Introduction to Worked Examples on CVC
Annex 1 of the Annex for IRI Guide:
The Worked Examples are provided to demonstrate to practitioners how the Guidelines can be applied to projects. The Worked Examples are hypothetical project business cases and include hypothetical financial assessments with key project information.
Worked Examples were selected to cover diverse sectors, including sectors which have proven CVC concepts and sectors which are relatively new to CVC. They were selected to cover different types of CVC opportunities. While the Worked Examples are hypothetical and entirely fictitious, they are drawn from real-world projects to demonstrate practical challenges and concrete CVC opportunities.
Assumptions made in the hypothetical financial assessment in each Worked Example are based on statistical data and the consultant’s estimations from experience in similar projects around the world and are prepared strictly for capacity building purpose. Any similarity to any existing or planned projects is coincidental. It should neither be used for any decision making nor applied to any real or planned projects, without taking into account the specificities of the project being assessed. To avoid any misunderstandings or any adverse influences that this report may have on an actual real project, all names and locations have been anonymized to ensure that the capacity building value of the report is not undermined.
Table 7: Overview of Worked Examples
No.
|
Project
|
Sector
|
Core Services/ Public Service Delivery
|
CVC Opportunities
|
|---|
|
1.
|
Wastewater treatment plant
|
Urban Management
|
Wastewater treatment
|
Water reclamation, carbon credits
|
|
2.
|
Urban transit
|
Transport
|
Urban mobility
|
Commercial space, advertising and marketing, infrastructure sharing
|
|
3.
|
Public hospital
|
Health
|
Public health services
|
Revenue from improved medical services and commercial space
|
|
4.
|
Affordable housing
|
Housing
|
Low-income and middle-income housing
|
High-quality amenities services, development of office-space in a nearby land
|
|
5.
|
Waste recycling
|
Urban Management
|
Solid waste management
|
Sustainable road construction
|
The structure of the Worked Examples will be as follows: First, the content of the Worked Examples will be provided, and brief project scope introduced. The first section of the Worked Example will demonstrate how the first Guidelines on policy, legal and institutional readiness can be applied. The second section will demonstrate how the second Guidelines on preparing a project to maximize CVC opportunities can be applied.
As developing CVC activities will incur additional cost, the Project Owner should consider if this additional cost will outweigh the additional revenue generate from CVC.
Net revenue from CVC is thus hypothetically assumed to be total revenue stream from CVC throughout the project life minus additional CVC-related expenses throughout the project life. In the hypothetical financial assessment, potential net revenue contribution of CVC is calculated as a % of net revenue from CVC to total required revenue. For simplification, it is assumed that total required revenue is the total revenue required to make the project financially viable or to make the project’s return exceed the hurdle rate.
The hypothetical financial assessment only aims to conceptually show a potential revenue structure in the scenario with and without CVC and its potential to help reduce or close the funding gaps.
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