Project development is where preparations, planning, analyses, evaluations, and decision events occur and activities that span project definition to creation of the project company's business plan take place. It is the preparation to manage complex, rigorous, and comprehensive processes that cultivates a conducive project environment in the host country and fair regulatory treatment. It is the stage where a balanced risk allocation, a bankable feasibility study, a thorough due diligence, and a sound project financing plan materialize. Project development is a lengthy process to assess, prepare for funding, and bring a project to completion. It is part of the project finance process, which has three main stages: The project prebid or development, contract development and negotiation, and raising the required funding.
The prerequisites of effective project finance are sound budgeting, comprehensive planning, financial modeling, and financial control and reporting systems and providing convincing evidence and clarity of project value creation. There are a multitude of activities in the project development phase which should meet those prerequisites and be guided by the following objectives: