projects

Answer explanation

Using the Cost-Benefit Analysis technique, which is the best technical solution for a project?

• a. Lowest Net Present Value in economic terms or lowest economic Internal Rate of Return

• b. Highest Net Present Value in economic terms or highest economic Internal Rate of Return

• c. Lowest Net Present Value in economic terms or highest economic Internal Rate of Return

• d. Highest Net Present Value in economic terms or lowest economic Internal Rate of Return

Answer explanation

What is true about constraints and dependencies?

• a. Legal and regulatory issues must be resolved before a project moves forward to appraisal

• b. A project containing constraints should not move forward to appraisal

• c. Constraints have to be solved before moving to appraisal

• d. Potential dependencies and constrains have to be identified and clarified before moving forward to appraisal

Which of the following statements about Cost-Benefit Analysis are true?

1. CBA measures the relationship between the costs of a project and the revenues of that project.

2. CBA should be applied to all projects, regardless of the procurement method.

• a. Only 1 is true

• b. Only 2 is true

• c. Both 1 and 2 are true

• d. Neither 1 or 2 is true

Answer explanation

Ref. Section 8

Which describes “opportunity costs” in a Cost-Benefit Analysis?

• a. The value of benefits or costs where no competitive or explicit market

• b. The best alternative use of assets or capital

• c. Those that affect third parties beyond the population to which the project is addressed in the first instance

• d. The cost of the investment itself

Answer explanation

Ref. Section 8

Why are benefits particularly challenging to deal with in a Cost-Benefit Analysis?

• a. All benefits must be tangible

• b. All benefits must be discounted for the effect of taxes

• c. Only direct benefits are considered

• d. All relevant benefits have to be quantified

Answer explanation

Ref. section 8

In which circumstance may the eNPV NOT be the most appropriate performance indicator?

• a. The project may become a PPP and therefore require a different discount rate

• b. The best technical solution has already been identified

• c. Alternatives have significant differences in terms of resource consumption

• d. The project generates or is capable of producing higher benefits than costs

Answer explanation