feasibility studies in construction projects in iceland studies in... · feasibility studies in...

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Feasibility studies in construction projects in Iceland

by

Ásta Ósk Stefánsdóttir

Thesis of 30 ECTS credits Master of Science in Engineering Management

January 2015

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Thesis of 30 ECTS credits submitted to the School of Science and Engineering

at Reykjavík University in partial fulfillment of the requirements for the degree of

Master of Science in Engineering Management

January 2015

Supervisor:

Þórður Víkingur Friðgeirsson, Supervisor Assistant Professor, Reykjavík University, Iceland

Examiner:

Halldór Zoёga, Examiner Engineer and Administrator, Icelandic Transport Authority

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Feasibility!studies!in!construction!projects!in!Iceland! !

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Abstract

The research of this thesis will build on a recently published study on feasibility studies in

public construction projects in Iceland. The previous study was conducted based on the

fact that investment decisions for public projects in Iceland have often been controversial

and it is not always clear how prioritization and selection of projects is evaluated. The

Icelandic law on public project procurement (no. 84/2001) requires that different solutions

to achieve the defined need must be examined and compared internally before applying

for funding by feasibility analysis. However, the law is believed to be limited and the

results of the previous study show that there is a gap between feasibility study procedures

in public construction projects in Iceland and best practices. The research of this thesis is

based on this conclusion with a new angle focusing on feasibility studies in private

construction projects in Iceland. The literature review determines which procedures can

be classified as best practices when performing feasibility studies in the inception of

projects. Then an interview-based qualitative research is conducted including eight

randomly selected private construction projects in Iceland where current feasibility study

practices are benchmarked against theoretical best practices.

The aim of the research is to expand the knowledge about of the last decade´s and current

feasibility study practices in Iceland by comparing the results of the two studies on public

construction projects and private construction projects respectively. The results show that

there is a difference between feasibility study practices in private projects and public

projects where the private projects perform significantly better. But, the procedures are

lacking more than half of the processes to be considered best practices in both cases.

Keywords: Project management; Feasibility study; Cost-benefit analysis.

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Úrdráttur

Þessi ritgerð felur í sér rannsókn sem byggir á annarri nýbirtri rannsókn um

hagkvæmnisathuganir í opinberum framkvæmdum á Íslandi. Fyrri rannsóknin byggði á

þeirri staðreynd að fjárfestingarákvarðanir í tengslum við opinberar framkvæmdir á

Íslandi hafa oft á tíðum verið umdeildar og ekki hefur verið ljóst hvernig forgangsröðun

og val á verkefnum hefur farið fram. Lög um skipan opinberra framkvæmda (no. 84/2001)

gera kröfur um könnun og samanburð á þeim valkostum sem til greina koma við lausn

þeirra þarfa sem framkvæmdinni er ætlað að fullnægja áður en sótt er um fjárveitingu.

Þrátt fyrir það eru lögin talin ábótavön og niðurstöður fyrri rannsóknar gefa til kynna að

munur sé á núverandi starfsháttum í opinberum verkefnum á Íslandi og þeim aðferðum

sem teljast fræðilega bestar í dag á sviði hagkvæmnisathugana. Rannsókn þessarar

ritgerðar byggir á þessari niðurstöðu og felur í sér nýjan vinkil á viðfangsefnið með því að

taka fyrir hagkvæmnisathuganir í einkaframkvæmdum á Íslandi. Fræðilegi kafli

ritgerðarinnar ákvarðar þá vinnuferla sem teljast fræðilega bestir á sviði

hagkvæmnisathugana á frumathugunarstigi framkvæmda. Eigindleg rannsókn byggð á

viðtölum er gerð þar sem átta einkaframkvæmdir eru skoðaðar og niðurstöður þeirra

bornar saman við þær aðferðir sem teljast fræðilega bestar í dag.

Markmið rannsóknarinnar er að auka þekkingu á því hvernig staðið er að

hagkvæmnisathugunum á Íslandi í dag með því að bera saman niðurstöður þessar

rannsóknar og niðurstöður fyrri rannsóknar fyrir opinberu verkefnin. Niðurstöður sýna að

marktækur munur er á því hvernig staðið er að hagkvæmnisathugunum í

einkaframkvæmdum og opinberum framkvæmdum en einkaframkvæmdirnar samræmast

fræðilega bestu aðferðum betur. Þrátt fyrir það þá vantar meira en helming vinnuferla upp

á í báðum tilfellum til þess að hægt sér að flokka aðferðirnar sem fræðilega bestu

starfshætti á sviði hagkvæmnisathugana.

Lykilorð: Verkefnastjórnun; hagkvæmniathugun; kostnaðar-/ábatagreining.

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30 ECTS thesis submitted to the School of Science and Engineering at Reykjavík University in partial fulfillment

of the requirements for the degree of Master of Science in Engineering Management

January 2015

Student: ___________________________________________


Supervisor: ___________________________________________

Þórður Víkingur Friðgeirsson

Examiner: ___________________________________________

Halldór Zoёga

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Feasibility*studies*in*construction*projects*in*Iceland* *

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Table of contents

Abstract ............................................................................................................................... i

Úrdráttur .............................................................................................................................. ii

List of figures ..................................................................................................................... vi

List of tables ...................................................................................................................... vii

1. Introduction ........................................................................................................... 1

1.1 Introduction of the project “Improvement of the public project life cycle” .......... 1

1.2 Statement of the problem ....................................................................................... 1

1.3 Research aim and objectives .................................................................................. 2

1.4 Research questions and hypothesis ........................................................................ 2

1.5 Limitations ............................................................................................................. 3

1.6 Structure of the thesis ............................................................................................ 4

2 Research background ............................................................................................ 5

2.1 Introduction ............................................................................................................ 5

2.2 An overview of international public project governance ....................................... 5

2.2.1 Norway ............................................................................................................ 5

2.2.2 United Kingdom .............................................................................................. 6

2.2.3 Canada ............................................................................................................. 7

2.3 Feasibility studies in public projects in Iceland ..................................................... 7

2.4 Conclusion ............................................................................................................. 9

3 Literature review ................................................................................................... 9

3.1 Introduction .......................................................................................................... 10

3.2 Project feasibility studies ..................................................................................... 11

3.2.1 Introduction into project feasibility studies ................................................... 11

3.2.2 Validity of feasibility studies for construction projects ................................. 12

3.2.3 Project feasibility studies and sustainability .................................................. 14

3.3 Cost-Benefit Analysis .......................................................................................... 16

3.3.1 The major steps in cost-benefit analysis ........................................................ 17

3.4 Framing of feasibility study theoretical best practices ........................................ 22

3.5 Conclusion ........................................................................................................... 26

4 Research methodology ........................................................................................ 26

4.1 Introduction .......................................................................................................... 27

4.2 Research design ................................................................................................... 27


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4.2.1 Qualitative research ....................................................................................... 27

4.2.2 Standardized open-ended interview ............................................................... 27

4.2.3 Interview questionnaire ................................................................................. 29

4.3 Data gathering ...................................................................................................... 29

4.3.1 Data classification .......................................................................................... 32

4.4 Data analysis ........................................................................................................ 33

4.4.1 Current feasibility study practices in private construction projects

in Iceland .................................................................................................................... 33

4.4.2 Current feasibility study practices in construction projects in

Iceland ...................................................................................................................... 34

4.5 Conclusion ........................................................................................................... 37

5 Results ................................................................................................................. 38

5.1 Introduction .......................................................................................................... 38

5.2 Framing of feasibility study theoretical best practices ........................................ 38

5.3 Current feasibility study practices in private construction projects in

Iceland ........................................................................................................................... 39

5.4 Current feasibility study practices in construction projects in Iceland ................ 39

6 Discussion ........................................................................................................... 41

6.1 Introduction .......................................................................................................... 41

6.2 Feasibility study practices in construction projects in Iceland ............................ 41

6.3 Limitations ........................................................................................................... 43

6.4 Further research ................................................................................................... 44

6.5 Conclusion ........................................................................................................... 44

7 Conclusion .......................................................................................................... 45

7.1 Feasibility analysis ............................................................................................... 46

7.2 Feasibility study practices in construction projects in Iceland ............................ 46

7.3 Recommendation ................................................................................................. 47

References ......................................................................................................................... 47

Appendix I: Overview of public project governance ....................................................... 50

Appendix II: Questionnaire form ...................................................................................... 52

Appendix III: Evaluation form .......................................................................................... 55

Appendix IV: Completed evaluation forms ...................................................................... 59


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List of figures

Figure 1: The structure of the literature review and its connection with the previous

chapter as well as the following chapter. .................................................................. 11

Figure 2: Flowchart showing the flow of the six major phases of a feasibility study with

gateways after each phase. ........................................................................................ 25

Figure 3: Average consistency with best practice for all projects with regard to the amount

of occurrences in each category, for private projects and public projects respectively.

................................................................................................................................... 35

Figure 4: ROAMEF CYCLE. Appraisal and evaluation often form stages of broad policy

cycle that some departments and agencies formalize in the acronym ROAMEF

(Rationale, Objectives, Appraisal, Monitoring, Evaluation and Feedback) (HM

Treasury, 2003). ........................................................................................................ 50

Figure 5: The business case model sees the development of the business case progressing

through three phases and within those phases are key steps that will collectively

make up a solid business case (Treasury Board of Canada Secretariat, 2009). ........ 51

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List of tables

Table 1: Consistency with best practice for six selected public projects (Fridgeirsson,

2014). .......................................................................................................................... 8

Table 2: Consistency of approach towards feasibility analysis for six selected public

projects (Fridgeirsson, 2014). ..................................................................................... 8

Table 3: The eight selected private projects, the companies responsible and types of

companies. ................................................................................................................. 30

Table 4: Estimated total cost of the eight selected private projects. ................................. 32

Table 5: Consistency with best practice for the eight selected private projects. .............. 33

Table 6: Consistency of approach towards feasibility analysis for the eight private projects

(occurrences and weighted percentages taken into the account of the number of

activities in each category). ....................................................................................... 34

Table 7: Average consistency with best practice for all projects, for private projects and

public projects respectively. ...................................................................................... 35

Table 8: Average consistency with best practice for all projects with regard to the amount

of occurrences in each category, for private projects and public projects respectively.

................................................................................................................................... 35

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1. Introduction

1.1 Introduction of the project “Improvement of the public project life cycle”

This thesis is a part of a bigger project, which has the work title “Improvement of the

public project life cycle” (IPP). The project is based on the fact that a majority of public

funded projects suffer from cost overruns (Fridgeirsson, 2010) and in Iceland the weakest

link in the public financial management is believed to be unprofessional decision making

(Fridgeirsson quoted The Icelandic National Audit Office, 2010).

The project is aimed at investigating the present situation and determine if there is a gap

between current procedures and best practices. The goal is to provide important

information on current flaws and what has to be done for improvement.

This thesis focuses on project feasibility and is related to the following work packages

(WP) of the project:

• Project scope

• Options

• Appraisal

1.2 Statement of the problem

The research of this thesis will build on a recently published study on feasibility studies in

public construction projects in Iceland with a new angle focusing on feasibility studies in

private construction projects in Iceland. After the recession, the private industry was hard

hit and the need for cost-effective solutions became greater than ever before. Private

funded projects are different from public projects in some aspects. Private funded projects

are usually composed to maximize shareholders profit, while a public project may incur

other purposes. For example, serving strategic objectives, creating jobs and public non-

profit services. In the public sector, the decision makers do not have personal

responsibility for the success of the proposed project and the costs are borne by taxpayers.

However, in the private sector the company follows its project from the beginning to the

end and assumes all responsibility for itself.

The results of the previous study for the public projects show that there is a lack of

systematic procedures in the feasibility phase of projects: when the viability of projects is

determined and projects are selected for funding. To ensure efficient allocation of


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society´s resources and stakeholders´ money, it is important that only the most promising

projects get accepted for funding. The procedures of project management contribute to

this objective, that is, if they are applied at the right time, in the right way and

consistently. The early development of strategies, philosophies and methodologies of

project implementation have been stressed as the most important factor in achieving

success in projects (Munns & Bjeirmi, 1996) where the success is defined as completion

to budget, satisfying the project schedule and meeting the project goal. Project feasibility

studies have these objectives when they are conducted to justify investments in

infrastructure projects and have a vital importance in supporting decisions related to

spending on infrastructure projects. The situation in the feasibility phase of public projects

in Iceland and the importance of feasibility procedures lays the foundation for the need

for further investigation in the field of projects´ inception and feasibility.

1.3 Research aim and objectives

In this thesis, recently published peer-reviewed articles and academic books on feasibility

studies will be reviewed with the aim of framing current best practices of feasibility

studies. Then a research will be conducted, giving insight into feasibility study practices

in private construction projects in Iceland. By examining feasibility study practices in

private projects and comparing the results of the two studies, this research and the

aforementioned study for the public projects respectively, aims to expand knowledge and

give insight into the last decade´s and current feasibility study practices in Iceland. The

objective is to lay the foundation for further improvement in the feasibility phase of

projects, which can benefit all stakeholders in either public or private projects.

1.4 Research questions and hypothesis

The research of this thesis will build on the aforementioned research for public

construction projects with a new angle focusing on feasibility studies in private

construction projects in Iceland. The research will seek to expand the knowledge about

the last decade´s and current feasibility study practices in Iceland and will seek to answer

the questions:

• How are feasibility study practices in private construction projects in Iceland

compared to theoretical best practices?


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• How are feasibility study practices in private construction projects compared to

feasibility practices in public construction projects in Iceland?

The research hypothesis suggests that the same applies for feasibility studies in private

construction projects as in public construction projects. The findings of the previous

research, for public construction projects, show that there is a disparity between current

feasibility study practices and best practices in public projects in Iceland.

1.5 Limitations

This thesis is limited to the methodology of project management and focuses on the

feasibility phase in the project life cycle, more specifically the project feasibility study.

The preparation and foundation of this thesis research is then limited to the literature

review on the subject. The research of this thesis is limited to the examination of the

feasibility study practices in private construction projects. Then the results will be

compared to the results of the previous research for the public projects sourced from

document analysis. However, when collecting data from the private companies for this

thesis´ research the documents available for analysis were limited because private

companies were reluctant to give up important information about their financial practices

and the data was classified. For that reason, another research method had to be chosen and

interviews were the only possibility. It should be kept in mind that possible bias can exist

which does limit the comparability and credibility of the overall results where two

different research methods have been used and the results of the two researches are being

compared. Thus the results only give some indications about the overall feasibility

practices in Iceland.

Where the research involves comparison of feasibility study practices in two different

sectors of the construction business, public sector and private sector, the comparability

and evaluation can be affected. The criteria for private and public projects sometimes is

not the same, where private projects focus more on maximizing financial profitability but

the public projects focus on meeting the needs of the society. Also, impacts of private

construction projects tend to be less environmental and social than public construction

projects. There is also a possibility that the economic crisis might have affected the initial

study practices in private companies where the procedures of funders, for example banks,

might have changed and the requirements for borrowers made higher. That could limit the

comparison between projects implemented before and after the crisis.


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1.6 Structure of the thesis

This thesis contains seven main chapters. Each chapter is summarized briefly below:

The first chapter is the introduction to the thesis where the research is framed and the

background of the thesis is presented. The aim and objective of the research is defined

and the research questions and its hypothesis are presented. The limitations of the

research are explained as well.

The second chapter contains the research background, which the research of this thesis is

built on. At first, the legal framework for public construction projects in Iceland and three

other countries: Norway, Canada and United Kingdom is briefly reviewed and then the

results from a previous study, “The feasibility of public projects in Iceland”, are

presented.

The third chapter includes discussions and reviews of peer-reviewed articles and

academic books in the field of feasibility studies. This chapter focuses on explaining what

feasibility studies entail and its importance in practice. The development of feasibility

studies will be investigated and theoretical best practices framed, which lays the

foundations for this thesis research.

In chapter four, the research of the thesis is introduced and its methodology presented.

The research design is explained, including the research type, research method and data

gathering in addition to presenting data classification and data analysis. The private

projects under investigation are introduced as well. The data from this thesis´ research as

well as the previous research for the public construction projects are analyzed and

compared.

In chapter five, the results of the research are presented where the research questions are

answered and the research hypothesis is tested.

Chapter six includes a discussion on feasibility study practices in construction projects in

Iceland based on the results of the research of this thesis as well as the previous research

for the public projects. In addition, there is a discussion about the limitations of this

research as well as the limitations of a cost-benefit analysis. Then further research on the

subject is suggested.

In chapter seven, the conclusion of the thesis is presented and suggestions for

improvements in the feasibility phase in construction projects in Iceland are made.

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2 Research background

2.1 Introduction

In this chapter, the background of the research will be reviewed and screened, with the

aim of providing a better understanding of the foundation that is laid for feasibility studies

in Iceland. For public projects this foundation is based on legal requirements and in

Iceland the Icelandic law on public project procurement (no. 84/2001) sets those

requirements. This thesis’ research will build on a recently published article, “The

feasibility of public projects in Iceland” (Fridgeirsson, 2014), whose results will be

reviewed later in this chapter. Fridgeirsson (2014) states that “limited transparency was

found in the management of the initial study reports for the public projects and the

findings show that the current process of feasibility analysis during the inception phase is

inconsistent and there seem to be few practices that align with current best practices.”

Fridgeirsson (2014) suggests in order to improve the situation, it is important the Minister

of Finance issues detailed guidelines for conducting feasibility analysis in accordance

with current best practices.

In this chapter, legal requirements, guides and standards on feasibility studies in three

other developed countries: Norway, Canada and United Kingdom, will be reviewed

briefly. The objective of this screening is to provide a better insight into current feasibility

study procedures in the world for comparison to the current Icelandic practice. The reason

for this comparison with other countries is that governmental requests often set a standard

for the industry.

2.2 An overview of international public project governance

2.2.1 Norway

In Norway, The Ministry of Finance issues quality assurance, QA1 and QA2, which all

investment projects with an expected budget exceeding NOK 750 million shall undergo.

The QA1 is the quality assurance of the choice of concept, or the preliminary study. In the

QA1, it´s purpose is described:

“To ensure that the choice of concept has been subjected to a political process of fair and

rational choice. The ultimate aim is that the chosen concept is the one with the highest

economic returns and the best use of public funds. The choice of concept is a political


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decision to be made by the Cabinet, while the consultant’s role is restricted to assert the

quality of the documents supporting the decision” (NTNU, 2014).

According to QA1 (NTNU, 2014), the responsible ministry/agency is required to prepare

a detailed concept evaluation. The evaluation process is described in detail in the QA1.

The QA1 is to be performed sufficiently early, at a time when the choice between

alternative concepts is still open. The requirements for the work procedures for the

consultant are also defined in detail.

The Ministry of Finance in Norway also publishes an up-to date guide to cost-benefit

analysis and in order to further improve user friendliness, the Norwegian Government

Agency for Financial Management publishes a cost-benefit analysis handbook (Ministry

of Finance, 2012).

2.2.2 United Kingdom

In the UK, The HM Treasury provides guidance to other public sector bodies on how

proposals should be appraised, before significant funds are committed, and how past and

present activities should be evaluated. The guide is called The Green Book – Appraisal

and Evaluation in Central Government. The Green Book states that all new policies,

program (group of related projects) and projects, whether revenue, capital or regulatory,

should be subject to comprehensive but proportionate assessment, wherever it is

practicable, as so best to promote the public interest.

The purpose of the Green Book is to ensure that no policy, programs or project are

adopted without first having the answer to these questions (HM Treasury, 2003):

• Are there better ways to achieve this objective?

• Are there better uses for these resources?

This is achieved through (HM Treasury, 2003):

• Identifying other possible approaches that may achieve similar results.

• Where ever feasible, attributing monetary values to all impacts of any proposed

policy, project and program.

• Performing an assessment of the costs and benefits for relevant options.

The process of appraisal and evaluation is described in detail in the Green book and is

shown graphically in figure 4 in Appendix I.


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2.2.3 Canada

The Treasury Board of Canada Secretariat published the Business Case Guide in 2009

after many consolidated efforts were undertaken to improve how investment decisions are

made and supported and business results are measured by the Government of Canada

(Treasury Board of Canada Secretariat, 2009). The purpose of the Business Case Guide is

to support the development of a strong business case that links investments with program

results and, ultimately, with the strategic outcomes of the organization. The primary

audience for the reference tool is Government of Canada program managers seeking

approval for an activity, initiative, or project. The guide should be used throughout the

entire life cycle of the investment, including the approval stage, to ensure meaningful

dialogue between managers and the approval or funding authority from the earliest

possible time (Treasury Board of Canada Secretariat, 2009). In addition, the Business

Case Guide states that regardless of the complexity and risk of the proposed investment,

and whether or not Treasury Board project approval is being sought, the document should

be used to guide the development of the investment´s business case.

The Business Case Guide has been constructed around two policies, Policy on Investment

Planning and Policy on the Management of Projects. The Business Case Guide is a

detailed guide to creating a business case. The business case model is shown in figure 5 in

Appendix I.

2.3 Feasibility studies in public projects in Iceland

In the aforementioned study, “The feasibility of public projects in Iceland” (Fridgeirsson,

2014), six Icelandic public projects were screened from the perspective of how the initial

feasibility is determined in relation to best practice. The research was qualitative and the

methodological approach was based upon document analysis, or more specifically,

content analysis. The projects screened were a diverse set chosen to represent different

project types: tunnel, harbor, concert hall, avalanche barrier, school and tourists service

center (Fridgeirsson, 2014). Descriptive materials, in the form of initial study reports for

the six projects, were analyzed and scored on a numerical scale against the requirements

of best practices. Consistency with best practice was assessed and classified into the

following three categories: full consistency, partial consistency and no consistency.

The findings of the study are shown in table 1 and table 2.


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Project(name:(

Full!consistency!

Partial!consistency!

No!consistency!Full!

consistency!Partial!

consistency!No!consistency!

Vadlaheidi!tunnel! 5! 3! 9! 29%! 18%! 53%!

Landeyjar!harbour! 6! 8! 3! 35%! 47%! 18%!

Harpa!concert!hall! 10! 2! 5! 59%! 12%! 29%!

School!in!Mosfell!town! 2! 7! 8! 12%! 41%! 47%!

Avalance!protection! 4! 5! 8! 24%! 29%! 47%!

