What are the main items for proper due diligence, when dealing with special purpose vehicles or SPVs for construction projects?
What are the main steps for effective due diligence of an SPV to be created for a construction project?
I think the following paper will help you out in this regard:
Types and functions of special purpose vehicles in infrastructure megaprojects
T Sainati, G Locatelli, N Smith, N Brookes… - … Journal of Project …, 2020 - Elsevier
Thank you @Prof-Dr-Ahmed Al-Baidhani أ. د. احمد البيضاني for the relevant recommendation.
Based on the article you have suggested, it is effected based on the nature of SPV:
▪Legal functions of SPVs (Contracting, Collecting & hiring, Co-owning and investing, Transferring, Constraining, Isolating, Targeting jurisdictions)
▪Details of SPV contracting (role assumed by SPVs, governance structure of SPVs, transactions involving SPVs)
▪Organisational functions of SPVs (Managing and performing activities, Administrating contracts, Governing)
Etc.
Thus, its due diligence procedure cannot be easily compared. Considering that one of the main challenges of adopting SPV in construction projects, is its due diligence.
Main points that come to mind are overrun of costs and time delay.
@Dr. Rajendra K. Gupta, time and cost performances would be baseline considerations.
But, regarding SPV as financial mechanisms for projects with usually obstacles that restructs adopting conventional approaches, it would be difficult to have good evaluation of the other party for their past time and cost performances.
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