According to the Rapid Damage and Needs Assessment (RDNA4) prepared by the United Nations in cooperation with the Government of Ukraine, the World Bank and the European Commission, the full recovery of Ukraine over the next decade will require USD 524 billion.
However, regardless of the actual volume of investments in restoration and development over the next few years, a certain portion will be covered by the state budget. Simultaneously, the primary financial support is anticipated to originate from international programmes, donor funds and the private sector. In this process, municipalities face a key challenge: to access these funds, they must have well-prepared project documentation, in particular, a technical and economic feasibility study (a feasibility study for foreign contractors), which complies with both current legislation and international standards.
In August 2024, the Cabinet of Ministers of Ukraine adopted Resolution No. 903, establishing the regulatory framework for the preparation, evaluation and prioritisation of public investment projects. The document stipulates that all projects applying for state or donor funding must be registered on the DREAM digital platform, which is part of the Unified Public Investment Management System. The Resolution provides for a multi-level assessment of projects, from the local level to the Strategic Investment Council, factoring in social impact, economic feasibility, technical feasibility and compliance with strategic priorities of the state.
This regulatory step was a significant milestone in the development of a systematic approach to investment management. The document established the requirements for registering projects on the DREAM platform and introduced clear evaluation criteria covering social, economic and technical aspects.
In this context, high-quality project documentation is not just a formality, but the key to funding that will enable municipalities to implement critically important initiatives in sustainable recovery and development.
What should a high-quality feasibility study contain?
For an investment project to be viable and have a chance of being funded, the technical and economic feasibility study must address five key questions.1. Is there any demand?
A comprehensive analysis of community needs, existing infrastructure and the competitive environment. It is vital to demonstrate that the project aligns with the genuine needs of the population and has the potential for sustainable development.
2. How will this be implemented?The technical part of the feasibility study describes the technologies, resources, implementation stages, deadlines, location selection, logistics and compliance with regulations. It is essential for the investor (or private partner) to see a clearly planned initiative.
3. How much will it cost and what will it bring?The financial model demonstrates income and expenditure, investment efficiency (NPV, IRR, Payback Period) and positive effects for the local community (economic, social, environmental, etc.). Calculations must be logical and transparent.
4. What are the risks involved?Assessment of legal, environmental, operational and political risks, as well as mechanisms for managing them — insurance, contingency plans, guarantees.
5. Is the project ready for financing?The concept of Bankability refers to the ability to be attractive to financial institutions. A clear structure, financing model and co-financing sources are of critical importance.
Common issues in project preparation
According to data collected by experts of BDO in Ukraine during the preparation of the investment guide for the URC2025 conference in Rome, a significant proportion of the proposed projects had ample potential for improvement:
- Limited quality of materials: general formulations, unverified or outdated data
- Free interpretation of financial indicators: their overly vague application or lack of key indicators
- Lack of coherent structure: ideas without the proper details, analytics, technical plan
Internal challenges faced by municipalities when preparing projects
In addition to external challenges related to access to financing, municipalities often face internal barriers that significantly complicate the preparation of high-quality investment projects:
- Lack of experience with grants and investments. Many municipalities do not have a consistent practice of attracting external funding, are unfamiliar with donor requirements, and only partially use tools that are standard in international project activities. This leads to a formal approach and low quality of submitted materials.
- Language barrier. Most international programmes require documentation to be submitted in English. The lack of specialists with the relevant skills in municipalities complicates communication with donors and reduces the chances of successful submission.
- Opaque recipient structure. Investors and donors expect a clear legal structure, a comprehensible management model, and transparent financial reporting. If a municipality or its partner cannot provide such information, it raises doubts about the project reliability.
- Lack of resources to search for opportunities. Most municipalities have rather limited human and technical resources to monitor current support programmes, analyse requirements and prepare applications. This leads to the loss of funding opportunities even for promising initiatives.
How to improve the quality of training?
To compete effectively for funding, municipalities must act systematically:
- Engaging consultants. Experienced professionals help to avoid mistakes and improve the quality of projects
- Investing in educational programmes. Training in the basics of financial modelling, analytics, project and risk management
- Standardisation of feasibility studies. Use of templates that meet the requirements of international donors (EBRD, IFC)
- Communication with donors. Understanding their expectations and adapting projects to specific programmes.
The large-scale recovery efforts required in Ukraine necessitate not only substantial financial resources but also meticulous project preparation at the local level. The problems identified — both internal and external — indicate the need for a systematic approach, training of municipality teams, involvement of consultants, and compliance with national and international standards. A high-quality feasibility study, transparent structure, realistic financial model and implementation strategy are not just requirements, but prerequisites for successful fundraising. This is a strategy that municipalities can implement to enhance their investment attractiveness, thereby ensuring their own sustainability and prospects for further development in total uncertainty.
BDO in Ukraine is a trusted provider of professional services for regions and municipalities, offering training, auditing, digitalisation and the preparation of high-quality projects. We work closely with municipalities to help them attract funding and implement strategic initiatives. We invite you to reach out to us. Together, we can establish a robust foundation for the future of your municipality.