Snaefells!stofa! 3! 3! 11! 18%! 18%! 65%!

!! !! !! Average:! 29%! 27%! 43%!

!Table 1: Consistency with best practice for six selected public projects (Fridgeirsson, 2014).

Category!

Normalized!weight!

Full!consistency!

Partial!consistency!

No!consistency!

Weighted!Full!

consistency!

Weighted!Partial!

consistency!

Weighted!No!

consistency!

Project!overview! 0,24! 15! 1! 8! 63%! 4%! 33%!

Alternatives! 0,12! 3! 2! 7! 25%! 17%! 58%!

Benefits!and!cost! 0,29! 7! 16! 7! 23%! 53%! 23%!

Net!present!value!(NPV)! 0,12! 1! 2! 9! 8%! 17%! 75%!

Sensitivity!analysis! 0,06! 0! 2! 4! 0%! 33%! 67%!

Make!a!recommendation! 0,12! 2! 5! 5! 17%! 42%! 42%!

Independent!consultants! 0,06! 2! 0! 4! 33%! 0%! 67%!

!! !! !! !! Average:! 24%! 24%! 52%!

!Table 2: Consistency of approach towards feasibility analysis for six selected public projects (Fridgeirsson, 2014).

Table 1 shows consistency with best practice for the six selected projects and table 2

shows the consistency of approach towards feasibility analysis for the six selected

projects. The category “project overview” is most consistent with best practice. The


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findings show that there is a disparity between best practice and current feasibility study

practices in public projects in Iceland, where 76% of the categories are only partially

consistent with best practice.

2.4 Conclusion

The review of the governmental requirements on feasibility studies in Norway, United

Kingdom and Canada show that the emphasis is laid on the thoroughness and

transparency of the requirements and the focus is on the follow-up by the government.

The foreign requirements indicate strict and detailed rules on feasibility study procedures

as well as great monitoring on behalf of the government. The requirements in the other

countries are also accessible and user-friendly.

The significant gap between theoretical best practices and current feasibility study

practices in public projects in Iceland, revealed in Fridgeirsson´s study, can be derived

from limitations in Icelandic legislation. Where governmental requests often set a

standard for the industry, feasibility procedures in the private sector are also at risk.

The conclusion on the situation in Icelandic legislation on feasibility studies and

feasibility studies practices in public projects in Iceland, lays the foundation for the

research of this thesis, where further investigation in the field of feasibility studies in

Iceland will be conducted focusing on the private sector.

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3 Literature review

3.1 Introduction

The previous chapter included a review of governmental requirements in three other

countries as well as the results of an investigation on feasibility studies in public

construction projects in Iceland. Since governmental requests often set a standard for

industry, the content of the previous chapter lays the foundation for the literature review

of this thesis where the field of feasibility studies will be examined. The chapter will start

with an introduction of feasibility studies and their position within the field of project

management and project life cycle. The aim of the literature review is to determine what

feasibility studies entail as well as an understanding of their importance in practice and

role in the implementation of construction projects. The development of feasibility studies

from the last decade will be investigated, as well as the focus and the current situation.

The content of peer-reviewed articles on the subject will be investigated as well as

academic books explaining the innovative tools and techniques used when conducting

feasibility studies. The review will focus on framing feasibility study theoretical best

practices, which will lay the foundation for the research of this thesis. The structure of the

literature review as well as its connection with the previous chapter and following chapter

is shown graphically in figure 1.


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Figure 1: The structure of the literature review and its connection with the previous chapter as well as the following chapter.

3.2 Project feasibility studies

3.2.1 Introduction into project feasibility studies

The project feasibility study phase involves the making of a project feasibility study that

comprises an evaluation and analysis of the potential of a proposed project and is based

on extensive investigation and research to support the process of decision-making. Munns

and Bjeirmi (1996) state that “the project definition and early decision making is critical

to overall success and suggest that the broader decisions in selecting a suitable project in

the first place are more likely to influence the overall success of the project.” The project

feasibility phase is the second phase in the lifecycle of a project but the first one is the

conceptualization phase (Kerzner, 2006). According to Kerzner (2006) the

conceptualization phase involves two critical factors: (1) Identify and define the problem,

and (2) identify and define the potential solutions.

Kerzner (2006) gives the following explanation of the feasibility study phase: “The

feasibility study phase considers the technical aspects of the conceptual alternatives and

provides a firmer basis on which to decide whether to undertake the project.”


!4!12!4!

In other words, the feasibility study includes an analysis of the project´s viability and

focuses on helping answer the essential question of “should we proceed with the proposed

project idea?” The end result of a feasibility study is therefore the go/no-go decision.

Kerzner (2006) gives a more detailed purpose of the feasibility phase:

• Plan the project development and implementation activities

• Estimate the probable elapsed time, staffing, and equipment requirements

• Identify the probable costs and consequences of investing in the new project

Feasibility studies are typically carried out before the project initiation in support of the

proposed business case and provide an accurate assessment of the factors that might affect

the project. A feasibility study enables a realistic evaluation of a project, incorporating

both the positive and negative aspects of the opportunity (Gardiner, 2005).

3.2.2 Validity of feasibility studies for construction projects

According to Flyvbjerg et al. (2002) in public transportation infrastructure projects, costs

are underestimated in almost 9 out of 10 projects and actual costs are on average 28%

higher than estimated costs. This problem leads to inefficient use of stakeholder´s money

where a project may be started despite the fact that is it not economically viable and/or it

may be started instead of another project that would have yielded higher returns. Cost-

underestimation is also the case in other types of infrastructure projects and the reason is

assumed to be the incentive to make a project look better and profitable in order to get the

project started (Flyvbjerg et al., 2002). This procedure is known to affect decision making

in the beginning of projects, and is called “strategic misrepresentation”, in addition to

“optimism bias” which includes excessive optimism on the project’s outcome.

Fridgeirsson (2012) states that “the consequences of these two phenomena are unrealistic

expectations of projects’ benefits, costs and duration, which distort the real financial

needs and benefits, stirs up controversy and unnecessary difficulties in the duration of the

project.” Fridgeirsson (2012) mentions a problem in the decision making process in public

projects, that is the people who make the project’s go/no-go decision are not financially

responsible for the project. Where the decision makers are not risking their own funds,

they might not act in the best interest of taxpayers.

Public projects are funded by the countries’ taxpayers and generally require huge and

immediate investments while private projects can be financed by the company´s own


!4!13!4!

capital or the company can seek external funding. While the financial responsibility of the

public projects is distributed among taxpayers, the private companies carry all financial

responsibility themselves. In order to prevent the use of the abovementioned procedures

and to promote the efficient use of stakeholders´ money, feasibility studies should be

conducted, whether the proposed construction project is within the public sector or the

private sector. Owners, decision makers and financial institutions build their decisions to

proceed with and/or finance any project based on the results of the feasibility study of that

project (Hyari and Kandil, 2009).

Hyari and Kandil (2009) state that ensuring the validity of economic feasibility studies of

construction projects is a vital step in ascertaining that decisions related to the

construction of facilities are based on consistent and standard procedures that avoid the

use of misleading or inadequate information. They also emphasize that decision makers

exert every possible effort to ascertain that analyses presented in a feasibility study report

are based on reasonable forecasts and reliable information. To develop a successful

project, its promoters should ascertain that the project be politically, socially, legally,

environmentally, economically and financially viable and the project viability may only

be determined following a detailed and accurate feasibility study (Salman et.al 2007).

The conduct of a comprehensive feasibility analysis plays an important role regarding

implementation and prioritization in the decision-making phase in the beginning of a

project life cycle, which applies to public and private projects respectively. Yun and

Caldas (2009) argue that this process leads decision makers to make a go/no-go decision,

to determine investment priority between capital projects, and to provide optimal

alternatives and investment timing. They state that preliminary feasibility studies are the

basis for the go/no-go decision, which determines whether the capital project is to be

recommended or not. Many funding agencies in the private sector also require satisfactory

feasibility study reports before committing significant funds to projects seeking external

finance (Gardiner, 2005).

Hyari and Kandil (2009) emphasize the importance of weighing massive expenditures on

construction projects against the expected benefits resulting from the projects to

stakeholders and therefore conducting feasibility studies prior to the construction of the

facilities. The economic feasibility of a project is an estimate of the potential profitability

of a project and a study that measures the expected benefits from a certain project relative

to its cost (Hyari and Kandil, 2009). A study conducted by Yun and Caldas (2009) came


!4!14!4!

to similar conclusion, which supports the further investigation in the following

subsections of the literature review on feasibility studies. In that study data mining was

conducted to discover knowledge from preliminary feasibility studies of large-scale

projects in Korea using classification and prediction. Their conclusion was that the

dominant decision variables in determining the implementation of the project were the

benefit - cost ratio, the economic feasibility and the financial feasibility, but these

decision variables have in common that they are closely related to the financial aspects of

a project (Yun and Caldas, 2009). Yun and Caldas (2009) state that in this case the benefit

- cost ratio was the most important decision variable for determining the project

implementation. In the next subsections, the processes of feasibility studies will be

examined in more detail as well as the recommended tools and techniques for conducting

successful feasibility studies, that is cost-benefit analysis.

3.2.3 Project feasibility studies and sustainability

According to Yun and Caldas (2009) the preliminary feasibility studies include four

processes that are used to analyze a capital project: project overview; economic

feasibility; political viability; and total viability.

• Project overview examines the project’s basic information such as its

background, objectives, and procedure and planned content.

• Economic feasibility estimates demand and calculates economic and financial

indices such as benefit-cost ratio (B/C), net present value (NPV) and internal rate

of return (IRR) based on cost-benefit analysis to determine national economic

impact and investment suitability.

• Political viability evaluates non-economic impact, attitudes toward the project,

financial feasibility, and compliance with relevant governmental policies,

environmental impact, as well as project-specific factors.

• Total viability leads decision makers to make a Go/No Go decision, determine

investment priority between capital projects and provide optimal alternatives and

investment timing.

Yun and Caldas’s (2009) results from analyzing decision variables that influence

preliminary feasibility studies reveal that practitioners emphasize financial aspects in the

project’s planning phase. While economic performance is given the most attention, less


!4!15!4!

attention is given to the social and environmental performance. They still have the

opinion that there is a need to reinforce the evaluation criteria for the non-economic

factors. Although economic feasibility has the biggest influence on the Go decision it

does not mean that other factors aren´t important in the decision making process as well.

Public capital projects should be considered not only in economic perspectives. This

applies to some types of projects within the private sector a well.

Yun and Caldas (2009) quote MOPB (1999): “For successful implementation and

operation, infrastructure projects need clear objectives and goals, which include the

following: achieving greater social justice, developing the economy and sustainable

employment, developing financially responsible programs, and protecting the

environment.” A research similar to Yun and Caldas’ was conducted in China where

China´s construction industry was the research field, but according to the authors, Shen et

al. (2010), implementing construction projects has been a driving force to the economic

growth in China over previous two decades. They state that the effects of the construction

industry on the degrading environment are huge and one of the major reasons for this is

the lack of consideration given to the environmental protection in the project feasibility

study. Their results reveal the insufficiency of examining the performance of

implementing a construction project from the perspective of sustainable development. The

results also suggest the need for shifting the traditional approach of project feasibility

study to a new approach that embraces the principles of sustainable development (Shen et

al., 2010).

In sustainable construction practices, sustainability promotes the balance of

environmental protection, economic development and social development. It refers to

various methods in the process of implementing construction projects that involve less

harm to the environment (Shen et al., 2010). Performance attributes are used for assessing

performance of construction projects, but what factors/or or attributes are considered for

each project can differ depending on the project´s type. Shen et al. (2010) categorize all

available performance attributes into environmental, economic and social where some

attributes are common to all projects where other apply only to individual projects.

For public sector projects in China, the study’s results show interesting evidence where

limited concern is given on market competition (economical), safety standards (social),

and eco-environmental sensitivity of the project location and land consumption

(environmental). Shen et al. (2010) argue that the reason for the development is limitation


!4!16!4!

in practice of sustainable construction methods. They state that this limitation is partly

due to the profit-driven culture in the industry where cost, quality and schedule have been

the determinants ensuring maximum benefits to the construction business. They argue that

in order to improve the existing practice of construction implementation towards

contributing to sustainable development, all the three dimensions, including economical,

social and environmental issues, need to be fully concerned in conducting project

feasibility studies (Shen et al., 2010). According to Shen et al. (2010) the responsibility of

implementing sustainable construction practices is on the project’s participants. The

government´s role is important in promoting sustainability of construction project at the

stage of the project feasibility study. The government should guide with policies, laws

and regulations and balance the interests among economic, social and environmental

stakeholders (Shen et al., 2010). That sort of guidance would benefit all construction

projects, whether they are within the public sector or the private sector.

3.3 Cost-Benefit Analysis

The review of peer-reviewed articles in the previous subsections emphasizes the

importance of evaluating the costs and benefits of construction projects in order to

increase their efficiency. The broad purpose of cost-benefit analysis is to help decision-

making and to make it more rational. More specifically, the objective is to have more

efficient allocation of stakeholders´ resources. Cost-benefit analysis was initially used in

the U.S. in the 1930’s, but now cost-benefit analysis is used in many different contexts for

many different purposes (Boardman et al., 2014). The Project Management Institute

(PMI) recommends using cost-benefit analysis as a tool and technique in project quality

management, where the primary benefits of meeting quality requirements can include less

re-work, higher productivity, lower costs, and increased stakeholder satisfaction (PMI,

2008).

In order to demonstrate the superior efficiency of a particular intervention relative to the

alternatives, including the status quo, analysts use a cost-benefit analysis. The analysis

includes a systematic cataloguing of impacts as benefits (pros) and costs (cons), valuing

in dollars (assigning weights), and then determining the net benefits of the proposal

relative to the status quo. All of the costs and benefits are considered to society as a

whole, that is, social costs and social benefits (Boardman et al., 2014). Although

originally a cost-benefit analysis was designed for the public sector it is also applicable in


!4!17!4!

the private sector. The standard cost-benefit analysis is conducted while a project or

policy is under consideration, independent of its type, before it is started or implemented.

The cost-benefit analysis assists in the decision about whether resources should be

allocated by government or the company to a specific project or policy or not. In

situations in which analysts care only about efficiency, cost-benefit analysis provides a

method for making direct comparisons among alternative policies (Boardman et al.,

2014). Cost-benefit analysis is based on the Kaldor-Hicks criterion and when all relevant

projects are independent, the cost-benefit analysis decision rule is simple: adopt all

policies that have positive net benefits. A more general version of the rule applies in

situations involving multiple policies that may enhance or interfere with each other:

choose the combination of policies that maximizes net benefits (Boardman et al., 2014).

Boardman et al. (2014) recommend using net present value rule (NPV) as a decision rule

instead of cost-benefit ratio or internal rate of return. According to them it is the

appropriate criterion to use where other rules can give incorrect answers. While applying

the rule, an analyst should still be aware where it applies only to the actual alternatives

specified and other alternatives might conceivably be better. While the net present value

criterion results in a more efficient allocation of resources, it does not necessarily

recommend the most efficient allocation of resources.

It is also important for analysts to realize the limitations of a cost-benefit analysis.

According to Boardman et al. (2014) two types of circumstances make the net benefits

criterion an inappropriate decision rule for public policy. First, technical limitations may

make it impossible to quantify and then monetize all relevant impacts as costs and

benefits. Second, goals other than efficiency are relevant to the policy.


!4!18!4!

3.3.1 The major steps in cost-benefit analysis

Boardman et al. (2014) recommend breaking the process of a cost-benefit analysis down

into nine basic steps:

1. Specify the set of alternative projects.

2. Decide whose benefits and costs count (standing).

3. Identify the impacts (benefits and costs) categories, catalogue them, and select

measurement indicators.

4. Predict the impacts (benefits and costs) quantitatively over the life of the project.

5. Monetize (attach dollar values to) all impacts (benefits and costs).

6. Discount benefits and costs to obtain present value.

7. Compute the net present value of each alternative.

8. Perform sensitivity analysis.

9. Make a recommendation.

Below is each step described and illustrated.

1. Specify the set of alternative projects.

Step 1 requires the analyst to specify the set of alternative projects. For many projects the

number of potential alternatives can be so large that neither decision makers nor analysts

can cognitively handle comparisons among them. Resource and cognitive constraints

mean that analysts typically analyze only a few (less than six) alternatives (Boardman et

al., 2014).

Cost-benefit analysis compares the net benefits of investing resources in one or more

particular potential projects with the net benefits of a project that would be displaced if

the project(s) under evaluation were to proceed. The displaced project is the status quo,

which means there is no change in government policy (Boardman et al., 2014), that is, no

change in the existing state of affairs.

2. Decide whose benefits and costs count (standing).

In step 2, the analyst must decide whose benefits and costs should be included.

In the public sector the provincial perspective, for example, measures only the benefits

and costs that affect the residents within a certain area, but a global perspective includes

the benefits and costs that affect everyone (Boardman et al., 2014). Boardman et al.


!4!19!4!

(2014) note that the issue of standing can sometimes be contentious and point out that

some environmental issues should be analyzed from a global perspective and local

governments typically want to consider only benefits and costs to local residents and to

ignore costs and benefits that occur in adjacent municipalities or are borne by higher

levels of government.

3. Identify the impacts (costs and benefits) categories, catalogue them, and select

measurement indicators.

Step 3 requires the analyst to identify the physical impact categories of the proposed

alternatives, catalogue them as benefits and costs, and specify the measurement indicator

of each impact category. Impacts include both input, that is resources required, and

outputs (Boardman et al., 2014). In a highway construction project the benefit impact

categories can for example include “time and operating cost savings”, “safety benefits”

and “toll revenues” and the cost impact categories can include for example

“maintenance”, “toll collection” and “toll booth construction”.

Boardman et al. (2014) emphasize that analysts identify explicitly the ways in which the

project would make some individuals better off, for example through improved skills,

better education, or higher incomes and identify as well the negative environmental and

congestion impacts of the growth.

In order to treat something as an impact, we have to know there is a cause-and-effect

relationship between some physical outcome of the project and the utility of human

beings with standing. Impacts that do not have any value to human beings are not

counted. Demonstrating such cause-and-effect relationships often requires an extensive

review of scientific and social science research (Boardman et al., 2014).

The choice of measurement indicator depends on data availability and ease of

monetization (Boardman et al., 2014).

4. Predict the impacts (costs and benefits) quantitatively over the life of the project.

Almost all projects have impacts (costs and benefits) that extend over time. In step 4 the

task is to quantify all costs and benefits in each time period. The analyst must make

predictions for each alternative in each time period. For example, a production company


!4!20!4!

has to predict ahead of time the type A product sale price and the cost of type A raw

material each year for a specified period of time and do the same for type B product.

In practice, predicting impacts is very important and very difficult. Prediction is

especially difficult where projects are unique, have long time period, or relationships

among variables are complex (Boardman et al., 2014).

5. Monetize (attach dollar values to) all impacts (benefits and costs).

In step 5, the analyst has to monetize each of the impacts or value in dollars each of the

impacts. Boardman et al. (2014) note that sometimes the most intuitively important

impacts are difficult to value in monetary terms, for example valuing environmental

impact. In cost-benefit analysis the value of an output is typically measured in terms of

“willingness to pay”, that is the maximum amount an individual is willing to sacrifice to

procure a good or avoid something undesirable. Where markets exist and work well, a

willingness to pay can be determined from the appropriate market demand curve

(Boardman et al., 2014). Where markets do not exist or do not work well, analysts can

draw upon previous research and use “plug in” values whenever possible. If analysts are

unwilling to attach a monetary value to some impact, they are forced to use an alternative

method of analysis.

6. Discount benefits and costs to obtain present value.

For a project that has impacts that occur over years, we need to aggregate the benefits and

costs that arise in different years. In cost-benefit analysis, future benefits and costs are

discounted relative to present benefits and costs in order to obtain their present values

(PV) (Boardman et al., 2014).

Boardman et al. (2014) note that the need to discount arises for two main reasons. First,

there is an opportunity cost to the resources used in a project. Second, most people prefer

to consume now rather than later. Inflation must be taken into account.

A cost (Ct) or benefit (Bt) that occurs in year t is converted to its present value by dividing

it by (1+s)t, where s is the social discount rate. Real inflation-adjusted social discount rate

should be used. Suppose a project has a life of n years.

The present value of the benefits, PV(B), and the present value of the costs, PV(C), of the

project are, respectively:


!4!21!4!

!" ! = ! !!(1+ !)!

!

!!!

!" ! = ! !!(1+ !)!

!

!!!

!The discount rate is the opportunity cost of investing in the project rather than in the

capital market, that is, instead of accepting a project, the firm can always return the cash

to the shareholders and let them invest in financial assets (Brealey et al., 2011). For

government analysts, the discount rate is usually mandated by a government agency with

authority. For most projects that do not have impacts beyond 50 years (intragenerational),

real social discount rate of 3.5 percent is recommended. If the project is intergenerational

then time-declining discount rates are recommended (Boardman et al., 2014).

7. Compute the net present value of each alternative.

The net present value (NPV) of an alternative equals the difference between the PV of the

benefits and the PV of the costs:

!"# = !" ! − !"(!)

The basic decision rule for a single alternative project (relative to the status quo) is

simple: adopt the project if its NPV is positive.

The analyst should recommend the proceeding with the proposed project if its

!"# = !" ! − !" ! > 0

That is, if its benefits exceed its costs:

!" ! > !" !

When there is more than one alternative to the status quo and all the alternatives are

mutually exclusive, then the rule is slightly more complicated: select the project with the

largest NPV. If no NPV is positive, then none of the specified alternatives are superior to

the status quo, which should remain in place (Boardman et al., 2014).

Boardman et al. (2014) emphasize the importance of remembering that NPVs are

estimates and that sensitivity analysis (step 8) should be conducted before making a final

recommendation.


!4!22!4!

8. Perform sensitivity analysis.

There may be considerable uncertainty about both the predicted impacts and the

appropriate monetary valuation of each unit of the impact. Boardman et al. (2014)

recommend using sensitivity analysis to deal with such uncertainties. Sensitivity analysis

helps to determine which risks have the most potential impact on the project. It examines

the extent to which the uncertainty of each project element affects the objective being

examined when all other uncertain elements are held at their baseline value (PMI, 2008).

