Technical due diligence (TDD) is used to convert project ambition into factual verification. For investors, it functions as an early barrier against unrealistic proposals. The independent engineer (OE) leads the process by reviewing engineering documentation, permits, contractual structure, and resource planning. The objective is to confirm that a project is both technically and commercially feasible.
Independent engineer verification for lender readiness
Lenders assess readiness using reports produced by the OE. Their review focuses on whether the design complies with applicable standards and whether the EPC contractor can deliver as planned. They also expect that interfaces are closed. In parallel, lenders examine whether contingency allowances are realistic, local permits are secured, and the schedule includes credible float.
Risk quantification during TDD
Issues often emerge during TDD, including inadequate geotechnical data, unclear procurement timelines, and equipment vendors that have not been proven. The OE translates these weaknesses into quantifiable risks. Mitigation recommendations are made before financial close. If a project proceeds without testing, it may require redesign later, which can trigger claims and affect IRR.
Due-diligence reporting as investor protection
For investors, the OE’s due-diligence report is described as a form of defence rather than an audit. It supports negotiations aimed at allocating risk appropriately and ensuring covenants are enforceable. Technical realism is positioned as a way to protect the lender’s security and the sponsor’s reputation. Proper diligence is presented as lower cost than losses avoided through early detection.