The study with emphasis on assessment of technological parameters and the effect on the economic viability of initiative is called TEV Study. For a successful TEV analysis, a critical assessment of technical risk, market risk, regulatory risk, and financial risk are considered. The degrees of technological risk and associated financial viability are measured in a TEV survey to help borrowers see the acceptability of the risk level involved in a project. A TEV work is a risk assessment activity that was carried out prior to the decision of a bank or the money institution to sanction a loan.
In project finance, TEV study includes assessing a project in a systematic manner, with relevant data on its technological and economic climate, in the weaving of technical and financial information on the project into one or several parameters under which it is recommended that the project can be chosen, changed, or rejected. It aims at exposing the strengths and weaknesses of a current or potential project, the opportunities and risks in an area, the resources necessary for the implementation and ultimately the prospects for success objective and rational. This takes account of the historical background of the company or plan, product, or service definition, budgets, administrative and management information, sales reports, financial data, legal requirements, and tax obligations. The TEV studies usually precede the design and execution of the project. A feasibility review will reveal new concepts that can completely alter the design of a project. It is better to make these assumptions in advance rather than just spring in and discover that the plan will not work. A feasibility study is always useful to the business since it offers you and other investors a clear understanding of the proposed scheme.
Below are some key benefits of conducting Tecno-Economic Viability (TEV) study for project finance:
• Focusing on project teams
• Identifying new possibilities
• Valuable information provided for a “go/no-go” decision
• Reduces business alternatives
• Identifies a valid reason for undertaking the project
• By evaluating multiple parameters, success rates are enhanced
• Aids decision-making on the project