When net present value has been calculated and if the project appears worth going ahead,

a sensitivity analysis is performed. According to Brealey et al. (2011), before the go-

decision is made, it is important to delve into the impact forecasts and identify the key

variables that determine whether the project succeeds or fails, for example, unit sales,

revenue, variable cost per unit and initial cost. It is also important to look out for

unidentified variables. A sensitivity analysis is conducted where analysts are asked to give

optimistic and pessimistic estimates for the underlying variables. For each estimate the net

present value is recalculated as the variables are set one at a time to their optimistic and

pessimistic value (Brealey et al., 2011).

Boardman et al. (2014) mention three other approaches to doing sensitivity analysis:

partial sensitivity analysis, worst- and best-case analysis and Monte Carlo sensitivity

analysis.

9. Make a recommendation.

Analysts should make recommendations based on NPVs and sensitivity analysis.

It is important to realize that cost-benefit analysis is only one input to this political

decision-making process, one that attempts to push it toward a more efficient resource

allocation and in practice, correct cost-benefit analysis is no more than a voice for rational

decision-making (Boardman et al., 2014). It is also important to bear in mind that

independent, unbiased assessments are needed if the cost-benefit analysis is to work

correctly and produce believable results, i.e. to avoid “judge and jury” characteristics

(Shtub et al., 2005).


!4!23!4!

3.4 Framing of feasibility study theoretical best practices

When the primary contents of subsections 3.2.3 Project feasibility studies and

sustainability, including the four major processes of a feasibility study and the three

recommended performance attributes, and 3.3.1 The major steps in cost-benefit analysis

are reviewed in relation to each other and combined, the six major phases of a feasibility

study can be concluded as well as their major activities. These phases and their activities

create a basis for feasibility theoretical best practices which the research of this thesis will

build on, but a research questionnaire will be designed based on these contents:

1. Project overview

2. Alternatives

3. Benefits and costs

4. Net present value (NPV)

5. Sensitivity analysis

6. Make a recommendation

Phase 1 includes establishing the frame of the project, it´s basis and the needs for the

project. The analyst has to define the objectives of the project and there has to be a mutual

understanding between all stakeholders on the project´s objectives.

Phase 2 is the definition of the project´s alternatives where the options can vary on many

dimensions. At least two alternatives and less than six alternatives have to be defined. The

zero-option has to be defined as well.

Phase 3 is the definition of benefits and costs that should be included. Economical, social

and environmental factors and/or attributes should be considered but the analyst should

have in mind that there might be some attributes that do not apply to the individual

projects.

This phase should include the following activities:

• Decide whose benefits and cost count • Catalogue the impacts and select measurement indicators (units) • Predict the impacts quantitatively over the life of the project • Monetize (put price on) all impacts.

Phase 4 involves discounting benefits and costs of each alternative to obtain present value

(PV) and then calculate the net present value (NPV) for each alternative by finding the

difference between the present value of the benefits and present value of the costs. The

basic decision rule is that the analyst should recommend proceeding with the proposed


!4!24!4!

project if the present value of benefits exceeds the present value of costs and should select

the alternative with the largest net present value. Sensitivity analysis should be conducted

(phase 5) before making the final recommendation.

Phase 5 involves performing sensitivity analysis to deal with uncertainties about both the

predicted impacts and the appropriate pricing valuation of each unit of the impact.

Phase 6 involves the evaluation of all alternatives and making recommendation based on

the net present value (NPV) and sensitivity analysis.

The following list contains the summary of the major activities for a feasibility study:

1. Project overview • Explain the origin of the project • Project background • Project objectives • Needs analysis

2. Alternatives • Development of alternatives. Limit to at least two and less than six

alternatives in addition to the zero alternative. 3. Benefits and costs

• Decide whose benefits and cost count. Economic, social and environmental factors and/or attributes.

• Catalogue the impacts quantitatively over the life of the project. • Monetize (put price on) all impacts.

4. Net present value (NPV) • Discount benefits and cost to obtain present values. • Compute the net present value (NPV) of each alternative.

5. Sensitivity analysis • Perform sensitivity analysis of each alternative.

6. Recommendations • Evaluation of alternatives. • Selection of the “most promising” alternative.

Figure 2 shows the flow of the six major phases with gateways after each phase. If after

each phase the project is considered viable based on the activities in each phase, the

project should proceed. However, if after any phase of the six major phases the project

does not fulfill the activities, it should end and not be considered viable.


!4!25!4!

!Figure 2: Flowchart showing the flow of the six major phases of a feasibility study with gateways after each phase.

!

Start!

Project!overview!

NO!YES!

End!

Alternatives!

Benefits!and!costs!

Net!present!value!(NPV)!

Sensitivity!analysis!

Make!a!recommendation!

Proceed!

NO!YES!

End!

NO!YES!

End!

NO!YES!

End!

NO!YES!

End!

NO!YES!

End!


!4!26!4!

3.5 Conclusion

The aim of the literature review was to determine what feasibility studies entail,

understand their importance in practice and role in implementation of construction

projects, as well as investigate their development in the last decades, their focus and the

current situation. The results of the above-mentioned peer-reviewed articles show the

urgent need for governments to have strict laws and regulations in the decision-making

process in public construction projects, which could also benefit the private construction

projects. In order to prevent a conflict of interest within the government and inefficiencies

in the decision-making process of proposed projects, so that the stakeholders’ money and

resources are spent in the most efficient way, a detailed project feasibility study is

necessary when selecting construction projects, independent of their type.

When gathering the results from the articles on project feasibility studies, they clearly

show the importance of the economical issues in the conduct of a project feasibility study:

A project will not proceed if it is not financially viable. Simultaneously the results show

that not enough emphasis is laid on the project´s sustainability in the project feasibility

phase, which has proven to have negative consequences on the society and environment,

regarding the project. The feasibility study in the conception of projects is the foundation

for a comprehensive and transparent determination of the viability of investment

proposals, focusing on minimizing uncertainty throughout the lifetime of the project. The

recommended processes and performance attributes of feasibility studies as well as the

recommended tools and technique examined in this chapter lay the foundation for the

research of this thesis, but a research questionnaire will be designed in the following

chapter, based on section 3.4 Framing of feasibility study theoretical best practices.


!4!27!4!

4 Research methodology

4.1 Introduction

Qualitative research was conducted in order to expand the knowledge about the last

decade´s and current feasibility study practices in private construction projects in Iceland.

The researcher interviewed employees from eight different private companies, which had

recently participated in the preparation of a construction. The analysis of the data gathered

from the interviews gave an understanding of what factors and/or attributes have been

used in the conception of projects and insights into the quality of the prerequisite used

when deciding on projects. A comparison of the data gathered from this study as well as

the data gathered from the previous study for the public projects, presented in section 2.3,

gives an indication about current feasibility study practices in Iceland.

4.2 Research design

4.2.1 Qualitative research

The aim of the research is to benchmark current feasibility study practices in private

construction projects in Iceland against theoretical best practices, as well as compare

current feasibility study practices in private construction projects to current feasibility

study practices in public construction projects, where the results for the public projects are

already available. The research can therefore be classified as applied research, and is

based on qualitative methods where exploration of feasibility studies is carried out to gain

more insights on the subject and to develop a theory on current feasibility study practices

in Iceland. Qualitative methods are ideal for this particular research where they facilitate

the study of issues in depth and detail; increase the depth of understanding of the cases

studied and typically produce a wealth of detailed information about a small number of

cases (Patton, 2002).


!4!28!4!

4.2.2 Standardized open-ended interview

According to Patton (2002) qualitative findings grow out of three kinds of data collection:

(1) in-depth, open-ended interviews; (2) direct observation; and (3) written documents. In

this research, direct observation is not a suitable data collection method, were feasibility

study procedures can be a long process and this research examines feasibility study

procedures already applied within the businesses. When contacting the private companies

and asking for information about their feasibility study procedures most of them were not

willing to give away documents on the subject nor was the researcher allowed to review

them, where they were recorded as classified. The data gathering was therefore based on

interviews.

The approach taken to the design of the interview was fully structured in advance of the

interviews and is called the standardized open-ended interview. The interview consists of

a set of questions carefully worded and arranged with the intention of taking each

respondent through the same questions with essentially the same words (Patton, 2002).

The standardized open-ended interview is used when it is important to minimize variation

in the questions posed to interviewees (Patton, 2002), which is the case in this particular

research where answers will be evaluated on the same scale and compared.

Before starting the interviews it is important to realize the advantages and disadvantages

of using interviews as a data collection method. Robson (2011) identifies the pros of

interviews as a flexible and adaptable way of finding things out as well as being quicker

than observation, but still incorporating aspects of it. In addition they can reap unexpected

awards where things about the interview other than the actual answers to the questions

may be interesting to the researcher (Robson, 2011). When designing the interview it is

important to have the cons of interviews in mind but according to Robson (2011)

interviews require careful preparation as well as being time-consuming. In addition, the

researcher needs skill and experience to handle the results of such a flexible approach and

the reliability is challenged by the lack of standardization. However, the standardized

open-ended interview is less flexible than other types of interviews where questions are

written out in advance exactly the way they are asked during the interview, making the

interview highly focused and time is used efficiently (Patton, 2002).


!4!29!4!

4.2.3 Interview questionnaire

The interviews were based on a questionnaire where the task for the researcher is to

provide a framework within which people can respond in a way that represents accurately

and thoroughly their experience with the particular program being evaluated (Patton,

2002). When designing the questions it is important that it is clear to the interviewee what

is being asked and to use words that make sense to the interviewee (Patton, 2002). Asking

singular, unambiguous and non-leading questions improves the quality of data obtained

during the interview (Patton, 2002).

The interview questionnaire includes 17 open questions, based on this thesis literature

review´s theoretical best practices, with focus on the unit of analysis: methods, processes

and procedures, factors and/or attributes. That is, the data collection from the eight private

businesses is based on what methods, processes and procedures for conducting feasibility

analysis were applied and what factors and/or attributes were used. The unit of analysis is

based on the following questions and are in accordance with the previous study for public

projects:

• What was done? (feasibility analysis method)

• How was it done? (processes and procedures)

• What sort of prerequisites was used? (factors and/or attributes)

The 17 questions asked were in accordance with the previous study for public projects

with the aim of enabling comparison between the results of the two studies for public

projects and private projects respectively.

4.3 Data gathering

The approach of data gathering aims at collecting information about specific methods,

processes and procedures, and prerequisites for conducting a feasibility analysis for

private construction projects in Iceland from the perspective of private businesses in

Iceland. The data gathering is limited to private projects established in the period from

2001 to the present day, where the Icelandic law no. 84/2001 was passed by the

parliament in 2001.

When selecting projects for the research, different private companies were contacted, but

the companies had in common having been involved in a preparation of a construction

project sometime the last 13 years, as well as being responsible for the construction


!4!30!4!

project. The selection of construction projects was random and was aimed at selecting

projects based on their variety and with regard to selecting projects from several different

businesses.

The eight construction projects selected are presented in table 3, detailing the concerned

company responsible for the construction project as well as the type of the concerned

company.

Project name: Concerned company: Type of company:

Advania Data Center Advania Information technology

Egilsholl Cinema Hall Sambioin Cinema

Harpa Hotel and Apartments Mannvit Engineering consultancy

Hofdatorg Down Town and Service Center Eykt Constructor

Holaberg Senior Citizen Apartments SS Verktaki Constructor

Proposed Aluminum Smelter Skagabyggd Klappir Development Development and investment

Vindakor Apartments Upphaf Real estate

X Data Center X Data center

Table 3: The eight selected private projects, the companies responsible and types of companies.

The gathering of data was based on interviews. The eight different companies were

visited and an employee responsible for the preparation of the construction project and

participated in the initial study was interviewed. The design of the interview was based on

studying what methods, processes and procedures for conducting feasibility analysis were

applied and what factor and/or attributes were used. A total of 17 questions were asked

based on the list of major activities for the conduct of a feasibility study framed as

theoretical best practices in section 3.4:


!4!31!4!

Project overview Q1. Has the origin of the project been explained? Q2. Has the background of the project been described? Q3. Have the project objectives been defined? Q4. Has a needs analysis been carried out?

Alternatives Q5. How many alternative schemes/projects were considered? Q6. Was the zero-alternative included?

Cost-benefit Q7. Were benefits and beneficiaries identified? Q8. Were costs identified? Q9. Have the impacts been recorded as performance indicators? (units) Q10. Have the impacts been predicted quantitatively over the life of the project? Q11. Have all impacts been monetized?

Net present value (NPV) Q12. Have the benefits and costs been discounted to obtain present value? Q13. Has the net present value (NPV) been computed and compared for each alternative?

Sensitivity analysis Q14. Has sensitivity analysis been performed for each alternative?

Make recommendation Q15. Has evaluation of alternatives been performed? Q16. Has the selection of the most promising alternative been made?

Additionally, it was checked whether an outside evaluation from independent consultant had been performed.

For each feasibility conduction activity it was sought to find answers to the following questions:

• What was done? (feasibility analysis method) • How was it done? (processes and procedures) • What sort of prerequisites was used? (factors and/or attributes)

In addition to these questions, information about the total cost of each construction project

was gathered for better realization of the size of the projects and for further comparison of

the projects. Table 4 shows the estimated total cost of each of the eight projects in billions

of ISK.


!4!32!4!

Project name Estimated total cost of project (bilion ISK)

Advania Data Center 0.7

Egilsholl Cinema Hall 0.6

Harpa Hotel and Apartments 14

Hofdatorg Down Town & Service Center 6

Holaberg Senior Citizen Apartments 1

Proposed Aluminium Smelter Skagabyggd 70

Vindakor Apartments 1.6

X Data Center 11

Table 4: Estimated total cost of the eight selected private projects.

The questionnaire presented to the eight employees is available for review in the

Appendix II. In each interview the questions were asked in the right order and comments

registered in the abovementioned form for each question where appropriate.

4.3.1 Data classification

For each interview the questionnaire form was filled out and consistency with best

practice for each question was also evaluated and registered. The consistency with best

practice was assessed and classified into the following three categories:

• Full consistency with best practice

• Partial consistency with best practice

• No consistency with best practice

In assessing the consistency with best practice, the answer to each question was evaluated

as how consistent it was to the summary of theoretical best practices in section 3.4.

The unfilled evaluation form is available for review in Appendix III.


!4!33!4!

4.4 Data analysis

4.4.1 Current feasibility study practices in private construction projects in

Iceland

For each of the eight interviews, comments and an evaluation of consistency with best

practice were reported in the defined form and are available for review in Appendix IV.

For the 17 questions and 8 projects a total of 136 occurrences (17 x 8) are recorded, where

67 of them are evaluated as fully consistent with best practice, 31 partially consistent with

best practice and 38 have no consistency with best practice. Table 5 shows how the 17

occurrences for each project split between the three classes of consistency with best

practice as well as the percentage of each class for each project. Full consistency varies

from 35% to 65% with a mean of 49%, partial consistency varies from 12% to 35% with a

mean of 23% and no consistency varies from 18% to 47% with a mean of 28%.

Table 5: Consistency with best practice for the eight selected private projects.


!4!34!4!

Table 6 demonstrates the distribution of the scores and the normalized results due to

different number of questions within each category. The consistency percentages are

based on the number of questions within each category and the consistency strength

within each category.

Table 6: Consistency of approach towards feasibility analysis for the eight private projects (occurrences and weighted percentages taken into the account of the number of activities in each category).

The category “project overview” is the most consistent with best practice and thereafter

the category “alternatives”. The categories “net present value” and “independent

consultants” have the highest rate of no consistency with best practice. The general

conclusion is a gap of 60% of the categories where there is only partial consistency with

best practice, where 40% of the categories are fully consistent with best practice.

4.4.2 Current feasibility study practices in construction projects in Iceland

The data analysis of the research “The feasibility of public projects in Iceland” carried out

in 2014 is presented in section 2.3. The average consistency with best practice evaluation

for the two studies is shown in table 7 and table 8. Table 7 shows the average consistency


!4!35!4!

with best practice for all projects, private projects and public projects respectively. Table

8 shows the average consistency with best practice for all projects with regard to the

amount of occurrence in each category, for private and projects and public projects

respectively. The weighted consistency with best practice is shown graphically in figure

3.

Table 7: Average consistency with best practice for all projects, for private projects and public projects respectively.

Table 8: Average consistency with best practice for all projects with regard to the amount of occurrences in each category, for private projects and public projects respectively.

Figure 3: Average consistency with best practice for all projects with regard to the amount of occurrences in each category, for private projects and public projects respectively.

40%!

24%!

36%!

24%!

24%!

52%!

0% 10% 20% 30% 40% 50% 60%

Weighted Full consistency

Weighted Partial consistency

Weighted No consistency

Public!construction!projects! Private!construction!projects!


!4!36!4!

For the private projects the general conclusion is a gap of 60% of the categories where

there is only partial consistency with best practice, but for the public projects the gap is

76%.

In order to determine whether the difference between the consistency with best practices

for the private projects and the public projects is significant, a two-sample t-test is

performed on the full consistency rates. The rates for the public projects are shown in

table 1 in section 2.3 and for the private projects in table 5 in section 4.4.1. The null

hypothesis states that there is no difference between the means of the two cases; !! stands

for the hypothesized mean of the full consistency rates for the private projects and !! for

the public projects.

Null hypothesis: H0: !! = !!!

Alternative hypothesis: Ha: !! ≠ !!!

The two-sample t-test determines whether the difference between the two means is

significantly different from the hypothesized difference between means.

Degrees of freedom, DF, are computed:

!" = !(!!

!

!! +!!!!!)

!

(!!!

!!)!

!! − 1+(!!

!

!!)!

!! − 1

Then test statistic is computed, which is a t-score, t, defined by the following equation:

! = !!! − !!! − !

!!!!! +

!!!!!

where !! is the standard deviation and !!!is the mean of the full consistency rates for the

private projects and !! is the standard deviation !!!is the mean of the full consistency

rates for the public projects, !! is the number of private projects and !! is the number of

public projects, and d is the hypothesized difference between the means.

!!!= 9.59 !!!= 16.55 !! = 8 !! = 6 !! = 49.25 !! = 29.50

d = 0 DF = 11,46 t = 2,81


!4!37!4!

The critical value of t is 2.20 if 95% confidence interval is assumed. If the standardized

difference between the two sample means, t, is larger than 2.20 it can be concluded that

there is a significant difference between the two means. Where t = 2,81 > 2.20 there is a

significant difference between the two means and the null hypothesis is rejected.

4.5 Conclusion

The research included evaluation of data obtained through interviews in eight private

companies that had in recent years prepared, and most of them established as well, a

construction project. The types of businesses responsible for the construction are different

and the total cost of projects varies from 0.6 billion ISK to 70 billion ISK. The projects

were all started after the year 2007, in the shadow of the economical crisis. The following

eight private construction projects were examined:

• Advania Data Center • Egilsholl Cinema Hall • Harpa Hotel and Apartments • Hofdatorg Down Town and Service Center • Holaberg Senior Citizen Apartments • Proposed Aluminum Smelter Skagabyggd • Vindakor Apartments • X Data Center

The interviews were based on 17 questions obtained from the conclusion of the literature

review on feasibility study best practices. For each question, information about the

underlying methods, processes and procedures, factors and/or attributes was collected.

Evaluation of the data was based on benchmarking the current feasibility study practices

and procedures against the best practices. The conclusion of the research shows that there

is a considerable discrepancy between current feasibility practices in private projects and

best practices and the conduct of feasibility studies in private projects is lacking processes

to be considered best practice. The data collected from the research was compared to the

data collected from the previous study for the public projects, presented in section 2.3.

The data analysis shows a significant difference between feasibility study practices in

private construction projects and public construction projects respectively, where the

private projects are performing better, although in both cases the feasibility study

procedures are lacking more than half of their processes to be considered best practice.

!


!4!38!4!

5 Results

5.1 Introduction

In this chapter the results of the thesis are presented. The results of the literature review

are presented first with the literature review aimed at framing the feasibility study best

practices. The research of this thesis sought to answer the aforementioned research

questions:

• How are feasibility study practices in private construction projects in Iceland

compared to theoretical best practices?

• How are feasibility study practices in private construction projects compared to

feasibility practices in public construction projects in Iceland?

The research questions are answered and the research hypothesis was tested, by

interpreting the data analysis in chapter 4, but the research hypothesis suggested that the

same applies for feasibility studies practices in private construction projects as in public

construction projects. The findings of the research for the public construction projects

showed that there is a disparity between current feasibility study practices in public

projects in Iceland and best practices. The results give an understanding of current

feasibility study practices in private construction projects in Iceland and an indication of

current feasibility study practices in construction projects in Iceland, including private and

public construction projects. It should be kept in mind that two different research methods

were used for the two research studies compared, which might have biased the results to

some extent and should be taken into account when results are interpreted.

5.2 Framing of feasibility study theoretical best practices

The literature review aimed at framing the best practices of feasibility studies which laid

the foundation for the research. The conclusion of the review involved 6 major processes

of the feasibility study: project overview, alternatives, benefits and costs, net present

value (NPV), sensitivity analysis and making recommendation. Each process is described

in more detail in section 3.4.


!4!39!4!

5.3 Current feasibility study practices in private construction projects in Iceland

The research of this thesis was a qualitative study based on interviews and involved

investigation and evaluation of feasibility study practices in eight private construction

projects. The following eight private projects were examined:

• Advania Data Center • Egilsholl Cinema Hall • Harpa Hotel and Apartments • Hofdatorg Down Town and Service Center • Holaberg Senior Citizen Apartments • Proposed Aluminum Smelter Skagabyggd • Vindakor Apartments • X Data Center

Evaluation of data was based on benchmarking current practices and procedures against

best practices for conducting feasibility analysis which includes the following six

processes: project overview, alternatives, benefits and costs, net present value (NPV),

sensitivity analysis and making a recommendation. In addition, it was checked whether an

outside evaluation from independent consultants had taken place.

The overall conclusion of the study shows that there is a considerable gap between current

practices and procedures in conducting feasibility studies in private construction projects

and theoretical best practices, where 60% of the processes are only partially consistent

with best practices.

