The government will push ahead with the largest overhaul of the preliminary feasibility study (pre-feasibility) system since 2019. The key is to lower the weight of the economic feasibility assessment for projects in underdeveloped local areas and to also consider their contribution to regional growth. In particular, it decided to introduce a separate evaluation weight for projects in population-declining areas.
The Ministry of Planning and Budget on the 10th held the third Fiscal Project Evaluation Committee meeting and announced the "Plan to overhaul and operate the preliminary feasibility study system."
◇ Separate evaluation introduced for population-declining areas… "Potential" to be considered in regional balance assessments
The government will lower the economic feasibility (B/C) weight by 5 percentage points (p) and raise the regional balance weight by 5 p in the evaluation indices for projects in 89 population-declining cities, counties and districts nationwide. Until now, even within non-capital regions, areas at risk of extinction and those that are not have been evaluated by the same standard.
For capital region projects, which since the 2019 overhaul have been evaluated only on economic feasibility and policy relevance, the government will lower the economic feasibility weight by 5 p and newly create a balanced growth evaluation item (within 5%).
As a result, for population-declining areas, the maximum share of the economic feasibility indicator in the overall evaluation will fall from 30–45% to 30–40%, while the regional balance indicator will expand from 30–40% to 35–45%. In the capital region, the share of the economic feasibility indicator will be adjusted from 60–70% to 55–70%, and a new balanced growth evaluation item of up to 5% will be added where none existed before.
The evaluation content will also change. The "regional balanced development" evaluation, which had relied only on quantitative indicators such as local underdevelopment and spillover effects, will be expanded and reorganized into "balanced growth effects," adding two qualitative pillars: "regional particularity" and "future growth potential."
In culture and tourism, the uniqueness of local history and ecological resources, and the medium- to long-term growth potential of the content industry, will newly become evaluation targets. Projects that receive a grade of "excellent" or higher in the "balanced growth impact assessment," scheduled for introduction in 2027, may receive priority selection for pre-feasibility or be exempted.
◇ Higher pre-feasibility thresholds for SOC… to apply starting with the third batch of 2025 projects
The pre-feasibility threshold for social overhead capital (SOC) projects such as roads, railways and ports will be raised from 50 billion won to 100 billion won based on total project cost, and from 30 billion won to 50 billion won based on central government funding. This reflects criticism that, even though the average project cost of SOC pre-feasibility applications has more than doubled over the past 20 years, the thresholds remained unchanged. SOC projects under 100 billion won may proceed after undergoing the competent ministry's own feasibility review.
For informatization projects with rising demand due to the spread of artificial intelligence (AI), the standard for economic feasibility analysis will shift from B/C (benefit-expense) to E/C (effect-expense), and the pre-feasibility duration will be shortened from nine months to six months. The current system makes it difficult to measure the increase in benefits from enhanced decision-making via AI. A new pre-feasibility exemption will also be introduced for projects to rebuild aging systems and equipment.
A private-sector expert consulting group will be introduced across all stages of pre-feasibility. Key tasks, including adjustments to the balanced growth weight, will go into effect following guideline revisions in May and will apply starting with the third batch of projects selected last year.