A practical guide to Bankability in construction projects

WHAT IS BANKABILITY IN THE CONTEXT OF A CONSTRUCTION PROJECT?

A project structure is "bankable" if lenders are prepared to finance it.

When parties negotiate a construction contract, the concept of 'bankable' is usually:

• Negotiated by reference to what the Principal has been able to agree with lenders in the past; and
• What the Principal is taking to lenders on the current project.

What Factors Influence Bankability?

The credit committees of lenders seek certainty. They tend to require that risks are capable of assessment or analysis and not open-ended. While many factors can influence whether and what a lender is prepared to lend into a project, a number of key issues in construction contracts often include those in the table below.