5.4 Current feasibility study practices in construction projects in Iceland

To give an indication of current feasibility study practices in construction projects in

Iceland the conduct of feasibility studies in private and public projects is examined and

compared. The two research studies were both qualitative studies based on the same 17

questions and classification of evaluation. The research of the private projects was

interview-based and the research of the public projects was based on content analysis. The

data analysis and results of the research “The feasibility of public projects in Iceland”

carried out in 2014 is presented in section 2.3 and the comparison between the two

research studies is presented in section 4.4.2. Based on the data analysis in section 4.4.2,

the research hypothesis stating that there is no difference between feasibility studies

practices in private construction projects and public construction projects, is rejected, i.e.


!4!40!4!

there is a significant difference between feasibility studies practices in private

construction projects and public construction projects. In other words, the private projects

perform significantly better in conducting feasibility analysis than the public projects.

Despite this conclusion, in both cases, the data analysis shows that there is a discrepancy

of applied methodology and best practices when conducting feasibility analysis, where the

private projects only fulfill 40% of the best practice processes and the public projects

24%. In both cases the projects are lacking more than half of the feasibility study

procedures to be considered best practices.


!4!41!4!

6 Discussion

6.1 Introduction

This chapter includes a discussion on the feasibility study practices in construction

projects in Iceland based on the results of the research of this thesis. In addition, there is a

discussion about the limitations of this research as well as the limitations of cost-benefit

analysis. Then further research in the field of feasibility studies is suggested in order to

expand knowledge on the subject and improve feasibility study practices in Iceland.

6.2 Feasibility study practices in construction projects in Iceland

This research has aimed at expanding knowledge about the last decade´s and the current

feasibility study practices in Iceland. The results indicate that the private construction

projects perform significantly better in conducting feasibility analysis than the public

construction projects, but in both cases the projects are lacking more than half of the

feasibility study procedures to be considered best practices. For the public projects, legal

requirements structure a framework of feasibility study procedures that they are required

to follow, but the conclusion of Fridgeirsson´s investigation on feasibility studies in

public projects indicates that the there is a lack of transparency in the management of

initial study reports in addition to the lack of feasibility study procedures. He suggests in

order to improve the situation, it is important the Minister of Finance issues detailed

guidelines for conducting feasibility analysis in accordance with current best practice

(2014). The review of the international requirements on feasibility study procedures in

section 2.2 showed clearly the limitations of the Icelandic law on public project

procurement in comparison to the international requirements. The foreign requirements

indicate stricter rules on feasibility study procedures as well as greater monitoring on

behalf of the government.

For the private construction projects, the company itself is responsible for its own

feasibility study, but in those cases where the project is restricted to the Law on

Environmental Impact Assessment, the EIA entails a part of the feasibility study, for

example, by identifying environmental and social impacts and evaluation of alternatives.

The companies responsible for the private construction projects under investigation in this

thesis´ research were of different types and the projects were financed in different ways,

but their intention with the projects was the same: benefit financially. In those cases


!4!42!4!

where external financing was sought to finance the projects the interviewees talked about

the requirements set by the financing agencies. The companies asking for financing were

required to sell the concept of the project and convince and reassure the lender of the

viability of the project as well as its profitability. In those cases, the company was

required to submit a feasibility study. It can be assumed that the work procedures of

financing agencies are stricter and borrowers are expected to meet stricter requirements

after the recession. Nowadays the construction business is tough and it is probably more

important now than ever that the right projects are selected and proceed with construction

based on the right factors.

Based on this thesis´ research, it can be reasoned that the more responsibility the private

project implies and the more expensive and extensive the project, the more the company

is compelled to lay emphasis on feasibility studies. This conclusion can be drawn from

the fact that the 4 most expensive private projects of this thesis´ research, seen in table 4,

are also the 4 most consistent with best practice, seen in table 5. The cost estimates and

the ranking of consistency go hand in hand except for the most expensive project,

Proposed Aluminum Smelter Skagabyggd, which places 4th, that could be explained by

the fact that EIA has not been conducted yet for that project. For the cheaper projects, less

emphasis was laid on feasibility studies and the practice seems to be based on rushing into

the projects without sufficient preparation and analysis. The results show that current

methodology of performing feasibility analysis varies greatly and the overall conclusion

shows limited consistency with best practices. The significant difference between

feasibility study practices in private and public projects could be explained based on the

literature review and the information drawn from this thesis research. The pressure that

the financing agencies lay on the private companies seeking external financing requires

reassurance about the viability of the project, the situation in the economy where

construction cost is high and the housing market is tough and the fact that the private

companies are risking their own money when they decide on establishing a construction

project, should give the companies enough reason to prepare and evaluate their proposed

project thoroughly before deciding to proceed with the project. Despite that difference,

feasibility study practices in private and public construction projects are lacking

procedures to be considered best practices and there is space for major improvement of

procedures in both cases.


!4!43!4!

For the public projects, issuing detailed guidelines for conducting feasibility analysis in

accordance with current best practices is suggested in order to improve the situation

(Fridgeirsson, 2014). Such publishing of exemplary practices by the government could

also benefit and have positive impact on feasibility study practices in the private sector

where governmental requirements often set the industry standard. The laws and

regulations create a specific model of ideal procedures that organizations work by and the

private sector can use in its own favor. When issuing such guidelines transparency,

accessibility and user-friendliness should be kept in mind.

6.3 Limitations

This research was limited to the examination of conduct of feasibility studies in eight

private construction projects. The presented theoretically best practices for conducting

feasibility studies for construction projects were limited to the literature review and the

conclusion is therefore limited to the extent of that review. There are also some

limitations to the research that could have affected the research findings. As mentioned

earlier, two different research methods were used for the two research studies compared

for the private projects and public projects respectively, which could have biased the

results and should be kept in mind when results are interpreted.

When selecting private projects for the investigation, the aim was to collect feasibility

study data from projects initiated in the period 2001-2014, i.e. after the law on public

project procurement (no. 84/2001) was passed by the government in 2001 to the present

day. The research included a comparison between feasibility study practices in the private

projects and public projects, but the results for the public projects were already available.

Half of the public projects were prepared before the financial crisis in 2008, but when

collecting data for the private projects limited data was available for projects initiated

before that time. The explanations given for this limitation were different: staff turnover,

lack of storing data, changes in ownership and changes in work procedures. It can be

assumed that preparation of private projects has improved in some ways after the

recession where the construction business is tougher which could have exaggerated the

significant difference between feasibility study practices in public and private projects.

The fact that public and private projects are different in nature where the impacts of

private construction projects tend to be less environmental and social than public

construction projects, could have affected the evaluation and comparison but none of the


!4!44!4!

private projects considered environmental and social impacts in their feasibility study. For

the private projects, all of the focus was on financial benefits and costs. In addition, it is

important to realize that the cost-benefit analysis has some limitations, but two

circumstances make the net benefit criterion an inappropriate decision rule: technical

limitations and goals other than efficiency (Boardman et al., 2014). Limitations in theory,

data or analytical resources may make it impossible for the analyst to measure and value

all impacts of a policy as commensurate costs and benefits. Usually efficiency underlies

cost-benefit analysis, but sometimes goals other than efficiency are relevant, especially in

the public sector (Boardman et al., 2014).

6.4 Further research

The research of this thesis did not include examination of how well the private projects

passed the budget or how they performed during and after implementation, where some of

the projects have not been established yet. For the public projects, all of them apart from

one ran into problems (Fridgeirsson, 2014). It would be interesting to follow the eight

private projects, and investigate whether they achieved their defined needs and how well

they met expectations. In order to determine how Icelandic feasibility study practices are

consistent with best practice in comparison to international practices, it would be

interesting to repeat this thesis´ research as well as the research for the public projects in

the three countries reviewed in section 2.2. Further research, based on these perspectives

could benefit and improve feasibility study practices in Iceland by expanding new

knowledge on the subject.

6.5 Conclusion

Considering the advantage and success that conducting feasibility analysis can give in the

development, preparation and implementation of construction projects the results of the

research are disappointing to some degree. The results show significant difference

between feasibility study practices in private construction projects and public construction

projects in Iceland, where the private projects perform better. The performance of the

private projects can possibly be explained by the pressure that the financing agencies lay

on the private companies seeking external finance by requiring reassurance about the

viability of the project. In addition, the situation in the economy where construction cost

is high and the housing market is tough and the fact that the private companies are risking


!4!45!4!

their own money when they decide on establishing a construction project. Simultaneously,

there is limited transparency in the management of initial study reports for the public

projects and poor or no methodology is present for feasibility analysis to evaluate various

options in public projects. But despite the significantly better performance of the private

projects, feasibility study practices in both private and public projects are lacking more

than half of the processes to be considered best practices.

To improve the situation and current methodology in the public sector it has been

recommended to improve the procedures entailing new detailed guidelines for performing

feasibility analysis in accordance with best practices. This improvement could also benefit

the private sector, especially if the guidelines are transparent, accessible and user-friendly.

Private businesses that are considering launching new projects are then encouraged to

adopt the principal methodology of feasibility analysis in the inception of the project with

the aim of increasing the chances of success in the whole life cycle of the project.


!4!46!4!

7 Conclusion

7.1 Feasibility analysis

The importance of conducting feasibility studies in construction projects is clear, entailing

professional methodology to evaluate the viability of the proposed project before an

investment decision is made. The procedures of feasibility analysis develop a

comprehensive study and a series of examinations that contribute to the project´s success

where the success of the project includes for example, completion to budget, satisfying

the project schedule and meeting the project goal. Feasibility studies should be applied in

any development of new projects where efficiency is the goal, independent of the

project´s type.

According to the literature review, theoretical best practices of a feasibility study include

six processes; project overview, alternatives, benefits and costs, net present value (NPV),

sensitivity analysis and making recommendation. Each process is described in detail in

section 3.4 Framing of feasibility study theoretical best practices.

7.2 Feasibility study practices in construction projects in Iceland

Based on the abovementioned results, a questionnaire was designed to lay the foundation

for the data gathering of the research. The research entailed an interview-based qualitative

study on the feasibility study practices in eight different private construction projects in

Iceland. Answers were evaluated based on studying what methods, processes and

procedures were applied and what factors and/or attributes were used in the conduction of

the feasibility studies. The results of the evaluation were benchmarked against theoretical

best practices, showing the current feasibility study practices in private projects in

Iceland. Current feasibility study practices in private projects in Iceland were then

compared to current feasibility study practices in public projects in Iceland, giving an

indication about feasibility study practices in construction projects in Iceland.

The results indicated a significant difference between feasibility studies practices in

private construction projects and public construction projects where the private projects

perform better in conducting feasibility analysis than the public projects. However, in

both cases, the data analysis showed a discrepancy between applied methodology and best

practices when conducting feasibility analysis where the projects are lacking more than

half of the feasibility study procedures to be considered theoretical best practices.


!4!47!4!

7.3 Recommendation

To improve the situation and current methodology in the public sector it has been

recommended to improve the procedures by entailing new detailed guidelines for

performing feasibility analysis in accordance with best practices. Where governmental

requests often set standard for industry this improvement could benefit the private sector

as well. The importance of feasibility analysis is again highlighted and private businesses

that are considering launching new projects are encouraged to adopt the principal

methodology of feasibility analysis in the inception of the project with the aim of

increasing the chances of success in the whole life cycle of the project.


!4!48!4!

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!4!49!4!

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Treasury Board of Canada Secretariat. (2009). Business Case Guide. Retrieved on August

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!!!!!!!!


!4!50!4!

Appendix I: Overview of public project governance

Figure 4: ROAMEF CYCLE. Appraisal and evaluation often form stages of broad policy cycle that some departments and agencies formalize in the acronym ROAMEF (Rationale, Objectives, Appraisal, Monitoring, Evaluation and Feedback) (HM Treasury, 2003).


!4!51!4!

Figure 5: The business case model sees the development of the business case progressing through three phases and within those phases are key steps that will collectively make up a solid business case (Treasury Board of Canada Secretariat, 2009).


!4!52!4!

Proj

ect n

ame:

Dat

e of

inte

rvie

w:

Year

of p

roje

ct:

Inte

rvie

wee

:To

tal c

ost o

f pro

ject

:

Wha

t was

don

e?H

ow w

as it

don

e?W

hat s

ort o

f pre

requ

isite

s wer

e us

ed?

(Fea

sibi

lity

anal

ysis

met

hod)

(Pro

cess

es a

nd p

roce

dure

s)(F

acto

rs a

nd/o

r attr

ibut

es)

Proj

ect o

verv

iew

Alte

rnat

ives

Cos

t-ben

efit

Q1.

Has

the

orig

in o

f the

pro

ject

be

en e

xpla

ined

?

Q2.

Has

the

back

grou

nd o

f the

pr

ojec

t bee

n de

scrib

ed?

Maj

or a

ctiv

ities

for

feas

ibili

ty

anal

ysis

Q3.

Hav

e th

e pr

ojec

t obj

ectiv

es

been

def

ined

?

Q4.

Has

a n

eeds

ana

lysi

s bee

n ca

rrie

d ou

t?

Q5.

How

man

y al

tern

ativ

e sc

hem

es/p

roje

cts w

ere

cons

ider

ed?

Q6.

Was

the

zero

alte

rnat

ive

incl

uded

?

Com

pany

resp

onsi

ble:

Q8.

Wer

e co

sts i

dent

ified

?

Q7.

Wer

e be

nefit

s and

be

nefic

iarie

s ide

ntifi

ed?

Appendix II: Questionnaire form


!4!53!4!

Proj

ect n

ame:

Dat

e of

inte

rvie

w:

Year

of p

roje

ct:

Inte

rvie

wee

:To

tal c

ost o

f pro

ject

:

Wha

t was

don

e?H

ow w

as it

don

e?W

hat s

ort o

f pre

requ

isite

s wer

e us

ed?

(Fea

sibi

lity

anal

ysis

met

hod)

(Pro

cess

es a

nd p

roce

dure

s)(F

acto

rs a

nd/o

r attr

ibut

es)

Maj

or a

ctiv

ities

for

feas

ibili

ty

anal

ysis

Com

pany

resp

onsi

ble:

Pres

ent v

alue

Sens

itivi

ty a

naly

sis

Mak

e re

com

men

datio

n

Q11

. Hav

e al

l im

pact

s bee

n m

onet

ized

?

Q12

. Hav

e th

e be

nefit

s and

cos

ts

been

dis

coun

ted

to o

btai

n pr

esen

t val

ue?

Q13

. Has

the

net p

rese

nt v

alue

(N

PV) b

een

com

pute

d an

d co

mpa

red

for e

ach

alte

rnat

ive?

Q15

. Has

eva

luat

ion

of

alte

rnat

ives

bee

n pe

rfor

med

?

Q9.

Hav

e th

e im

pact

s bee

n re

cord

ed a

s per

form

ance

in

dica

tors

? (u

nits

)

Q10

. Hav

e th

e im

pact

s bee

n pr

edic

ted

quan

titat

ivel

y ov

er th

e lif

e of

the

proj

ect?

Q14

. Has

sens

itivi

ty a

naly

sis

been

per

form

ed fo

r eac

h al

tern

ativ

e?


!4!54!4!

Proj

ect n

ame:

Dat

e of

inte

rvie

w:

Year

of p

roje

ct:

Inte

rvie

wee

:To

tal c

ost o

f pro

ject

:

Wha

t was

don

e?H

ow w

as it

don

e?W

hat s

ort o

f pre

requ

isite

s wer

e us

ed?

(Fea

sibi

lity

anal

ysis

met

hod)

(Pro

cess

es a

nd p

roce

dure

s)(F

acto

rs a

nd/o

r attr

ibut

es)

Maj

or a

ctiv

ities

for

feas

ibili

ty

anal

ysis

Com

pany

resp

onsi

ble:

Inde

pend

ent c

onsu

ltant

s

Q17

. Has

an

outs

ide

eval

uatio

n fr

om in

depe

nden

t con

sulta

nts

been

per

form

ed?

Q16

. Has

the

sele

ctio

n of

the

mos

t pro

mis

ing

alte

rnat

ive

been

m

ade?


!4!55!4!

Appendix III: Evaluation form


!4!56!4!

Proj

ect n

ame:

Dat

e of

inte

rvie

w:

Year

of p

roje

ct:

Inte

rvie

wee

:To

tal c

ost o

f pro

ject

:

Wha

t was

don

e?H

ow w

as it

don

e?W

hat s

ort o

f pre

requ

isite

s wer

e us

ed?

(Fea

sibi

lity

anal

ysis

met

hod)

(Pro

cess

es a

nd p

roce

dure

s)(F

acto

rs a

nd/o

r attr

ibut

es)

Proj

ect o

verv

iew

Alte

rnat

ives

Cos

t-ben

efit

Maj

or a

ctiv

ities

for

feas

ibili

ty

anal

ysis

Q4.

Has

a n

eeds

ana

lysi

s bee

n ca

rrie

d ou

t?

Com

pany

resp

onsi

ble:

Q1.

Has

the

orig

in o

f the

pro

ject

be

en e

xpla

ined

?

Q2.

Has

the

back

grou

nd o

f the

pr

ojec

t bee

n de

scrib

ed?

Q3.

Hav

e th

e pr

ojec

t obj

ectiv

es

been

def

ined

?

Q5.

How

man

y al

tern

ativ

e sc

hem

es/p

roje

cts w

ere

cons

ider

ed?

Full

cons

iste

ncy

with

bes

t pr

actic

e

Parti

al

cons

iste

ncy

with

bes

t pr

actic

e

No

cons

iste

ncy

with

bes

t pr

actic

e

Q6.

Was

the

zero

alte

rnat

ive

incl

uded

?

Q7.

Wer

e be

nefit

s and

be

nefic

iarie

s ide

ntifi

ed?

Q8.

Wer

e co

sts i

dent

ified

?


!4!57!4!

Proj

ect n

ame:

Dat

e of

inte

rvie

w:

Year

of p

roje

ct:

Inte

rvie

wee

:To

tal c

ost o

f pro

ject

:

Wha

t was

don

e?H

ow w

as it

don

e?W

hat s

ort o

f pre

requ

isite

s wer

e us

ed?

(Fea

sibi

lity

anal

ysis

met

hod)

(Pro

cess

es a

nd p

roce

dure

s)(F

acto

rs a

nd/o

r attr

ibut

es)

Maj

or a

ctiv

ities

for

feas

ibili

ty

anal

ysis

Com

pany

resp

onsi

ble:

Full

cons

iste

ncy

with

bes

t pr

actic

e

Parti

al

cons

iste

ncy

with

bes

t pr

actic

e

No

cons

iste

ncy

with

bes

t pr

actic

e

Pres

ent v

alue

Sens

itivi

ty a

naly

sis

Q14

. Has

sens

itivi

ty a

naly

sis

been

per

form

ed fo

r eac

h al

tern

ativ

e?

Q11

. Hav

e al

l im

pact

s bee

n m

onet

ized

?

Q12

. Hav

e th

e be

nefit

s and

cos

ts

been

dis

coun

ted

to o

btai

n pr

esen

t val

ue?

Q13

. Has

the

net p

rese

nt v

alue

(N

PV) b

een

com

pute

d an

d co

mpa

red

for e

ach

alte

rnat

ive?

Q9.

Hav

e th

e im

pact

s bee

n re

cord

ed a

s per

form

ance

in

dica

tors

? (u

nits

)

Q10

. Hav

e th

e im

pact

s bee

n pr

edic

ted

quan

titat

ivel

y ov

er th

e lif

e of

the

proj

ect?


!4!58!4!

Proj

ect n

ame:

Dat

e of

inte

rvie

w:

Year

of p

roje

ct:

Inte

rvie

wee

:To

tal c

ost o

f pro

ject

:

Wha

t was

don

e?H

ow w

as it

don

e?W

hat s

ort o

f pre

requ

isite

s wer

e us

ed?

(Fea

sibi

lity

anal

ysis

met

hod)

(Pro

cess

es a

nd p

roce

dure

s)(F

acto

rs a

nd/o

r attr

ibut

es)

Maj

or a

ctiv

ities

for

feas

ibili

ty

anal

ysis

Com

pany

resp

onsi

ble:

Full

cons

iste

ncy

with

bes

t pr

actic

e

Parti

al

cons

iste

ncy

with

bes

t pr

actic

e

No

cons

iste

ncy

with

bes

t pr

actic

e

Mak

e re

com

men

datio

n

Inde

pend

ent c

onsu

ltant

s

Q17

. Has

an

outs

ide

eval

uatio

n fr

om in

depe

nden

t con

sulta

nts

been

per

form

ed?

Q15

. Has

eva

luat

ion

of

alte

rnat

ives

bee

n pe

rfor

med

?

Q16

. Has

the

sele

ctio

n of

the

mos

t pro

mis

ing

alte

rnat

ive

been

m

ade?


!4!59!4!

Appendix IV: Completed evaluation forms


!4!60!4!

Adv

ania

Dat

a Ce

nter

Dat

e of

inte

rvie

w:

Nov

embe

r 13t

h 20

1420

14In

terv

iew

ee:

Jóha

nn Þ

ór Jó

nsso

n, o

ffice

of t

he d

irect

orTo

tal c

ost o

f pro

ject

:70

0 m

illio

n IS

KCo

mpa

ny re

spon

sible

:A

dvan

ia

Wha

t was

don

e?H

ow w

as it

don

e?W

hat s

ort o

f pre

requ

isite

s wer

e us

ed?

(Fea

sibili

ty a

naly

sis m

etho

d)(P

roce

sses

and

pro

cedu

res)

(Fac

tors

and

/or a

ttrib

utes

)

Proj

ect o

verv

iew

The

orig

in h

as n

ot b

een

reco

rded

.-

-0

01

In th

e ag

reem

ent p

roce

ss w

ith th

e cu

stom

er,

the

back

grou

nd o

f the

pro

ject

was

reco

rded

in

min

utes

.-

Tech

nica

l inf

orm

atio

n fo

r dat

a ce

nter

s.0

10

Fina

ncia

l ben

efits

wer

e de

fined

. Oth

er

obje

ctiv

es w

ere

defin

ed in

clud

ing

to tr

ansf

er

and

sell

pow

er in

the

form

of i

nfor

mat

ion

and

build

up

the

data

cen

ter i

ndus

try th

at c

an

prov

ide

mor

e jo

bs.

Fina

ncia

l ben

efits

wer

e de

fined

bas

ed o

n pr

ofita

bilit

y ca

lcul

atio

ns.

Prof

itabi

lity

calc

ulat

ions

in d

olla

rs.

