Infrastructure projects will often have significant environmental impacts arising from construction and operation, which can be both positive and negative. The impacts may also include follow-on effects beyond the immediate project area, as well as beyond the people directly associated with the project (secondary impacts).

These impacts (including secondary impacts), and the corresponding formal process of approvals (which varies enormously from country to country), are a common source of delays in PPP projects.

The output of the process of analyzing the impact of the project on the public debt involves the addition of the marginal impact of the project in terms of expenditure with the existing projection of national expenses, plus the marginal related impact in terms of debt in the national accounts.

This will be then checked against the deficit ceiling and/or debt ceiling that may be in effect in the respective country, which may in turn imply that the PPP may or may not be procured.

Despite an international movement toward a standardization of accounting practices in governments around the world, there is still a great deal of divergence regarding accepted principles.

The impact of PPPs on accounting reports can therefore vary greatly. When neither of the two international standards are incorporated, there might be specific rules to be considered, in which case this feasibility exercise needs to be adapted accordingly.

The European System of Integrated Economic Accounts (ESA 2010) set up the regulations on how the EU member states prepare national accounts and produce comparable and homogeneous fiscal statistical information. ESA 2010 is the most recent version – until recently the standards applied have been those provided in ESA95.

IPSAS 32 deals specifically with service concession agreements, focusing on their governmental accounting consequences. The guideline presents a very comprehensive approach that includes most of the contracts defined as PPPs for the purpose of the PPP Guide. In fact, IPSAS 32 describes service concession agreements as long-term contracts between a government and a private party whereby:

Chapter 2 (section 1.8.5) presented the rationale for establishing a framework to account for the liabilities and the assets resulting from PPP contracts. In fact, many countries develop specific rules that determine how they should account for and report their financial commitments.

The fiscal feasibility analysis provides two essential outputs.

The first step in performing the fiscal feasibility exercise is to identify the liabilities assumed by government, at least on a yearly basis, for the entire duration of the contract.

There are two types of commitments that must be fully acknowledged in this identification: the direct liabilities and the contingent liabilities. To estimate contingent liabilities is a complex matter that may be approached by various methods which have been explained in chapter 2.

As discussed in chapter 2 (section 1.8), many PPP projects produce some sort of long-term fiscal consequences. These can be in the form of direct liabilities (when the project is partially or fully funded by the government) or contingent liabilities (when risks are allocated to the government either explicitly in the contract, in the debt agreements, or by the legal framework).

As has been presented in chapter 3, the Cost-Benefit Analysis (CBA) should have been conducted at the Identification Phase. In this case, it will have relied on preliminary data. As the Appraisal Phase matures, several aspects of the project, relevant for a more precise economic evaluation of the project, are detailed. These aspects must be incorporated into the previously developed CBA, and its results must be revisited. A minimum of the following aspects must be input into the CBA, during the Appraisal Phase.