The project finance is tailored to meet the needs of a specific project. Repayment of the financing relies on the cash flow and the assets of the project itself. The risks (and returns) are borne not by the sponsor alone but by different types of investors (equity holders, debt providers, quasi-equity investors).  Because risks are shared, one criterion of a project's suitability for financing is whether it is able to stand alone as a distinct legal and economic entity. Project assets, project-related contracts, and project cash flows need to be separated from those of the sponsor.

A first prediction of the costs of project should be performed already in the initial phase of the project development. This prediction should be done in order to assess whether the project will be an economic success. If this initial assessment is negative, planning should be halted in order to avoid incurring any further costs.