10

0

The

custo

mer

pro

vide

d th

e ne

eds a

naly

sis.

The

custo

mer

had

bee

n fo

r tria

l in

THO

R,

Adv

ania

´s o

lder

dat

a ce

nter

, and

wan

ted

mor

e sp

ace.

Adv

ania

met

thei

r nee

ds b

y bu

ildin

g a

bigg

er d

ata

cent

er in

Fitj

ar,

Reyk

jane

s.

Floo

r are

a, p

ower

supp

lies,

air c

ondi

tioni

ng,

10

0

Alte

rnat

ives

3 di

ffere

nt lo

catio

ns w

ere

cons

ider

ed,

Blön

duós

, Höf

n in

Hor

nafjö

rður

and

Fitj

ar

Whe

n co

mpa

ring

loca

tions

, the

pric

e an

d am

ount

of e

nerg

y av

aila

ble

in e

asch

lo

catio

n w

as c

onsid

ered

as w

ell a

s the

pric

e of

tran

spor

ting

supp

lies.

Cost

estim

atio

n.1

00

Q1.

Has

the

orig

in o

f the

pro

ject

be

en e

xpla

ined

?

Q2.

Has

the

back

grou

nd o

f the

pr

ojec

t bee

n de

scrib

ed?

Q3.

Hav

e th

e pr

ojec

t obj

ectiv

es

been

def

ined

?

Q4.

Has

a n

eeds

ana

lysis

bee

n ca

rried

out

?

Q5.

How

man

y al

tern

ativ

e sc

hem

es/p

roje

cts w

ere

cons

ider

ed?

Full

cons

isten

cy

with

bes

t pr

actic

e

Parti

al

cons

isten

cy

with

bes

t pr

actic

e

No

cons

isten

cy

with

bes

t pr

actic

e

Proj

ect n

ame:

Year

of p

roje

ct:

Maj

or a

ctiv

ities

for

feas

ibili

ty

anal

ysis


!4!61!4!

Adv

ania

Dat

a C

ente

rD

ate

of in

terv

iew

:N

ovem

ber 1

3th

2014

2014

Inte

rvie

wee

:Jó

hann

Þór

Jóns

son,

offi

ce o

f the

dire

ctor

Tota

l cos

t of p

roje

ct:

700

mill

ion

ISK

Com

pany

resp

onsi

ble:

Adv

ania

Wha

t was

don

e?H

ow w

as it

don

e?W

hat s

ort o

f pre

requ

isite

s wer

e us

ed?

(Fea

sibi

lity

anal

ysis

met

hod)

(Pro

cess

es a

nd p

roce

dure

s)(F

acto

rs a

nd/o

r attr

ibut

es)

Full

cons

iste

ncy

with

bes

t pr

actic

e

Parti

al

cons

iste

ncy

with

bes

t pr

actic

e

No

cons

iste

ncy

with

bes

t pr

actic

e

Proj

ect n

ame:

Year

of p

roje

ct:

Maj

or a

ctiv

ities

for

feas

ibili

ty

anal

ysis

The

optio

n of

not

pro

ceed

ing

the

proj

ect w

as

cons

ider

ed.

Whe

ther

or n

ot th

e pr

ojec

t wou

ld p

roce

ed

depe

nded

on

the

prod

uct p

rice.

Adv

ania

is

still

con

side

ring

thei

r coo

pera

tion

with

the

cust

omer

and

whe

ther

or n

ot to

con

tinue

w

ith it

, whe

re th

e ag

reem

ent i

s onl

y va

lid

for 9

mon

ths.

Prod

uct p

rice.

10

0

Cos

t-ben

efit

Fina

ncia

l ben

efits

wer

e id

entif

ied.

As w

ell a

s tra

nsfe

rrin

g an

d se

lling

pow

er in

the

form

of

info

rmat

ion

and

build

up

the

data

cen

ter

indu

stry

that

can

pro

vide

mor

e jo

bs.

Fina

ncia

l ben

efits

wer

e ba

sed

on

prof

itabi

lity

calc

ulat

ions

.

Fact

ors a

nd/o

r attr

ibut

es: P

rofit

abili

ty

calc

ulat

ions

.

01

0

All

finan

cial

cos

ts w

as id

entif

ied.

A

ll co

sts w

as e

stim

ated

with

the

help

of a

n en

gine

erin

g co

nsul

tanc

y fir

m th

at c

arrie

d ou

t a c

ost a

naly

sis.

Fact

ors a

nd/o

r attr

ibut

es: C

ost o

f pro

perty

, in

itial

cos

t, op

erat

ing

cost

, fin

anci

ng c

ost.

01

0

Cos

ts a

nd re

venu

es w

ere

reco

rded

in d

olla

rs.

-A

lls c

osts

and

reve

nues

in d

olla

rs.

10

0

Q6.

Was

the

zero

alte

rnat

ive

incl

uded

?

Q7.

Wer

e be

nefit

s and

be

nefic

iarie

s ide

ntifi

ed?

Q8.

Wer

e co

sts i

dent

ified

?

Q9.

Hav

e th

e im

pact

s bee

n re

cord

ed a

s per

form

ance

in

dica

tors

? (u

nits

)

Eco

nom

ic

( x

)yes

(

)no

Soc

ial

(

)yes

( x

)no

Env

ironm

enta

l (

)y

es (

x )n

o ! E

cono

mic

(

x )y

es (

)n

o S

ocia

l

(

)y

es (

x )n

o E

nviro

nmen

tal

(

)yes

( x

)no

!


!4!62!4!

Adv

ania

Dat

a C

ente

rD

ate

of in

terv

iew

:N

ovem

ber 1

3th

2014

2014

Inte

rvie

wee

:Jó

hann

Þór

Jóns

son,

offi

ce o

f the

dire

ctor

Tota

l cos

t of p

roje

ct:

700

mill

ion

ISK

Com

pany

resp

onsi

ble:

Adv

ania

Wha

t was

don

e?H

ow w

as it

don

e?W

hat s

ort o

f pre

requ

isite

s wer

e us

ed?

(Fea

sibi

lity

anal

ysis

met

hod)

(Pro

cess

es a

nd p

roce

dure

s)(F

acto

rs a

nd/o

r attr

ibut

es)

Full

cons

iste

ncy

with

bes

t pr

actic

e

Parti

al

cons

iste

ncy

with

bes

t pr

actic

e

No

cons

iste

ncy

with

bes

t pr

actic

e

Proj

ect n

ame:

Year

of p

roje

ct:

Maj

or a

ctiv

ities

for

feas

ibili

ty

anal

ysis

The

impa

cts w

ere

not p

redi

cted

qua

ntita

tivel

y ov

er th

e lif

e of

the

proj

ect.

-

The

cust

omer

mak

es a

gree

men

ts th

at la

st fo

r a

shor

t per

iod

time,

9 m

onth

s, an

d th

e in

fras

truct

ure

is w

ritte

n of

f ear

ly in

the

life

of

the

proj

ect.

00

1

All

cost

s and

reve

nues

hav

e be

en m

onet

ized

.-

All

cost

s and

reve

nues

in d

olla

rs/k

w.1

00

Pres

ent v

alue

No

pres

ent v

alue

cal

cula

tions

wer

e m

ade.

--

00

1

No

pres

ent v

alue

cal

cula

tions

wer

e m

ade.

--

00

1

Sens

itivi

ty a

naly

sis

Sens

itivi

ty a

naly

sis w

as p

erfo

rmed

for o

ne

alte

rnat

ive.

Sens

itivi

ty a

naly

sis w

as c

arrie

d ou

t bas

ed

on p

rice

elas

ticity

.Pr

ice

elas

ticity

.0

10

Mak

e re

com

men

datio

n

Diff

eren

t loc

atio

ns w

ere

eval

uate

d as

wel

l as

the

type

of h

ousi

ng, s

teel

vs.

lam

inat

ed.

Cos

t est

imat

ion.

Initi

al c

ost.

10

0

Q14

. Has

sens

itivi

ty a

naly

sis

been

per

form

ed fo

r eac

h al

tern

ativ

e?

Q15

. Has

eva

luat

ion

of

alte

rnat

ives

bee

n pe

rfor

med

?

Q11

. Hav

e al

l im

pact

s bee

n m

onet

ized

?

Q12

. Hav

e th

e be

nefit

s and

cos

ts

been

dis

coun

ted

to o

btai

n pr

esen

t val

ue?

Q13

. Has

the

net p

rese

nt v

alue

(N

PV) b

een

com

pute

d an

d co

mpa

red

for e

ach

alte

rnat

ive?

Q10

. Hav

e th

e im

pact

s bee

n pr

edic

ted

quan

titat

ivel

y ov

er th

e lif

e of

the

proj

ect?


!4!63!4!

Adv

ania

Dat

a C

ente

rD

ate

of in

terv

iew

:N

ovem

ber 1

3th

2014

2014

Inte

rvie

wee

:Jó

hann

Þór

Jóns

son,

offi

ce o

f the

dire

ctor

Tota

l cos

t of p

roje

ct:

700

mill

ion

ISK

Com

pany

resp

onsi

ble:

Adv

ania

Wha

t was

don

e?H

ow w

as it

don

e?W

hat s

ort o

f pre

requ

isite

s wer

e us

ed?

(Fea

sibi

lity

anal

ysis

met

hod)

(Pro

cess

es a

nd p

roce

dure

s)(F

acto

rs a

nd/o

r attr

ibut

es)

Full

cons

iste

ncy

with

bes

t pr

actic

e

Parti

al

cons

iste

ncy

with

bes

t pr

actic

e

No

cons

iste

ncy

with

bes

t pr

actic

e

Proj

ect n

ame:

Year

of p

roje

ct:

Maj

or a

ctiv

ities

for

feas

ibili

ty

anal

ysis

Rey

kjan

es w

as se

lect

ed b

ased

on

cost

es

timat

ion.

Bas

ed o

n co

st e

stim

atio

n. If

the

poss

ibili

ty

of e

xpan

ding

the

busi

ness

com

es u

p, th

e ho

usin

g w

ill b

e m

ore

sim

pler

and

che

aper

ne

xt ti

me,

to lo

wer

con

stru

ctio

n co

sts a

nd

prov

ide

bette

r pric

es fo

r the

pro

duct

.

Cos

t est

imat

ion.

10

0

Inde

pend

ent c

onsu

ltant

s

Cos

t ana

lysi

s was

per

form

ed b

y an

en

gine

erin

g co

nsul

tanc

y fir

m.

The

wor

k of

the

cons

ulta

nts d

id n

ot in

volv

e se

cond

opi

nion

des

k st

udy.

-0

01

84

5

Q17

. Has

an

outs

ide

eval

uatio

n fr

om in

depe

nden

t con

sulta

nts

been

per

form

ed?

Q16

. Has

the

sele

ctio

n of

the

mos

t pro

mis

ing

alte

rnat

ive

been

m

ade?

!


!4!64!4!

Egils

holl

Cin

ema

Hal

lD

ate

of in

terv

iew

:N

ovem

ber 1

4th

2014

2008

-201

0In

terv

iew

ee:

Bjö

rn Á

. Árn

ason

, man

ager

Tota

l cos

t of p

roje

ct:

600

mill

ion

ISK

Com

pany

resp

onsi

ble:

Sam

bio

Wha

t was

don

e?H

ow w

as it

don

e?W

hat s

ort o

f pre

requ

isite

s wer

e us

ed?

(Fea

sibi

lity

anal

ysis

met

hod)

(Pro

cess

es a

nd p

roce

dure

s)(F

acto

rs a

nd/o

r attr

ibut

es)

Proj

ect o

verv

iew

The

orig

in o

f the

pro

ject

has

not

bee

n re

cord

ed.

--

00

1

The

back

grou

nd o

f the

pro

ject

has

not

bee

n re

cord

ed.

--

00

1

3 ob

ject

ives

wer

e de

fined

.

The

obje

ctiv

es w

ere

3: T

o in

crea

se th

e ov

eral

l atte

ndan

ce, b

uild

up

com

petit

ion

with

oth

er ri

vals

on

the

mar

ket a

nd p

rovi

de

new

cus

tom

ers b

y ad

ding

a c

inem

a ha

ll in

a

new

and

gro

win

g su

burb

with

rath

er y

oung

po

pula

tion.

The

subu

rb w

as la

ckin

g a

cine

ma

hall

and

next

ci

nem

a w

as ra

ther

far a

way

. The

pro

ject

ow

ner´

s gue

ssed

as l

arge

par

t of t

he re

side

nts

did

not a

ttend

mov

ies b

ecau

se o

f the

dis

tanc

es.

10

0

Nee

ds a

naly

sis w

as c

arrie

d ou

t.N

eeds

ana

lysi

s was

car

ried

out b

y an

en

gine

erin

g co

nsul

tanc

y fir

m.

Nee

ds a

naly

sis o

f the

loca

tion

base

d on

the

age

of p

opul

atio

n, tr

affic

load

and

dem

and.

In th

e be

ginn

ing

of th

e pr

ojec

t the

cin

ema

hall

was

de

sign

ed a

s a lu

xury

cin

ema

with

hig

her t

icke

t pr

ices

but

afte

r the

rece

ssio

n th

e pr

ojec

t was

put

on

hol

d an

d th

e fo

cus c

hang

ed.T

he ti

cket

pric

es

wer

e ke

pt a

vera

ge.

10

0

Alte

rnat

ives

Two

loca

tion

optio

ns w

ere

exam

ined

.

The

two

loca

tions

con

side

red

wer

e Sp

öngi

n an

d Eg

ilshö

ll w

ith re

gard

to tr

affic

load

but

th

e lo

catio

n of

Spö

ngin

turn

ed o

ut to

be

inco

nven

ient

.

Traf

fic lo

ad.

10

0

Can

celli

ng th

e pr

ojec

t was

nev

er a

n op

tion.

--

00

1Q

6. W

as th

e ze

ro a

ltern

ativ

e in

clud

ed?

Q1.

Has

the

orig

in o

f the

pro

ject

be

en e

xpla

ined

?

Q2.

Has

the

back

grou

nd o

f the

pr

ojec

t bee

n de

scrib

ed?

Q3.

Hav

e th

e pr

ojec

t obj

ectiv

es

been

def

ined

?

Q4.

Has

a n

eeds

ana

lysi

s bee

n ca

rrie

d ou

t?

Q5.

How

man

y al

tern

ativ

e sc

hem

es/p

roje

cts w

ere

cons

ider

ed?

Full

cons

iste

ncy

with

bes

t pr

actic

e

Parti

al

cons

iste

ncy

with

bes

t pr

actic

e

No

cons

iste

ncy

with

bes

t pr

actic

e

Proj

ect n

ame:

Year

of p

roje

ct:

Maj

or a

ctiv

ities

for

feas

ibili

ty

anal

ysis


!4!65!4!

Egils

holl

Cine

ma

Hal

lD

ate

of in

terv

iew

:N

ovem

ber 1

4th

2014

2008

-201

0In

terv

iew

ee:

Björ

n Á

. Árn

ason

, man

ager

Tota

l cos

t of p

roje

ct:

600

mill

ion

ISK

Com

pany

resp

onsib

le:

Sam

bio

Wha

t was

don

e?H

ow w

as it

don

e?W

hat s

ort o

f pre

requ

isite

s wer

e us

ed?

(Fea

sibili

ty a

naly

sis m

etho

d)(P

roce

sses

and

pro

cedu

res)

(Fac

tors

and

/or a

ttrib

utes

)Fu

ll co

nsist

ency

w

ith b

est

prac

tice

Parti

al

cons

isten

cy

with

bes

t pr

actic

e

No

cons

isten

cy

with

bes

t pr

actic

e

Proj

ect n

ame:

Year

of p

roje

ct:

Maj

or a

ctiv

ities

for

feas

ibili

ty

anal

ysis

Cos

t-ben

efit

Fina

ncia

l ben

efits

wer

e id

entif

ied.

Fina

ncia

l ben

efits

wer

e id

entif

ied

by

prof

itabi

lity

calc

ulat

ions

Fact

ors a

nd/o

r attr

ibut

es: P

rofit

abili

ty

calc

ulat

ions

.

01

0

All

finan

cial

cos

ts w

ere

cons

ider

ed.

Cos

t ana

lysis

was

car

ried

out.

Fact

ors a

nd/o

r attr

ibut

es: I

nitia

l cos

t, op

erat

ing

cost,

rent

al c

ost,

cost

of c

apita

l.

01

0

All

costs

and

reve

nues

wer

e re

cord

ed a

s pe

rform

ance

indi

cato

rs.

-Co

sts a

nd re

venu

es w

ere

reco

rded

in Ic

elan

dic

kron

as.

10

0

The

cost

and

reve

nues

wer

e pr

edic

ted

quan

tiativ

ely

over

the

life

of th

e pr

ojec

t.Th

e co

st an

d re

venu

es w

ere

calc

ulat

ed 3

3 ye

ars a

head

, the

leng

th o

f the

leas

e.O

pera

ting

cost,

inita

l cos

t, re

ntal

cos

t and

re

venu

es.

10

0

The

cost

and

reve

nues

.-

All

finan

cial

cos

ts an

d re

venu

es in

Icel

andi

c kr

onas

.1

00

Pres

ent v

alue

Even

thou

gh th

e le

ase

was

for 3

3 ye

ars,

pres

ent v

alue

was

not

cal

cula

ted.

--

00

1

Q11

. Hav

e al

l im

pact

s bee

n m

onet

ized

?

Q12

. Hav

e th

e be

nefit

s and

cos

ts be

en d

iscou

nted

to o

btai

n pr

esen

t val

ue?

Q7.

Wer

e be

nefit

s and

be

nefic

iarie

s ide

ntifi

ed?

Q8.

Wer

e co

sts id

entif

ied?

Q9.

Hav

e th

e im

pact

s bee

n re

cord

ed a

s per

form

ance

in

dica

tors

? (u

nits)

Q10

. Hav

e th

e im

pact

s bee

n pr

edic

ted

quan

titat

ivel

y ov

er th

e lif

e of

the

proj

ect?

Eco

nom

ic

( x

)yes

(

)no

Soc

ial

(

)yes

( x

)no

Env

ironm

enta

l (

)y

es (

x )n

o ! E

cono

mic

(

x )y

es (

)n

o S

ocia

l

(

)y

es (

x )n

o E

nviro

nmen

tal

(

)yes

( x

)no

!


!4!66!4!

Egils

holl

Cine

ma

Hal

lD

ate

of in

terv

iew

:N

ovem

ber 1

4th

2014

2008

-201

0In

terv

iew

ee:

Björ

n Á

. Árn

ason

, man

ager

Tota

l cos

t of p

roje

ct:

600

mill

ion

ISK

Com

pany

resp

onsib

le:

Sam

bio

Wha

t was

don

e?H

ow w

as it

don

e?W

hat s

ort o

f pre

requ

isite

s wer

e us

ed?

(Fea

sibili

ty a

naly

sis m

etho

d)(P

roce

sses

and

pro

cedu

res)

(Fac

tors

and

/or a

ttrib

utes

)Fu

ll co

nsist

ency

w

ith b

est

prac

tice

Parti

al

cons

isten

cy

with

bes

t pr

actic

e

No

cons

isten

cy

with

bes

t pr

actic

e

Proj

ect n

ame:

Year

of p

roje

ct:

Maj

or a

ctiv

ities

for

feas

ibili

ty

anal

ysis

NPV

was

not

cal

cula

ted.

--

00

1

Sens

itivi

ty a

naly

sis

Sens

itivi

ty a

naly

sis w

as n

ot p

erfo

rmed

.-

-0

01

Mak

e re

com

men

datio

n

The

two

loca

tions

wer

e ev

alua

ted

but n

ot in

de

tail.

--

00

1

Onl

y on

e al

tern

ativ

e.-

-0

01

Inde

pend

ent c

onsu

ltant

s

Exam

inat

ion

of tw

o di

ffere

nt lo

catio

ns w

as

perfo

rmed

by

an e

ngin

eerin

g co

nsul

tanc

y fir

m.

The

cons

ulta

nts a

dvic

ed o

n ch

oosin

g Eg

ilsho

ll be

caus

e of

bet

ter t

rans

porta

tion

in

that

are

a.Tr

affic

load

.1

00

72

8

Q17

. Has

an

outsi

de e

valu

atio

n fro

m in

depe

nden

t con

sulta

nts

been

per

form

ed?

Q14

. Has

sens

itivi

ty a

naly

sis

been

per

form

ed fo

r eac

h al

tern

ativ

e?

Q15

. Has

eva

luat

ion

of

alte

rnat

ives

bee

n pe

rform

ed?

Q16

. Has

the

sele

ctio

n of

the

mos

t pro

misi

ng a

ltern

ativ

e be

en

mad

e?

Q13

. Has

the

net p

rese

nt v

alue

(N

PV) b

een

com

pute

d an

d co

mpa

red

for e

ach

alte

rnat

ive?

!

!


!4!67!4!

Har

pa H

otel

and

Apa

rtmen

tsD

ate

of in

terv

iew

:N

ovem

ber 1

1th

2014

2014

Inte

rvie

wee

:K

arl R

eym

ond

Birg

isso

n, e

ngin

eer

Tota

l cos

t of p

roje

ct:

14 b

illio

n IS

KC

ompa

ny re

spon

sibl

e:M

annv

it

Wha

t was

don

e?H

ow w

as it

don

e?W

hat s

ort o

f pre

requ

isite

s wer

e us

ed?

(Fea

sibi

lity

anal

ysis

met

hod)

(Pro

cess

es a

nd p

roce

dure

s)(F

acto

rs a

nd/o

r attr

ibut

es)

Proj

ect o

verv

iew

Man

nvit

owns

a p

art i

n th

e pr

ojec

t alo

ng w

ith

othe

r ow

erns

and

it´s

orig

in h

as b

een

reco

rded

.

Info

rmat

ion

abou

t the

stak

ehol

ders

in th

e pr

ojec

t and

thei

r res

pons

ibili

ty.

-1

00

Man

nvit

owns

a p

art i

n th

e pr

ojec

t so

it´s

back

grou

nd h

as b

een

reco

rded

.In

form

atio

n ab

out t

he d

evel

opm

ent o

f the

pr

ojec

t hav

e be

en re

cord

ed.

-1

00

The

obje

ctiv

e w

as d

efin

ed a

s fin

anci

al

bene

fits.

