Key takeaways
- The investment case should connect technical evidence, contractual allocation and capital decisions.
- Project risks are most manageable when they are identified before they become embedded in execution.
- Governance should remain proportionate to materiality and lifecycle stage.
RTB and FID answer different questions
Ready to Build is a statement about project maturity. Final Investment Decision is a decision about capital. Conflating the two weakens governance because it allows technical readiness to be mistaken for an approval to deploy funds.
A project may be substantially ready to build but still require resolution of financing terms, residual legal risk, return thresholds, partner obligations, market conditions or board-reserved matters before capital is committed.
What RTB should evidence
- Material permits and project rights are in place or subject only to clearly defined residual items.
- Land, access and key interfaces are sufficiently secure for construction.
- Grid and technical design have reached an agreed level of maturity.
- Material contracts are executable or capable of execution within defined conditions.
- The project schedule, CAPEX and risk register are coherent with the proposed investment case.
What FID adds
FID tests whether the whole proposition remains investable at the point capital is to be committed. It should consider returns, financing availability, downside protection, final contractual allocation, governance approvals and the status of conditions that were deliberately left open during development.
Why the separation improves execution
Separating readiness from investment approval gives management a cleaner decision trail. Development teams know what evidence they must produce; investment committees know what they are approving; financing teams can map conditions to drawdown; and boards retain control over the point at which project maturity becomes committed capital.
FRANENSA perspective
FRANENSA uses stage-gated governance so that project maturity, investment approval, financing close and notice to proceed remain separately evidenced. The objective is not additional bureaucracy; it is disciplined capital deployment.