Studies: fundamental to project success

At Lithon, extensive research and feasibility studies are an integral part of our project advisory and consulting engineering offerings. These scientific analyses determine the viability of a proposed project by considering risk factors and how likely the project is to succeed. “Without these studies, the potential success of a project is unknown, and it may fail as a result,” says Lithon Namibia’s Executive Director Set-Son Shifidi. 

Start strong, finish strong

Bringing a project concept or idea to life requires significant human and financial resources, and it’s essential to understand the process and get off to the best start. Unfortunately, it doesn’t always work that way, as Lithon Namibia’s CEO, Gert Maritz, explains: “Project sponsors often make the mistake of starting with a detailed design – or even construction – without doing market studies, considering environmental and legal factors, or compiling financial models to determine the project feasibility. As a result, they may under- or overestimate the market and underestimate the cost and time involved in implementing the project. And they may then struggle to attract financing and be forced to go back to the drawing board or abandon the project altogether.”

Comprehensive study services

Lithon offers study services through both our project advisory and consulting engineering departments. “Through our 360 degree approach we offer services in both the technical and non-technical spheres of a project. Project Advisory has to do with all the non-technical matters of a project, i.e. legal, environmental, financial, markets etc. We would compile a financial model and factor in all the non-financial aspects as part of the project advisory services. Technical matters related to the project is done by our competent multi-disciplinary engineering departments, ensuring the project is feasible from a technical perspective with no foreseen fatal flaws.”

When conducting these studies, we identify, allocate, and mitigate risks, right from the start, for the entire life cycle of the project. Typically, these risks relate to interest rate fluctuations, inflation, planning, design, construction, operations, demand and supply, and much more. 

Here’s a closer look at what our studies entail.

Needs Analysis: This is the process of analysing the need for a particular product or service in a specific population or area. It’s typically conducted to determine the potential uptake of the product or service.

Opportunity Study: Usually the first step in the pre-investment phase, this study is designed to clearly define the project concept, highlight the envisaged outcomes and benefits, identify the technical options available, and clarify the scope and boundaries. It helps to identify any fatal flaws or reasons why the project cannot work. It looks at environmental, legal, and financial factors and takes into account the market and macro or micro-economy.

Pre-Feasibility Study: This next step in the process takes a more in-depth look at the technical, legal, financial, environmental, and market aspects of the project. It covers key areas including market and demand assessment, technical options, normative estimates of capital costs and operating costs, potential revenue streams, and initial analysis of financing options. 

Feasibility Study: If the project passes the pre-feasibility study, it moves on to a full feasibility study. This stage involves a detailed evaluation of the project feasibility and aims to provide comprehensive information which can be used to make project investment and financing decisions. A full feasibility report typically addresses the following: 

• Project need and boundaries, service outcomes and demand projections
• Technical configuration and feasibility
• Social and environmental impacts
• Policy, legal, regulatory and institutional analysis
• Financial and economic feasibility
• Value for Money analysis and affordability considerations
• Government support requirements and implications for fiscal costs and contingent liabilities
• Project structuring and risk allocation
• Broad terms of the bid process, documentation and contracting
• Market attractiveness and bidder interest
• Roadmap for implementation

A Lithon study in action: The sewer master plan for Otjiwarongo

In 2016, the Lithon team undertook a full assessment of a bulk water scheme for Otjiwarongo in central-north Namibia. We carried out a detailed terrain survey and field investigation to gather information on critical components of the sewer system. We also used computer modelling to identify problems on the existing system and simulate the impact of future developments and extensions. 

With this information, we created a detailed sewer master plan for the Otjiwarongo Municipality. The plan outlined capacity problems on the existing sewer network, proposed mitigation measures, provided complete cost estimates and an implementation schedule and included updated sewer maps to guide the upgrade of the sewer system.

Prepare for project success

If you’re planning your next project, get in touch to find out how our study services can benefit you. Our Project Advisory team not only manages the study process from start to finish, they can handle the implementation and operational aspects of your project too. Our Consulting Engineering team can assist you with needs analysis as well as pre-feasibility, bankable feasibility, and trade-off studies in a wide range of fields. You can also rest assured that Lithon is well-versed in the required criteria for studies where international funding is involved – e.g. funding provided by the African Development Bank.