Estim

ate

the

cost

s of t

he p

roje

ct a

s acc

urat

e as

pos

sibl

e an

d de

fine

the

proj

ect i

n de

tail

with

the

aim

of b

ette

r out

com

e of

the

proj

ect.

-1

00

Nee

d an

alys

is w

as c

arrie

d ou

t.

Ana

lysi

s of t

he m

arke

t for

the

spec

ific

prod

uct,

that

is, d

eman

d fo

r apa

rtmen

ts in

th

is lo

catio

n an

d de

man

d fo

r a h

otel

in th

is

qual

ity c

lass

.

Ana

lysi

s of q

ualit

y, si

ze o

f hot

el ro

oms a

nd

pric

e pe

r nig

ht.

10

0

Alte

rnat

ives

3-4

grea

ter o

ptio

ns w

here

con

side

red

and

then

man

y m

inor

opt

ions

as w

ell.

The

cost

s and

tech

nica

l asp

ects

of t

he

alte

rnat

ives

was

com

pare

d.

The

grea

ter o

ptio

ns w

here

arc

hite

ctur

al, f

or

exam

ple

num

ber o

f flo

ors,

but t

he m

inor

op

tions

con

side

red

for e

xam

ple

the

stru

ctur

e of

ro

oms.

10

0

In th

e co

ncep

tual

stud

y th

e ze

ro a

ltern

ativ

e w

as in

clud

ed.

The

base

cas

e de

fined

.-

10

0

Cos

t-ben

efit

Fina

ncia

l ben

efits

of t

he p

roje

ct w

ere

iden

tifie

d.

Cal

cula

tions

mad

e w

ith th

e he

lp o

f the

ba

nk.

Fact

ors a

nd/o

r attr

ibut

es: P

rofit

abili

ty

calc

ulat

ion,

reve

nue

estim

atio

n an

d th

en p

rofit

pr

oven

.

01

0

Full

cons

iste

ncy

with

bes

t pr

actic

e

Parti

al

cons

iste

ncy

with

bes

t pr

actic

e

No

cons

iste

ncy

with

bes

t pr

actic

e

Proj

ect n

ame:

Year

of p

roje

ct:

Maj

or a

ctiv

ities

for

feas

ibili

ty

anal

ysis

Q1.

Has

the

orig

in o

f the

pro

ject

be

en e

xpla

ined

?

Q2.

Has

the

back

grou

nd o

f the

pr

ojec

t bee

n de

scrib

ed?

Q3.

Hav

e th

e pr

ojec

t obj

ectiv

es

been

def

ined

?

Q4.

Has

a n

eeds

ana

lysi

s bee

n ca

rrie

d ou

t?

Q5.

How

man

y al

tern

ativ

e sc

hem

es/p

roje

cts w

ere

cons

ider

ed?

Q6.

Was

the

zero

alte

rnat

ive

incl

uded

?

Q7.

Wer

e be

nefit

s and

be

nefic

iarie

s ide

ntifi

ed?

Eco

nom

ic

( x

)yes

(

)no

Soc

ial

(

)yes

( x

)no

Env

ironm

enta

l (

)y

es (

x )n

o


!4!68!4!

Har

pa H

otel

and

Apa

rtmen

tsD

ate

of in

terv

iew

:N

ovem

ber 1

1th

2014

2014

Inte

rvie

wee

:K

arl R

eym

ond

Birg

isso

n, e

ngin

eer

Tota

l cos

t of p

roje

ct:

14 b

illio

n IS

KC

ompa

ny re

spon

sibl

e:M

annv

it

Wha

t was

don

e?H

ow w

as it

don

e?W

hat s

ort o

f pre

requ

isite

s wer

e us

ed?

(Fea

sibi

lity

anal

ysis

met

hod)

(Pro

cess

es a

nd p

roce

dure

s)(F

acto

rs a

nd/o

r attr

ibut

es)

Full

cons

iste

ncy

with

bes

t pr

actic

e

Parti

al

cons

iste

ncy

with

bes

t pr

actic

e

No

cons

iste

ncy

with

bes

t pr

actic

e

Proj

ect n

ame:

Year

of p

roje

ct:

Maj

or a

ctiv

ities

for

feas

ibili

ty

anal

ysis

Alls

fina

ncia

l cos

ts w

ere

iden

tifie

d as

wel

l as

risk

anal

ysis

.

A d

etai

led

cost

est

imat

ion

was

car

ried

out.

Ris

k an

alys

is d

urin

g co

nstru

ctio

n w

as

carr

ied

out w

here

hea

lth a

nd se

curit

y of

w

orke

rs w

ere

iden

tifie

d as

wel

l as s

ocia

l, le

gal a

nd e

nviro

nmen

tal i

mpa

cts o

f the

pr

ojec

t and

the

sche

dule

of t

he p

roje

ct.

Fact

ors a

nd/o

r attr

ibut

es: I

nitia

l cos

ts, c

ost o

f ca

pita

l, in

vest

men

t cos

t, op

erat

ing

cost

s. Th

e pr

obab

ility

of e

very

risk

cla

ss o

f im

pact

was

ev

alut

ed a

nd it

´s c

onse

quen

ces r

ecor

ded.

01

0

The

finan

cial

impa

cts w

here

reco

rded

as

perf

orm

ance

indi

cato

rs.

-R

even

ues a

nd a

ll co

sts.

10

0

Fina

ncia

l im

pact

s wer

e pr

edic

ted

quan

titat

ivel

y ov

er th

e lif

e of

the

proj

ect.

-R

even

ues a

nd a

ll co

sts.

10

0

Fina

ncia

l im

pact

s, co

sts a

nd re

venu

es w

ere

mon

etiz

ed.

-A

ll co

sts a

nd re

venu

es in

Icel

andi

c kr

onas

10

0

Pres

ent v

alue

Pres

ent v

alue

was

not

cal

cula

ted.

Cos

t and

reve

nues

are

est

imat

ed w

ithou

t in

dexa

tion.

-0

01

Pres

ent v

alue

was

not

cal

cula

ted.

--

00

1

Q9.

Hav

e th

e im

pact

s bee

n re

cord

ed a

s per

form

ance

in

dica

tors

? (u

nits

)

Q10

. Hav

e th

e im

pact

s bee

n pr

edic

ted

quan

titat

ivel

y ov

er th

e lif

e of

the

proj

ect?

Q11

. Hav

e al

l im

pact

s bee

n m

onet

ized

?

Q12

. Hav

e th

e be

nefit

s and

cos

ts

been

dis

coun

ted

to o

btai

n pr

esen

t val

ue?

Q13

. Has

the

net p

rese

nt v

alue

(N

PV) b

een

com

pute

d an

d co

mpa

red

for e

ach

alte

rnat

ive?

Q8.

Wer

e co

sts i

dent

ified

?

Eco

nom

ic

( x

)yes

(

)no

Soc

ial

(

)yes

( x

)no

Env

ironm

enta

l (

)y

es (

x )n

o !


!4!69!4!

Har

pa H

otel

and

Apa

rtmen

tsD

ate

of in

terv

iew

:N

ovem

ber 1

1th

2014

2014

Inte

rvie

wee

:K

arl R

eym

ond

Birg

isso

n, e

ngin

eer

Tota

l cos

t of p

roje

ct:

14 b

illio

n IS

KC

ompa

ny re

spon

sibl

e:M

annv

it

Wha

t was

don

e?H

ow w

as it

don

e?W

hat s

ort o

f pre

requ

isite

s wer

e us

ed?

(Fea

sibi

lity

anal

ysis

met

hod)

(Pro

cess

es a

nd p

roce

dure

s)(F

acto

rs a

nd/o

r attr

ibut

es)

Full

cons

iste

ncy

with

bes

t pr

actic

e

Parti

al

cons

iste

ncy

with

bes

t pr

actic

e

No

cons

iste

ncy

with

bes

t pr

actic

e

Proj

ect n

ame:

Year

of p

roje

ct:

Maj

or a

ctiv

ities

for

feas

ibili

ty

anal

ysis

Sens

itivi

ty a

naly

sis

Sens

itivi

ty a

naly

sis w

as p

erfo

rmed

for o

ne

alte

rnat

ive.

The

sens

itivi

ty a

naly

sis f

ocus

es o

n ch

ange

s in

cos

t.In

itial

cos

ts.

01

0

Mak

e re

com

men

datio

n

Eval

uatio

n w

as b

ased

on

initi

al c

ost.

-In

itial

cos

t.1

00

Sele

ctio

n w

as b

ased

on

initi

al c

ost.

Whe

n se

lect

ing

the

mos

t pro

mis

ing

alte

rnat

ive,

stro

ng e

mph

asis

is la

id o

n se

curit

y is

sues

, whi

ch c

an so

met

imes

be

the

dete

rmin

ing

fact

or, d

omin

ant o

ver t

he

prof

itabi

lity

of th

e pr

ojec

t.

Initi

al c

ost.

10

0

Inde

pend

ent c

onsu

ltant

s

Prof

iabi

lity

calc

ulat

ions

wer

e pe

rfor

med

by

a ba

nk.

The

wor

k of

the

cons

ulta

nts d

id n

ot in

volv

e se

cond

opi

nion

des

k st

udy.

-0

01

113

3

Q14

. Has

sens

itivi

ty a

naly

sis

been

per

form

ed fo

r eac

h al

tern

ativ

e?

Q15

. Has

eva

luat

ion

of

alte

rnat

ives

bee

n pe

rfor

med

?

Q16

. Has

the

sele

ctio

n of

the

mos

t pro

mis

ing

alte

rnat

ive

been

m

ade?

Q17

. Has

an

outs

ide

eval

uatio

n fr

om in

depe

nden

t con

sulta

nts

been

per

form

ed?

!


!4!70!4!

Hof

dato

rg D

own

Tow

n &

Ser

vice

Cen

ter

Dat

e of

inte

rvie

w:

Nov

embe

r 18t

h 20

1420

09In

terv

iew

ee:

Gun

nar V

alur

Gís

laso

n, p

roje

ct m

anag

erTo

tal c

ost o

f pro

ject

:6

billi

on IS

KC

ompa

ny re

spon

sibl

e:Ey

kt

Wha

t was

don

e?H

ow w

as it

don

e?W

hat s

ort o

f pre

requ

isite

s wer

e us

ed?

(Fea

sibi

lity

anal

ysis

met

hod)

(Pro

cess

es a

nd p

roce

dure

s)(F

acto

rs a

nd/o

r attr

ibut

es)

Proj

ect o

verv

iew

A re

port

on th

e pr

ojec

t´s o

rigin

and

ba

ckgr

ound

.

The

build

ing

hist

ory

of th

e ol

d ho

uses

and

pr

oper

ty is

told

in th

e re

port.

Dev

elop

ing

of

trans

porta

tion

and

need

for a

new

city

ce

nter

exa

min

ed.

Tran

spor

tatio

n de

velo

pmen

t and

nee

d fo

r city

ce

nter

.1

00

A re

port

on th

e pr

ojec

t´s o

rigin

and

ba

ckgr

ound

.

Dev

elop

ing

of th

e lif

e an

d cu

lture

is

desc

ribed

and

pro

pose

d fu

ture

de

velo

pmen

tas w

ell.

The

plan

ning

of t

he

loca

tion

is d

escr

ibed

as w

ell a

s the

de

velo

pmen

t of t

he p

lann

ing

in th

e pa

st.

Dev

elop

men

t of t

he d

own

tow

n ar

ea is

de

scrib

ed a

nd th

e id

ea a

bout

a d

own

tow

n an

d se

rvic

e ce

nter

is d

escr

ibed

.

Dev

elop

men

t of c

ultu

re in

the

dow

n to

wn

area

. Pl

anni

ng o

f the

bui

ldin

g ar

ea, i

n th

e pa

st a

nd

futu

re. I

dea

abou

t the

dow

n to

wn

cent

er m

odel

.1

00

Bot

h fin

anci

al a

nd c

once

ptua

l obj

ectiv

es w

ere

defin

ed in

a c

lear

goa

l set

ting.

The

finan

cial

obj

ectiv

es w

ere

defin

ed in

de

tail

by p

rofit

abili

ty c

alcu

latio

ns. T

he

conc

eptu

al o

bjec

tives

inlc

uded

a n

ew

visi

on fo

r the

city

cen

ter,

with

a m

oder

n an

d ne

w d

esig

n of

hou

sing

, new

vis

ion

for

cultu

re w

here

all

kind

s of s

ervi

ces c

an b

e fo

und

in th

e sa

me

build

ing

as w

ell a

s a

hote

l, ap

artm

ents

and

rest

aura

nts.

Prof

iatb

ility

cal

cula

tions

. New

vis

ion

for t

he

city

cen

ter.

10

0

A n

eed

anal

ysis

was

car

ried

out

The

need

for o

ffice

bui

ldin

g w

as id

entif

ied,

lo

catio

ns a

nd st

ruct

ure

of p

oten

tial o

ffice

bu

ildin

gs w

as a

naly

sed

as w

ell a

s the

rent

al

rate

s. Th

e in

tern

al o

f the

hou

sing

was

an

alys

ed a

s wel

l, si

ze p

er o

ffice

, tec

hnic

al

need

s, nu

mbe

r of w

indo

ws,

num

ber o

f pa

rkin

g lo

ts n

eede

d. T

rans

porta

tion

agre

emen

ts w

ith e

mpl

oyee

s wer

e an

alys

ed

as w

ell.

Nee

d fo

r offi

ce sp

ace.

Loc

atio

n. R

enta

l rat

es.

Inte

rnal

faci

lity.

Tra

nspo

rtatio

n.1

00

Full

cons

iste

ncy

with

bes

t pr

actic

e

Parti

al

cons

iste

ncy

with

bes

t pr

actic

e

No

cons

iste

ncy

with

bes

t pr

actic

e

Proj

ect n

ame:

Year

of p

roje

ct:

Maj

or a

ctiv

ities

for

feas

ibili

ty

anal

ysis

Q1.

Has

the

orig

in o

f the

pro

ject

be

en e

xpla

ined

?

Q2.

Has

the

back

grou

nd o

f the

pr

ojec

t bee

n de

scrib

ed?

Q3.

Hav

e th

e pr

ojec

t obj

ectiv

es

been

def

ined

?

Q4.

Has

a n

eeds

ana

lysi

s bee

n ca

rrie

d ou

t?


!4!71!4!

Hof

dato

rg D

own

Tow

n &

Ser

vice

Cen

ter

Dat

e of

inte

rvie

w:

Nov

embe

r 18t

h 20

1420

09In

terv

iew

ee:

Gun

nar V

alur

Gís

laso

n, p

roje

ct m

anag

erTo

tal c

ost o

f pro

ject

:6

billi

on IS

KC

ompa

ny re

spon

sibl

e:Ey

kt

Wha

t was

don

e?H

ow w

as it

don

e?W

hat s

ort o

f pre

requ

isite

s wer

e us

ed?

(Fea

sibi

lity

anal

ysis

met

hod)

(Pro

cess

es a

nd p

roce

dure

s)(F

acto

rs a

nd/o

r attr

ibut

es)

Full

cons

iste

ncy

with

bes

t pr

actic

e

Parti

al

cons

iste

ncy

with

bes

t pr

actic

e

No

cons

iste

ncy

with

bes

t pr

actic

e

Proj

ect n

ame:

Year

of p

roje

ct:

Maj

or a

ctiv

ities

for

feas

ibili

ty

anal

ysis

Alte

rnat

ives

2 a

ltern

ativ

es w

ere

cons

ider

ed.

The

two

optio

ns w

ere

offic

e bu

ildin

g an

d a

hote

l. A

fter d

ecid

ing

on th

e of

fice

build

ing

inte

rnal

alte

rnat

ives

wer

e co

nsid

ered

: w

indo

ws,

fittin

gs, c

over

ing,

squa

re m

eter

pe

r em

ploy

ee

Cos

t est

imat

ion

and

need

ana

lysi

s.1

00

The

zero

alte

rnat

ive

was

not

incl

uded

.-

The

alte

rnat

ive

to w

ait w

ith p

roce

edin

g w

ith

part

of th

e co

nstru

ctio

n w

as in

clud

ed, t

hat i

s not

te

arin

g do

wn

all o

f the

old

hau

ses i

mm

edia

tely

.0

01

Cos

t-ben

efit

The

finan

cial

ben

efits

wer

e id

entif

ied

in

deta

il. B

enef

its fo

r the

cul

ture

and

serv

ice

in

the

dow

n to

wn

area

wer

e id

entif

ied

as w

ell.

Prof

itabi

lity

calc

ulat

ions

and

ope

ratin

g es

timat

es.

Fact

ors a

nd/o

r attr

ibut

es: P

rofit

ablit

y. A

ll ki

nd

of se

rvic

e fo

und

in th

e sa

me

build

ing.

Cre

ate

a ci

ty c

ente

r with

cre

ativ

e cu

lture

. Sho

rter

dist

ance

s hav

e po

sitiv

e in

fluen

ce o

n tra

ffic

load

.

01

0

All

finan

cial

cos

ts w

ere

estim

ated

.D

etai

led

cost

ana

lysi

s was

car

ried

out.

Fact

ors a

nd/o

r attr

ibut

es: C

ost o

f pro

perty

, in

itial

cos

t, co

st o

f cap

ital,

oper

atin

g co

st,

inve

stm

ent c

ost.

01

0

Rev

enue

s and

cos

ts w

ere

reco

rded

as

perf

orm

ance

indi

cato

rs.

-R

even

ues,

cost

of p

rope

rty, i

nitia

l cos

t, co

st o

f ca

pita

l, op

erat

ing

cost

, inv

estm

ent c

ost.

10

0

Q5.

How

man

y al

tern

ativ

e sc

hem

es/p

roje

cts w

ere

cons

ider

ed?

Q6.

Was

the

zero

alte

rnat

ive

incl

uded

?

Q7.

Wer

e be

nefit

s and

be

nefic

iarie

s ide

ntifi

ed?

Q8.

Wer

e co

sts i

dent

ified

?

Q9.

Hav

e th

e im

pact

s bee

n re

cord

ed a

s per

form

ance

in

dica

tors

? (u

nits

)

Eco

nom

ic

( x

)yes

(

)no

Soc

ial

( x

)yes

( x

)no

Env

ironm

enta

l (

)y

es (

x )n

o

Eco

nom

ic

( x

)yes

(

)no

Soc

ial

(

)yes

( x

)no

Env

ironm

enta

l (

)y

es (

x )n

o


!4!72!4!

Hof

dato

rg D

own

Tow

n &

Ser

vice

Cen

ter

Dat

e of

inte

rvie

w:

Nov

embe

r 18t

h 20

1420

09In

terv

iew

ee:

Gun

nar V

alur

Gísl

ason

, pro

ject

man

ager

Tota

l cos

t of p

roje

ct:

6 bi

llion

ISK

Com

pany

resp

onsib

le:

Eykt

Wha

t was

don

e?H

ow w

as it

don

e?W

hat s

ort o

f pre

requ

isite

s wer

e us

ed?

(Fea

sibili

ty a

naly

sis m

etho

d)(P

roce

sses

and

pro

cedu

res)

(Fac

tors

and

/or a

ttrib

utes

)Fu

ll co

nsist

ency

w

ith b

est

prac

tice

Parti

al

cons

isten

cy

with

bes

t pr

actic

e

No

cons

isten

cy

with

bes

t pr

actic

e

Proj

ect n

ame:

Year

of p

roje

ct:

Maj

or a

ctiv

ities

for

feas

ibili

ty

anal

ysis

The

costs

and

reve

nues

wer

e pr

edic

ted

quan

titat

ivel

y ov

er th

e lif

e of

the

proj

ect.

Cost

and

reve

nues

wer

e pr

edic

ted

30 y

ears

ah

ead.

Initi

al c

ost,

cost

of c

apita

l, op

erat

ing

cost,

re

venu

es.

10

0

Fina

ncia

l ben

efits

, rev

enue

s and

cos

ts w

ere

mon

etiz

ed.

-Re

venu

es a

nd a

ll co

sts w

ere

mon

etiz

ed in

Ic

elan

dic

kron

as.

10

0

Pres

ent v

alue

Pres

ent v

alue

for r

even

ues a

nd c

osts

was

ca

lcul

ated

.A

nd F

CFF

was

cal

cula

ted.

Reve

nues

, cos

t of p

rope

rty, i

nitia

l cos

t, co

st of

ca

pita

l, op

erat

ing

cost,

inve

stmen

t cos

t.1

00

The

NPV

was

com

pute

d fo

r the

alte

rnat

ive

that

was

cho

sen.

The

NPV

of t

he c

osts

and

reve

nues

was

ca

lcul

ated

for t

he li

fe ti

me

of th

e bu

ildin

g.Re

venu

es, c

ost o

f pro

perty

, ini

tial c

ost,

cost

of

capi

tal,

oper

atin

g co

st, in

vestm

ent c

ost.

01

0

Sens

itivi

ty a

naly

sis

Sens

itivi

ty a

naly

sis fo

r the

alte

rnat

ive

that

w

as c

hose

n w

as p

erfo

rmed

.

Sens

itivi

ty a

naly

sis w

as p

erfo

rmed

with

re

spec

t to

inve

stmen

t cos

ts. A

s wel

l as

cred

it te

rms v

s loa

n ra

te.

Inve

stmen

t cos

ts.0

10

Mak

e re

com

men

datio

n

Onl

y on

e al

tern

ativ

e.-

-0

01

Onl

y on

e al

tern

ativ

e.-

-0

01

Q10

. Hav

e th

e im

pact

s bee

n pr

edic

ted

quan

titat

ivel

y ov

er th

e lif

e of

the

proj

ect?

Q14

. Has

sens

itivi

ty a

naly

sis

been

per

form

ed fo

r eac

h al

tern

ativ

e?

Q15

. Has

eva

luat

ion

of

alte

rnat

ives

bee

n pe

rform

ed?

Q16

. Has

the

sele

ctio

n of

the

mos

t pro

misi

ng a

ltern

ativ

e be

en

mad

e?

Q11

. Hav

e al

l im

pact

s bee

n m

onet

ized

?

Q12

. Hav

e th

e be

nefit

s and

cos

ts be

en d

iscou

nted

to o

btai

n pr

esen

t val

ue?

Q13

. Has

the

net p

rese

nt v

alue

(N

PV) b

een

com

pute

d an

d co

mpa

red

for e

ach

alte

rnat

ive?


!4!73!4!

Hof

dato

rg D

own

Tow

n &

Ser

vice

Cen

ter

Dat

e of

inte

rvie

w:

Nov

embe

r 18t

h 20

1420

09In

terv

iew

ee:

Gun

nar V

alur

Gís

laso

n, p

roje

ct m

anag

erTo

tal c

ost o

f pro

ject

:6

billi

on IS

KC

ompa

ny re

spon

sibl

e:Ey

kt

Wha

t was

don

e?H

ow w

as it

don

e?W

hat s

ort o

f pre

requ

isite

s wer

e us

ed?

(Fea

sibi

lity

anal

ysis

met

hod)

(Pro

cess

es a

nd p

roce

dure

s)(F

acto

rs a

nd/o

r attr

ibut

es)

Full

cons

iste

ncy

with

bes

t pr

actic

e

Parti

al

cons

iste

ncy

with

bes

t pr

actic

e

No

cons

iste

ncy

with

bes

t pr

actic

e

Proj

ect n

ame:

Year

of p

roje

ct:

Maj

or a

ctiv

ities

for

feas

ibili

ty

anal

ysis

Inde

pend

ent c

onsu

ltant

s

An

outs

ide

eval

uatio

n fr

om in

depe

nden

t co

nsul

tant

s was

not

per

form

ed.

--

00

1

94

4

Q17

. Has

an

outs

ide

eval

uatio

n fr

om in

depe

nden

t con

sulta

nts

been

per

form

ed?

!

!


!4!74!4!

Hol

aber

g Se

nior

Citi

zen

Apa

rtmen

tsD

ate

of in

terv

iew

:N

ovem

ber 6

th 2

014

2009

-201

2In

terv

iew

ee:

Árm

ann

Ósk

ar S

igurðs

son,

man

ager

Tota

l cos

t of p

roje

ct:

1 bi

llion

ISK

Com

pany

resp

onsib

le:

SS V

erkt

aki

Wha

t was

don

e?H

ow w

as it

don

e?W

hat s

ort o

f pre

requ

isite

s wer

e us

ed?

(Fea

sibili

ty a

naly

sis m

etho

d)(P

roce

sses

and

pro

cedu

res)

(Fac

tors

and

/or a

ttrib

utes

)

Proj

ect o

verv

iew

The

orig

in w

as n

ot e

xpla

ined

.N

o in

itial

repo

rt w

as c

arrie

d ou

t.-

00

1

The

back

grou

nd h

as n

ot b

een

desc

ribed

.N

o in

itial

repo

rt w

as c

arrie

d ou

t.-

00

1

The

only

obj

ectiv

e of

this

proj

ect w

as to

cr

eate

jobs

and

let t

he w

heel

s of t

he c

ompa

ny

spin

.Th

e ob

ject

ive

was

not

reco

rded

.Th

e pr

ojec

t was

star

ted

in 2

008,

the

year

of t

he

rece

ssio

n an

d m

any

proj

ects

wer

e pu

t on

hold

. 1

00

Nee

ds a

naly

sis h

ad b

een

carri

ed o

ut b

y th

e A

ssoc

iatio

n of

seni

or c

itize

ns in

Rey

kjav

ik

and

vici

nity

.

No

repo

rt w

as m

ade

com

prisi

ng th

e ne

eds

anal

ysis.

54

prep

arat

ory

mee

tings

wer

e he

ld w

here

the A

ssoc

iatio

n in

form

ed th

e co

nstru

ctor

of i

t´s n

eeds

and

requ

ests.

Nee

ds a

naly

sis c

onsis

ted

mai

nly

of th

e siz

e of

th

e ap

artm

ents.

10

0

Alte

rnat

ives

Diff

eren

t opt

ions

abo

ut th

e im

plem

enta

tion

of

the

build

ing

wer

e co

nsid

ered

.Th

e op

tions

wer

e no

t rec

orde

d.Co

st es

timat

ion.

01

0

The

zero

alte

rnat

ive

was

alw

ays a

n op

tion

befo

re th

e co

nstru

ctio

n sta

rted.

Th

e ze

ro a

ltern

ativ

e w

as n

ot re

porte

d.Th

e sit

uatio

n in

the

econ

omy

mad

e th

e A

ssoc

iatio

n an

d th

e co

nstru

ctor

dou

bt th

e po

ssib

ility

of t

he p

roje

ct.

10

0

Cos

t-ben

efit

Fina

ncia

l ben

efits

wer

e id

entif

ied.

Re

venu

e pl

an c

arrie

d ou

t.

Fact

ors a

nd/o

r attr

ibut

es: T

he in

com

e of

the

proj

ect w

as e

stim

ated

to d

ecid

e on

the

sale

pr

ice

of th

e bu

ildin

g.

01

0

Full

cons

isten

cy

with

bes

t pr

actic

e

Parti

al

cons

isten

cy

with

bes

t pr

actic

e

No

cons

isten

cy

with

bes

t pr

actic

e

Proj

ect n

ame:

Year

of p

roje

ct:

Maj

or a

ctiv

ities

for

feas

ibili

ty

anal

ysis

Q1.

Has

the

orig

in o

f the

pro

ject

be

en e

xpla

ined

?Q

2. H

as th

e ba

ckgr

ound

of t

he

proj

ect b

een

desc

ribed

?

Q3.

Hav

e th

e pr

ojec

t obj

ectiv

es

been

def

ined

?

Q4.

Has

a n

eeds

ana

lysis

bee

n ca

rried

out

?

Q5.

How

man

y al

tern

ativ

e sc

hem

es/p

roje

cts w

ere

cons

ider

ed?

Q6.

Was

the

zero

alte

rnat

ive

incl

uded

?

Q7.

Wer

e be

nefit

s and

be

nefic

iarie

s ide

ntifi

ed?

Eco

nom

ic

( x

)yes

(

)no

Soc

ial

(

)yes

( x

)no

Env

ironm

enta

l (

)y

es (

x )n

o


!4!75!4!

Hol

aber

g Se

nior

Citi

zen

Apa

rtmen

tsD

ate

of in

terv

iew

:N

ovem

ber 6

th 2

014

2009

-201

2In

terv

iew

ee:

Árm

ann

Ósk

ar S

igurðs

son,

man

ager

Tota

l cos

t of p

roje

ct:

1 bi

llion

ISK

Com

pany

resp

onsib

le:

SS V

erkt

aki

Wha

t was

don

e?H

ow w

as it

don

e?W

hat s

ort o

f pre

requ

isite

s wer

e us

ed?

(Fea

sibili

ty a

naly

sis m

etho

d)(P

roce

sses

and

pro

cedu

res)

(Fac

tors

and

/or a

ttrib

utes

)Fu

ll co

nsist

ency

w

ith b

est

prac

tice

Parti

al

cons

isten

cy

with

bes

t pr

actic

e

No

cons

isten

cy

with

bes

t pr

actic

e

Proj

ect n

ame:

Year

of p

roje

ct:

Maj

or a

ctiv

ities

for

feas

ibili

ty

anal

ysis

A de

taile

d co

st an

alys

is w

as c

arrie

d ou

t.A

ll co

sts o

f the

pro

ject

was

esti

mat

ed.

Fact

ors a

nd/o

r attr

ibut

es: C

ost o

f pro

perty

. Co

nstru

ctio

n co

st. C

ost o

f cap

ital.

01

0

All

finan

cial

impa

cts w

ere

reco

rded

as

perfo

rman

ce in

dica

tors

.-

Reve

nues

and

cos

ts.1

00

For t

he c

onstr

uctio

n fro

m th

e be

ginn

ing

to th

e fin

ish.

-Co

st of

pro

perty

. Con

struc

tion

cost.

Cos

t of

capi

tal,

prof

it.1

00

Costs

and

reve

nues

wer

e m

onet

ized

.-

Reve

nues

and

cos

ts w

ere

redo

rded

in Ic

elan

dic

kron

as.

10

0

Pres

ent v

alue

Bene

fits a

nd c

osts

wer

e no

t disc

ount

ed to

ob

tain

pre

sent

val

ue.

Onl

y fin

anci

al in

tere

sts a

nd c

ost o

f cap

ital

wer

e di

scou

nted

to o

btai

n pr

esen

t val

ue.

-0

01

The

NPV

was

not

com

pute

d.-

-0

01

Sens

itivi

ty a

naly

sis

Sens

itivi

ty a

naly

sis w

as n

ot p

erfo

rmed

.-

-0

01

Q9.

Hav

e th

e im

pact

s bee

n re

cord

ed a

s per

form

ance

in

dica

tors

? (u

nits)

Q10

. Hav

e th

e im

pact

s bee

n pr

edic

ted

quan

titat

ivel

y ov

er th

e lif

e of

the

proj

ect?

Q14

. Has

sens

itivi

ty a

naly

sis

been

per

form

ed fo

r eac

h al

tern

ativ

e?

Q11

. Hav

e al

l im

pact

s bee

n m

onet

ized

?

Q12

. Hav

e th

e be

nefit

s and

cos

ts be

en d

iscou

nted

to o

btai

n pr

esen

t val

ue?

Q13

. Has

the

net p

rese

nt v

alue

(N

PV) b

een

com

pute

d an

d co

mpa

red

for e

ach

alte

rnat

ive?

Q8.

Wer

e co

sts id

entif

ied?

Eco

nom

ic

( x

)yes

(

)no

Soc

ial

(

)yes

( x

)no

Env

ironm

enta

l (

)y

es (

x )n

o


!4!76!4!

Hol

aber

g Se

nior

Citi

zen

Apa

rtmen

tsD

ate

of in

terv

iew

:N

ovem

ber 6

th 2

014

2009

-201

2In

terv

iew

ee:

Árm

ann

Ósk

ar S

igurðs

son,

man

ager

Tota

l cos

t of p

roje

ct:

1 bi

llion

ISK

Com

pany

resp

onsib

le:

SS V

erkt

aki

Wha

t was

don

e?H

ow w

as it

don

e?W

hat s

ort o

f pre

requ

isite

s wer

e us

ed?

(Fea

sibili

ty a

naly

sis m

etho

d)(P

roce

sses

and

pro

cedu

res)

(Fac

tors

and

/or a

ttrib

utes

)Fu

ll co

nsist

ency

w

ith b

est

prac

tice

Parti

al

cons

isten

cy

with

bes

t pr

actic

e

No

cons

isten

cy

with

bes

t pr

actic

e

Proj

ect n

ame:

Year

of p

roje

ct:

Maj

or a

ctiv

ities

for

feas

ibili

ty

anal

ysis

Mak

e re

com

men

datio

n

Eval

uatio

n of

alte

rnat

ives

was

not

per

form

ed.

--

00

1

Onl

y on

e al

tern

ativ

e, n

ot w

ith re

gard

to

syste

mat

ic e

valu

atio

n of

opt

ions

.-

-0

01

Inde

pend

ent c

onsu

ltant

s

An

outsi

de e

valu

atio

n fro

m in

depe

nden

t co

nsul

tant

s was

not

per

form

ed.

--

00

1

63

8

Q15

. Has

eva

luat

ion

of

alte

rnat

ives

bee

n pe

rform

ed?

Q16

. Has

the

sele

ctio

n of

the

mos

t pro

misi

ng a

ltern

ativ

e be

en

mad

e?

Q17

. Has

an

outsi

de e

valu

atio

n fro

m in

depe

nden

t con

sulta

nts

been

per

form

ed?

!


!4!77!4!

Prop

osed

Alu

min

ium

Sm

elte

r Ska

gaby

ggd

Dat

e of

inte

rvie

w:

Nov

embe

r 6th

201

4In

pro

cess

201

4In

terv

iew

ee:

Jóha

nn F

riðrik

Har

alds

son,

man

ager

Tota

l cos

t of p

roje

ct:

70 b

illio

n IS

KCo

mpa

ny re

spon

sible

:K

lapp

ir D

evel

opm

ent

Wha

t was

don

e?H

ow w

as it

don

e?W

hat s

ort o

f pre

requ

isite

s wer

e us

ed?

(Fea

sibili

ty a

naly

sis m

etho

d)(P

roce

sses

and

pro

cedu

res)

(Fac

tors

and

/or a

ttrib

utes

)

Proj

ect o

verv

iew

The

pre-

feas

ibili

ty st

udy

expl

ains

the

orig

in

of th

e pr

ojec

t.A

desc

riptio

n ab

out t

he n

eed

for w

ire ro

ds

is gi

ven.

Impo

rt of

wire

rods

to E

urop

e ex

ceed

s the

pr

odcu

tion

in E

urop

e. A

naly

sis o

f the

pric

e of

th

e pr

oduc

t and

pric

e fo

reca

sts fo

r alu

min

ium

.1

00

The

pre-

feas

ibili

ty st

udy

expl

ains

the

back

grao

und

of th

e pr

ojec

t.A

deta

iled

desc

riptio

n of

the

tech

niqu

e be

hind

the

prod

uctio

n is

give

n.Te

chni

cal i

nfor

mat

ion

abou

t alu

min

ium

smel

ter

and

wire

rod

prod

uctio

n.1

00

The

obje

ctiv

es h

ave

been

roug

hly

defin

ed.

The

obje

ctiv

es a

re fi

nanc

ial b

enef

its a

s wel

l as

cre

atin

g em

ploy

men

t for

the

man

ager

s.Fi

nanc

ial b

enef

its.

01

0

A ne

eds a

naly

sis w

as c

arrie

d ou

t.A

mar

ketin

g re

port

was

mad

e w

ith fo

cus o

n th

e Eu

ropi

an m

arke

t.

The

need

s ana

lysis

com

prise

s stu

dyin

g th

e m

arke

t for

the

prod

uct.

Impo

rt of

the

prod

uct t

o Eu

rope

exc

eeds

the

prod

uctio

n in

Eur

ope

10

0

Alte

rnat

ives

Diff

eren

t loc

atio

ns fo

r the

smel

ter h

ave

been

ex

plor

ed. O

rigin

al lo

catio

n w

as H

úsav

ík. T

wo

prod

uctio

n siz

e op

tions

wer

e co

nsid

ered

, 240

th

ousa

nd to

ns a

nd 1

20 th

ousa

nd to

ns.

Loca

tions

had

to h

ave

acce

ss to

a p

ort a

nd

enou

gh e

nerg

y. 1

20 th

ousa

nd to

ns w

ere

deci

ded

for t

he p

rodu

ctio

n siz

e, w

ith th

e po

ssib

ility

of e

xpan

sions

of t

he sm

elte

r of

anot

her 1

20 th

ousa

nd to

ns in

the

futu

re.

Loca

tions

and

pro

duct

ion

size.

10

0

The

zero

alte

rnat

ive

was

not

incl

uded

.-

-0

01

Full

cons

isten

cy

with

bes

t pr

actic

e

Parti

al

cons

isten

cy

with

bes

t pr

actic

e

No

cons

isten

cy

with

bes

t pr

actic

e

Proj

ect n

ame:

Year

of p

roje

ct:

Maj

or a

ctiv

ities

for

feas

ibili

ty

anal

ysis

Q1.

Has

the

orig

in o

f the

pro

ject

be

en e

xpla

ined

?

Q2.

Has

the

back

grou

nd o

f the

pr

ojec

t bee

n de

scrib

ed?

Q3.

Hav

e th

e pr

ojec

t obj

ectiv

es

been

def

ined

?

Q4.

Has

a n

eeds

ana

lysis

bee

n ca

rried

out

?

Q5.

How

man

y al

tern

ativ

e sc

hem

es/p

roje

cts w

ere

cons

ider

ed?

Q6.

Was

the

zero

alte

rnat

ive

incl

uded

?


!4!78!4!

Prop

osed

Alu

min

ium

Sm

elte

r Ska

gaby

ggd

Dat

e of

inte

rvie

w:

Nov

embe

r 6th

201

4In

pro

cess

201

4In

terv

iew

ee:

Jóha

nn F

riðrik

Har

alds

son,

man

ager

Tota

l cos

t of p

roje

ct:

70 b

illio

n IS

KCo

mpa

ny re

spon

sible

:K

lapp

ir D

evel

opm

ent

Wha

t was

don

e?H

ow w

as it

don

e?W

hat s

ort o

f pre

requ

isite

s wer

e us

ed?

(Fea

sibili

ty a

naly

sis m

etho

d)(P

roce

sses

and

pro

cedu

res)

(Fac

tors

and

/or a

ttrib

utes

)Fu

ll co

nsist

ency

w

ith b

est

prac

tice

Parti

al

cons

isten

cy

with

bes

t pr

actic

e

No

cons

isten

cy

with

bes

t pr

actic

e

Proj

ect n

ame:

Year

of p

roje

ct:

Maj

or a

ctiv

ities

for

feas

ibili

ty

anal

ysis

Cos

t-ben

efit

Fina

ncia

l ben

efits

wer

e id

entif

ied.

The

finan

cial

ben

efits

wer

e an

alys

ed w

ith

the

help

of a

reve

nue

mod

el.

Fact

ors a

nd/o

r attr

ibut

es: F

inan

cial

ben

efits

in

dolla

rs

01

0

All

finan

cial

cos

ts di

rect

ly li

nked

to th

e co

nstru

ctio

n of

the

smel

ter a

nd it

s ope

ratio

n w

ere

iden

tifie

d.Co

st an

alys

is w

as c

arrie

d ou

t.

Fact

ors a

nd/o

r attr

ibut

es: I

nitia

l cos

t, op

erat

ion

cost,

pro

perty

cos

t, co

st of

cap

ital.

01

0

Fina

ncia

l im

pact

s wer

e re

cord

ed a

s pe

rform

ance

indi

cato

rs.

-In

itial

cos

t, op

erat

ion

cost,

pro

perty

cos

t, co

st of

cap

ital,

reve

nues

.1

00

Costs

and

reve

nues

wer

e pr

edic

ted

quan

titat

ivel

y ov

er th

e lif

e of

the

proj

ect.

A re

venu

e es

timat

e ha

s bee

n m

ade

to th

e ye

ar 2

030

with

focu

s on

the

prod

uct.

The

prod

uctio

n co

st ha

s bee

n es

timat

ed fr

om

the

deve

lopm

ent o

f alu

min

ium

pric

es.

Reve

nues

and

ope

ratin

g co

sts.

10

0

The

finan

cial

impa

cts w

ere

mon

etiz

ed.

-Co

sts a

nd re

venu

es w

ere

redc

orde

d in

dol

lars

.1

00

Pres

ent v

alue

Onl

y th

e ca

sh fl

ow w

as o

btai

ned

as p

rese

nt

valu

e.Th

e PV

() in

Exc

el w

as u

sed

to o

btai

n th

e pr

esen

t val

ue o

f the

cas

h flo

w.Ca

sh fl

ow.

01

0

Q7.

Wer

e be

nefit

s and

be

nefic

iarie

s ide

ntifi

ed?

Q8.

Wer

e co

sts id

entif

ied?

Q9.

Hav

e th

e im

pact

s bee

n re

cord

ed a

s per

form

ance

in

dica

tors

? (u

nits)

Q10

. Hav

e th

e im

pact

s bee

n pr

edic

ted

quan

titat

ivel

y ov

er th

e lif

e of

the

proj

ect?

Q11

. Hav

e al

l im

pact

s bee

n m

onet

ized

?

Q12

. Hav

e th

e be

nefit

s and

cos

ts be

en d

iscou

nted

to o

btai

n pr

esen

t val

ue?

Eco

nom

ic

( x

)yes

(

)no

Soc

ial

(

)yes

( x

)no

Env

ironm

enta

l (

)y

es (

x )n

o

Eco

nom

ic

( x

)yes

(

)no

Soc

ial

(

)yes

( x

)no

Env

ironm

enta

l (

)y

es (

x )n

o


!4!79!4!

Prop

osed

Alu

min

ium

Sm

elte

r Ska

gaby

ggd

Dat

e of

inte

rvie

w:

Nov

embe

r 6th

201

4In

pro

cess

201

4In

terv

iew

ee:

Jóha

nn F

riðrik

Har

alds

son,

man

ager

Tota

l cos

t of p

roje

ct:

70 b

illio

n IS

KCo

mpa

ny re

spon

sible

:K

lapp

ir D

evel

opm

ent

Wha

t was

don

e?H

ow w

as it

don

e?W

hat s

ort o

f pre

requ

isite

s wer

e us

ed?

(Fea

sibili

ty a

naly

sis m

etho

d)(P

roce

sses

and

pro

cedu

res)

(Fac

tors

and

/or a

ttrib

utes

)Fu

ll co

nsist

ency

w

ith b

est

prac

tice

Parti

al

cons

isten

cy

with

bes

t pr

actic

e

No

cons

isten

cy

with

bes

t pr

actic

e

Proj

ect n

ame:

Year

of p

roje

ct:

Maj

or a

ctiv

ities

for

feas

ibili

ty

anal

ysis

The

NPV

of t

he p

roje

ct´s

pro

fit w

as

com

pute

d fo

r one

alte

rnat

ive.

-N

PV o

f pro

fitab

ility

.0

10

Sens

itivi

ty a

naly

sis

Sens

itivi

ty a

naly

sis w

as o

nly

perfo

rmed

for

the

mos

t pro

misi

ng o

ptio

n.

The

sens

itivi

ty a

naly

sis in

clud

ed c

hang

es in

ra

tes,

deve

lopm

ent o

f the

alu

min

ium

wor

ld

mar

ket p

rice,

the

mar

ket p

rice

of th

e pr

oduc

t, an

d th

e to

tal c

onstr

uctio

n co

st of

th

e pr

ojec

t.

Rate

s, m

arke

t pric

e, in

itial

cos

t.0

10

Mak

e re

com

men

datio

n

No

syste

mat

ic e

valu

atio

n of

alte

rnat

ives

was

pe

rform

ed.

--

00

1

Onl

y on

e al

tern

ativ

e. 1

20 th

ousa

nd to

ns

prod

uctio

n in

Ska

gaby

ggð.

--

00

1

Inde

pend

ent c

onsu

ltant

s

A fo

reig

n co

nsul

tant

per

form

ed a

pre

-fe

asib

ility

ana

lysis

.Fo

reig

n co

nsul

tant

adv

iced

on

diffe

rent

lo

catio

ns a

s wel

l as s

ize

of p

rodu

ctio

n.Pr

oduc

tion

size,

loca

tion.

10

0

86

3

Q17

. Has

an

outsi

de e

valu

atio

n fro

m in

depe

nden

t con

sulta

nts

been

per

form

ed?

Q14

. Has

sens

itivi

ty a

naly

sis

been

per

form

ed fo

r eac

h al

tern

ativ

e?

Q15

. Has

eva

luat

ion

of

alte

rnat

ives

bee

n pe

rform

ed?

Q16

. Has

the

sele

ctio

n of

the

mos

t pro

misi

ng a

ltern

ativ

e be

en

mad

e?

Q13

. Has

the

net p

rese

nt v

alue

(N

PV) b

een

com

pute

d an

d co

mpa

red

for e

ach

alte

rnat

ive?

!


!4!80!4!

Vin

dako

r Apa

rtmen

tsD

ate

of in

terv

iew

:N

ovem

ber 5

th 2

014

2014

Inte

rvie

wee

:Pé

tur H

anne

sson

, pro

ject

man

ager

Tota

l cos

t of p

roje

ct:

1,6

billi

on IS

KC

ompa

ny re

spon

sibl

e:U

ppha

f

Wha

t was

don

e?H

ow w

as it

don

e?W

hat s

ort o

f pre

requ

isite

s wer

e us

ed?

(Fea

sibi

lity

anal

ysis

met

hod)

(Pro

cess

es a

nd p

roce

dure

s)(F

acto

rs a

nd/o

r attr

ibut

es)

Proj

ect o

verv

iew

The

orig

in o

f the

pro

ject

is b

ased

on

anal

ysis

of

the

haus

ing

mar

ket.

Ana

lysi

s of t

he h

ausi

ng m

arke

t.N

eed

for a

partm

ents

.1

00

The

back

grou

nd o

f the

pro

ject

was

reco

rded

.Th

e bu

ildin

g w

as b

ough

t wea

ther

proo

f and

av

aila

ble

data

abo

ut th

e pr

oper

ty a

nd

hous

ing

reco

rded

.D

raw

ings

, siz

e of

bui

ldin

g, p

rope

rty d

ata.

10

0

The

finan

cial

pro

fit o

bjec

tives

from

the

cons

truct

ion

wer

e de

fined

in d

etai

l.R

even

ue c

alcu

latio

ns.

The

obje

ctiv

es w

ere

finan

cial

in Ic

elan

dic

kron

as.

10

0

A n

eeds

ana

lysi

s was

car

ried

out.

A d

etai

led

anal

ysis

on

the

stat

us o

f the

ho

usin

g m

arke

t in

Icel

and

and

whe

re it

´s

aim

ing

was

car

ried

out.

The

repo

rting

, "U

pp ú

r öld

udal

num

" was

writ

ten

by G

AM

M

anag

emen

t hf.

in 2

011.

Eco

nom

ics

fore

cast

s fro

m S

tatis

tics I

cela

nd o

n th

e de

velo

pmen

t of p

opul

atio

n, re

ntal

mar

ket,

real

est

ate

pric

e an

d re

al e

stat

e su

pply

wer

e an

alys

ed in

det

ail.

Num

ber o

f dw

ellin

gs a

vaila

ble.

Pric

e pe

r sq

uare

met

er. C

hang

es o

f pop

ulat

ion.

Num

ber

of p

urch

ase

agre

emen

ts.

10

0

Alte

rnat

ives

Inte

rior a

ltern

ativ

es w

ere

cons

ider

ed a

s wel

l as

diff

eren

t fun

ding

alte

rnat

ives

.

Firs

t the

qua

lity

of th

e in

terio

r was

dec

ided

an

d th

en d

iffer

ent a

ltern

ativ

es o

f the

in

terio

r wer

e co

nsid

ered

.

Qua

lity

and

stru

ctur

e of

the

inte

rior.

Bas

ed o

n co

st e

stim

atio

n. In

vest

men

t cos

ts.

10

0

The

zero

alte

rnat

ive

was

not

incl

uded

.-

-0

01

Cos

t-ben

efit

Fina

ncia

l ben

efit

of th

e pr

ojec

t was

iden

tifie

d.

Ben

efits

for t

he h

ausi

ng m

arke

t by

addi

ng 5

4 ap

artm

ents

.

Ana

lysi

s of t

he im

pact

of a

ddin

g 54

ap

artm

ents

on

the

mar

ket.

Prof

itabi

lity

calc

ulat

ions

.

Fact

ors a

nd/o

r attr

ibut

es: P

rofit

abili

ty.

01

0

Full

cons

iste

ncy

with

bes

t pr

actic

e

Parti

al

cons

iste

ncy

with

bes

t pr

actic

e

No

cons

iste

ncy

with

bes

t pr

actic

e

Proj

ect n

ame:

Year

of p

roje

ct:

Maj

or a

ctiv

ities

for

feas

ibili

ty

anal

ysis

Q1.

Has

the

orig

in o

f the

pro

ject

be

en e

xpla

ined

?

Q2.

Has

the

back

grou

nd o

f the

pr

ojec

t bee

n de

scrib

ed?

Q3.

Hav

e th

e pr

ojec

t obj

ectiv

es

been

def

ined

?

Q4.

Has

a n

eeds

ana

lysi

s bee

n ca

rrie

d ou

t?

Q5.

How

man

y al

tern

ativ

e sc

hem

es/p

roje

cts w

ere

cons

ider

ed?

Q6.

Was

the

zero

alte

rnat

ive

incl

uded

?

Q7.

Wer

e be

nefit

s and

be

nefic

iarie

s ide

ntifi

ed?

Eco

nom

ic

( x

)yes

(

)no

Soc

ial

(

)yes

( x

)no

Env

ironm

enta

l (

)y

es (

x )n

o


!4!81!4!

Vind

akor

Apa

rtmen

tsD

ate

of in

terv

iew

:N

ovem

ber 5

th 2

014

2014

Inte

rvie

wee

:Pé

tur H

anne

sson

, pro

ject

man

ager

Tota

l cos

t of p

roje

ct:

1,6

billi

on IS

KCo

mpa

ny re

spon

sible

:U

ppha

f

Wha

t was

don

e?H

ow w

as it

don

e?W

hat s

ort o

f pre

requ

isite

s wer

e us

ed?

(Fea

sibili

ty a

naly

sis m

etho

d)(P

roce

sses

and

pro

cedu

res)

(Fac

tors

and

/or a

ttrib

utes

)Fu

ll co

nsist

ency

w

ith b

est

prac

tice

Parti

al

cons

isten

cy

with

bes

t pr

actic

e

No

cons

isten

cy

with

bes

t pr

actic

e

Proj

ect n

ame:

Year

of p

roje

ct:

Maj

or a

ctiv

ities

for

feas

ibili

ty

anal

ysis

All

finan

cial

cos

ts w

ere

iden

tifie

d.A

deta

iled

cost

anal

ysis

was

car

ried

out b

y Fe

rill,

engi

neer

ing

cons

ulta

ncy

firm

.

Cons

truct

ion

cost,

cos

t of c

apita

l, in

tere

st ex

pens

es, i

nves

tmen

t cos

t.

01

0

Costs

and

reve

nues

wer

e re

cord

ed a

s pe

rform

ance

uni

ts.-

Cons

truct

ion

cost,

cos

t of c

apita

l, in

tere

st ex

pens

es, i

nves

tmen

t cos

t, re

venu

es.

10

0

The

impa

cts w

ere

not p

redi

cted

qua

ntita

tivel

y ov

er th

e lif

e of

the

proj

ect.

--

00

1

All

costs

and

reve

nues

wer

e m

onet

iced

.-

All

costs

and

reve

nues

wer

e m

onet

ized

in

Icel

andi

c kr

onas

.1

00

Pres

ent v

alue

Pres

ent v

alue

was

cal

cula

ted

for t

he c

osts

and

reve

nues

.Pr

esen

t val

ues c

alcu

latio

ns.

Costs

and

reve

nues

.1

00

Onl

y fo

r the

mos

t pro

misi

ng a

ltern

ativ

e.-

-0

10

Sens

itivi

ty a

naly

sis

Sens

itivi

ty a

naly

sis w

as c

arrie

d ou

t for

one

al

tern

ativ

e.Se

nsiti

vity

ana

lysis

of i

nter

est e

xpen

ses o

f lo

ans v

s. ho

w e

arly

the

apar

tmen

ts ar

e so

ld.In

tere

st ex

pens

es.

01

0

Q8.

Wer

e co

sts id

entif

ied?

Q9.

Hav

e th

e im

pact

s bee

n re

cord

ed a

s per

form

ance

in

dica

tors

? (u

nits)

Q10

. Hav

e th

e im

pact

s bee

n pr

edic

ted

quan

titat

ivel

y ov

er th

e lif

e of

the

proj

ect?

Q14

. Has

sens

itivi

ty a

naly

sis

been

per

form

ed fo

r eac

h al

tern

ativ

e?

Q11

. Hav

e al

l im

pact

s bee

n m

onet

ized

?

Q12

. Hav

e th

e be

nefit

s and

cos

ts be

en d

iscou

nted

to o

btai

n pr

esen

t val

ue?

Q13

. Has

the

net p

rese

nt v

alue

(N

PV) b

een

com

pute

d an

d co

mpa

red

for e

ach

alte

rnat

ive?

Eco

nom

ic

( x

)yes

(

)no

Soc

ial

(

)yes

( x

)no

Env

ironm

enta

l (

)y

es (

x )n

o


!4!82!4!

Vin

dako

r Apa

rtmen

tsD

ate

of in

terv

iew

:N

ovem

ber 5

th 2

014

2014

Inte

rvie

wee

:Pé

tur H

anne

sson

, pro

ject

man

ager

Tota

l cos

t of p

roje

ct:

1,6

billi

on IS

KC

ompa

ny re

spon

sibl

e:U

ppha

f

Wha

t was

don

e?H

ow w

as it

don

e?W

hat s

ort o

f pre

requ

isite

s wer

e us

ed?

(Fea

sibi

lity

anal

ysis

met

hod)

(Pro

cess

es a

nd p

roce

dure

s)(F

acto

rs a

nd/o

r attr

ibut

es)

Full

cons

iste

ncy

with

bes

t pr

actic

e

Parti

al

cons

iste

ncy

with

bes

t pr

actic

e

No

cons

iste

ncy

with

bes

t pr

actic

e

Proj

ect n

ame:

Year

of p

roje

ct:

Maj

or a

ctiv

ities

for

feas

ibili

ty

anal

ysis

Mak

e re

com

men

datio

n

Eval

uatio

n of

diff

eren

t fun

ding

alte

rnat

ives

w

as p

erfo

rmed

.C

osts

for e

ach

alte

rnat

ive

calc

ulat

ed.

Inve

stm

ent c

osts

.0

10

Sele

ctio

n be

twee

n di

ffere

nt fu

ndin

g al

tern

atvi

es.

-B

ased

on

the

optim

al in

vest

men

t stra

tegy

.0

10

Inde

pend

ent c

onsu

ltant

s

Cos

t ana

lysi

s was

car

ried

out b

y an

en

gine

erin

g co

nsul

tanc

y fir

m.

The

wor

k of

the

cons

ulta

nts d

id n

ot in

volv

e se

cond

opi

nion

des

k st

udy.

-0

01

86

3

Q17

. Has

an

outs

ide

eval

uatio

n fr

om in

depe

nden

t con

sulta

nts

been

per

form

ed?

Q15

. Has

eva

luat

ion

of

alte

rnat

ives

bee

n pe

rfor

med

?

Q16

. Has

the

sele

ctio

n of

the

mos

t pro

mis

ing

alte

rnat

ive

been

m

ade?

!


!4!83!4!

X D

ata

Cen

ter

Dat

e of

inte

rvie

w:

Nov

embe

r 11t

h 20

1420

14In

terv

iew

ee:

XTo

tal c

ost o

f pro

ject

:11

bill

ion

ISK

Com

pany

resp

onsi

ble:

X

Wha

t was

don

e?H

ow w

as it

don

e?W

hat s

ort o

f pre

requ

isite

s wer

e us

ed?

(Fea

sibi

lity

anal

ysis

met

hod)

(Pro

cess

es a

nd p

roce

dure

s)(F

acto

rs a

nd/o

r attr

ibut

es)

Proj

ect o

verv

iew

The

orig

in o

f the

pro

ject

is n

ot e

xpla

ined

but

ev

eryt

hing

with

in th

e co

nstru

ctio

n ar

ea is

de

fined

.-

-0

01

The

back

grou

nd a

nd in

form

atio

n ab

out t

he

proj

ect i

s des

crib

ed b

y th

e bu

yer,

whi

ch x

us

es a

nd m

akes

cha

nges

on

in th

e co

ncep

tual

pr

oces

s.

Thes

e in

form

atio

n ar

e re

cord

ed in

the

conc

eptu

al st

udy.

Te

chni

cal i

nfor

mat

ion.

10

0

The

obje

ctiv

e w

as d

efin

ed a

s fin

anci

al

bene

fits.

Estim

ate

the

cost

s of t

he p

roje

ct a

s acc

urat

e as

pos

sibl

e an

d de

fine

the

proj

ect i

n de

tail

with

the

aim

of b

ette

r out

com

e of

the

proj

ect.

Cos

t est

imat

ion.

10

0

Nee

d an

alys

is w

as n

ot c

arrie

d ou

t.Th

e bu

yer a

sked

for a

spec

ific

qual

ity c

lass

fo

r the

dat

a ce

nter

and

x g

ave

advi

ce o

n di

ffere

nt c

lass

es.

In th

is c

ase

the

buye

r had

cer

tain

idea

s abo

ut

the

impl

emen

tatio

n of

the

proj

ect a

nd x

bas

ed

it´s f

easi

bilit

y st

udy

on th

at.

00

1

Alte

rnat

ives

Diff

eren

t qua

lity

clas

ses w

ere

cons

ider

ed.

The

pric

es o

f diff

eren

t qua

lity

clas

ses o

f da

ta c

ente

rs w

ere

com

pare

d.C

ost e

stim

atio

n.1

00

The

zero

alte

rnat

ive

was

incl

uded

in th

e co

ncep

tual

stud

y.B

ase

case

def

ined

.-

10

0

Cos

t-ben

efit

Fina

ncia

l ben

efit

of th

e pr

ojec

t was

iden

tifie

d.

With

the

use

of p

rofit

abili

ty c

alcu

latio

ns

but x

had

lim

ited

acce

ss to

thes

e in

form

atio

n w

here

they

wer

e cl

assi

died

be

caus

e of

com

petit

ors.

Fact

ors a

nd/o

r attr

ibut

es: P

rofit

abili

ty.

01

0

Q6.

Was

the

zero

alte

rnat

ive

incl

uded

?

Q7.

Wer

e be

nefit

s and

be

nefic

iarie

s ide

ntifi

ed?

Q1.

Has

the

orig

in o

f the

pro

ject

be

en e

xpla

ined

?

Q2.

Has

the

back

grou

nd o

f the

pr

ojec

t bee

n de

scrib

ed?

Q3.

Hav

e th

e pr

ojec

t obj

ectiv

es

been

def

ined

?

Q4.

Has

a n

eeds

ana

lysi

s bee

n ca

rrie

d ou

t?

Q5.

How

man

y al

tern

ativ

e sc

hem

es/p

roje

cts w

ere

cons

ider

ed?

Full

cons

iste

ncy

with

bes

t pr

actic

e

Parti

al

cons

iste

ncy

with

bes

t pr

actic

e

No

cons

iste

ncy

with

bes

t pr

actic

e

Proj

ect n

ame:

Year

of p

roje

ct:

Maj

or a

ctiv

ities

for

feas

ibili

ty

anal

ysis

Eco

nom

ic

( x

)yes

(

)no

Soc

ial

(

)yes

( x

)no

Env

ironm

enta

l (

)y

es (

x )n

o


!4!84!4!

X D

ata

Cen

ter

Dat

e of

inte

rvie

w:

Nov

embe

r 11t

h 20

1420

14In

terv

iew

ee:

XTo

tal c

ost o

f pro

ject

:11

bill

ion

ISK

Com

pany

resp

onsi

ble:

X

Wha

t was

don

e?H

ow w

as it

don

e?W

hat s

ort o

f pre

requ

isite

s wer

e us

ed?

(Fea

sibi

lity

anal

ysis

met

hod)

(Pro

cess

es a

nd p

roce

dure

s)(F

acto

rs a

nd/o

r attr

ibut

es)

Full

cons

iste

ncy

with

bes

t pr

actic

e

Parti

al

cons

iste

ncy

with

bes

t pr

actic

e

No

cons

iste

ncy

with

bes

t pr

actic

e

Proj

ect n

ame:

Year

of p

roje

ct:

Maj

or a

ctiv

ities

for

feas

ibili

ty

anal

ysis

All

finan

cial

cos

ts w

ere

iden

tifie

d.

A d

etai

led

cost

est

imat

ion

was

car

ried

out.T

hen

risk

anal

ysis

for t

he c

ost

estim

atio

n w

as c

arrie

d ou

t with

Mon

te

Car

lo si

mul

atio

n an

d ris

k an

alys

is d

urin

g co

nstru

ctio

n w

as c

arrie

d ou

t whe

re

tech

nica

l per

form

ance

of t

he p

roje

ct w

as

eval

uate

d.Fa

ctor

s and

/or a

ttrib

utes

: Ini

tial c

ost,

oper

atin

g co

st, c

ost o

f pro

perty

, cos

t of c

apita

l.

01

0

The

finan

cial

impa

cts a

nd te

chni

cal

perf

orm

ance

whe

re re

cord

ed a

s ind

icat

ors.

-C

osts

and

reve

nues

.1

00

The

finan

cial

impa

cts a

nd te

chni

cal

perf

orm

ance

wer

e pr

edic

ted

quan

titat

ivel

y ov

er th

e lif

e of

the

proj

ect.

Unf

orse

en c

ost i

s tak

en in

to a

ccou

nt.

Cos

ts, r

even

ues a

nd te

chni

cal p

erfo

rman

ce.

10

0

Fina

ncia

l im

pact

s wer

e m

onet

ized

.-

Cos

ts a

nd re

venu

es w

ere

reco

rded

in Ic

elan

dic

kron

as.

10

0

Pres

ent v

alue

Pres

ent v

alue

was

not

cal

cula

ted.

--

00

1

Pres

ent v

alue

was

not

cal

cula

ted.

--

00

1

Q11

. Hav

e al

l im

pact

s bee

n m

onet

ized

?

Q12

. Hav

e th

e be

nefit

s and

cos

ts

been

dis

coun

ted

to o

btai

n pr

esen

t val

ue?

Q13

. Has

the

net p

rese

nt v

alue

(N

PV) b

een

com

pute

d an

d co

mpa

red

for e

ach

alte

rnat

ive?

Q8.

Wer

e co

sts i

dent

ified

?

Q9.

Hav

e th

e im

pact

s bee

n re

cord

ed a

s per

form

ance

in

dica

tors

? (u

nits

)

Q10

. Hav

e th

e im

pact

s bee

n pr

edic

ted

quan

titat

ivel

y ov

er th

e lif

e of

the

proj

ect?

Eco

nom

ic

( x

)yes

(

)no

Soc

ial

(

)yes

( x

)no

Env

ironm

enta

l (

)y

es (

x )n

o


!4!85!4!

X D

ata

Cen

ter

Dat

e of

inte

rvie

w:

Nov

embe

r 11t

h 20

1420

14In

terv

iew

ee:

XTo

tal c

ost o

f pro

ject

:11

bill

ion

ISK

Com

pany

resp

onsi

ble:

X

Wha

t was

don

e?H

ow w

as it

don

e?W

hat s

ort o

f pre

requ

isite

s wer

e us

ed?

(Fea

sibi

lity

anal

ysis

met

hod)

(Pro

cess

es a

nd p

roce

dure

s)(F

acto

rs a

nd/o

r attr

ibut

es)

Full

cons

iste

ncy

with

bes

t pr

actic

e

Parti

al

cons

iste

ncy

with

bes

t pr

actic

e

No

cons

iste

ncy

with

bes

t pr

actic

e

Proj

ect n

ame:

Year

of p

roje

ct:

Maj

or a

ctiv

ities

for

feas

ibili

ty

anal

ysis

Sens

itivi

ty a

naly

sis

Sens

itivi

ty a

naly

sis w

as c

arrie

d ou

t for

one

al

tern

ativ

e.Se

nsiti

vity

ana

lysi

s was

car

ried

out f

or th

e pr

ofita

bilit

y ca

lcul

atio

ns.

Prof

itabi

lity

calc

ulat

ions

.0

10

Mak

e re

com

men

datio

n

Eval

uatio

n of

alte

rnat

ives

was

per

form

ed.

Eval

uatio

n of

diff

eren

t qua

lity

clas

ses w

as

perf

orm

ed a

nd c

osts

com

pare

d.C

ost e

stm

atio

n.1

00

Diff

eren

t qua

lity

clas

ses w

ere

eval

uate

d an

d th

e m

ost p

rom

isin

g w

as se

lect

ed.

Sele

ctio

n of

the

mos

t pro

mis

ing

alte

rnat

ive

was

bas

ed o

n th

e co

st a

naly

sis.

Cos

t est

mat

ion.

10

0

Inde

pend

ent c

onsu

ltant

s

Feas

bilit

y st

udy

was

per

form

ed b

y an

en

gine

erin

g co

nsul

tanc

y fir

m.

The

engi

neer

ing

cons

ulta

ncy

firm

adv

iced

on

the

optim

al q

ualit

y cl

ass,

base

d on

pr

ofita

bilit

y ca

lcul

atio

ns a

nd c

ost a

naly

sis

Qua

lity

clas

s of d

ata

cent

er.

10

0

103

4

Q17

. Has

an

outs

ide

eval

uatio

n fr

om in

depe

nden

t con

sulta

nts

been

per

form

ed?

Q14

. Has

sens

itivi

ty a

naly

sis

been

per

form

ed fo

r eac

h al

tern

ativ

e?

Q15

. Has

eva

luat

ion

of

alte

rnat

ives

bee

n pe

rfor

med

?

Q16

. Has

the

sele

ctio

n of

the

mos

t pro

mis

ing

alte

rnat

ive

been

m

ade?

!

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