Market Sounding in Park-PFI — Three-Stage Design and Implementation [2026 Edition]

In the commercialization of Park-PFI (the Public Solicitation Management System), market sounding (sounding-type market survey) is among the most important preparatory steps. By engaging private-sector operators in dialogue before designing solicitation conditions, municipalities can significantly mitigate the greatest risk in a solicitation: receiving zero bids.

The MLIT guidelines revised in May 2025 explicitly recommend implementing sounding in two stages: one at the concept phase and one at the scheme development phase. This two-stage structure creates a useful division of labor — gathering broad perspectives early, then narrowing to confirmation of specific solicitation conditions later.

As of March 2025, 165 parks nationwide have adopted Park-PFI. Among successful cases, a shared characteristic is the implementation of staged sounding. The Kaiseizan Park case in Koriyama City in particular went further than the MLIT-recommended two stages, adopting a three-stage design.

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Park-PFI practice involves three distinct types of sounding. Understanding the precise definition and purpose of each is the starting point for effective design.

Type 1: Trial Sounding (Experimental Use Format)

Definition: A format in which private-sector operators actually use park facilities for a defined trial period, empirically verifying revenue potential, site conditions, and operational risks.

Purpose: To enable private actors to verify firsthand what desk-based analysis cannot fully reveal — actual visitor draw, actual operating costs, and actual risks.

Format characteristics:

• Duration is typically one to three months
• Usage fees are waived or set at a nominal level (to preserve participation incentives)
• Participation eligibility is typically limited to incorporated entities (not individuals)
• Post-trial interviews are conducted to feed findings into the next design phase

At Kaiseizan Park, the trial ran from October 1–31, 2020, operating daily from 9:00 to 21:00. Usage fees were waived, and participating operators received a +5-point incentive in the subsequent formal solicitation.

This format is sometimes called a "social experiment sounding" and is conceptually aligned with Parks as Platforms — the idea of using parks as testbeds for urban activity. From the private sector's perspective, the ability to test operations in advance significantly reduces entry risk.

Type 2: Pre-Sounding (Intent-Gathering Format)

Definition: A sounding conducted during the feasibility study phase, aimed at broadly understanding private-sector entry needs and intent.

Purpose: To clarify which types of operators show interest in participation, what barriers to entry exist, and which business models are likely to be financially viable.

Format characteristics:

• Supporting materials consist of park overview, drawings, concept statement, current site coverage ratio, and proposed treatment of existing facilities — solicitation conditions are not yet finalized at this stage
• Prioritizes broad participation; individual interviews or group formats are both acceptable
• Results are consolidated and incorporated into the feasibility study report

At Kaiseizan Park, pre-sounding was conducted in September 2021, with private operators submitting inquiries via email to the advisory firm (Oriental Consultants).

Type 3: Market Sounding (Full-Scale Format)

Definition: A sounding conducted immediately before the solicitation guideline is finalized, disclosing a draft of the solicitation conditions and confirming private-sector intent and requirements.

Purpose: To verify whether actual operators would apply under the proposed conditions. If conditions are problematic, they can be revised before the guideline is formally issued.

Format characteristics:

• Supporting materials are substantively specific: implementation policy, basic scheme draft, and outline of solicitation conditions
• Feedback is collected on usage fee levels and the municipality's share of designated park facility improvement costs
• Either open solicitation (broad participation) or targeted invitation (specific operators) format is used
• Results are directly incorporated into the solicitation guideline

At Kaiseizan Park, market sounding was conducted in January 2022. Participating operators received a +3-point incentive in the subsequent solicitation.

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The three-stage sounding design implemented by Koriyama City is widely referenced as an example of how MLIT's recommended two-stage framework can be refined and extended.

Timeline and Role of Each Stage

The defining characteristic of this design is the clear role assigned to each stage, with the outputs of each stage feeding into the design of the next. Empirical knowledge from the trial sounding shaped the question design for the pre-sounding; entry-intent signals from the pre-sounding informed the conditions draft for the market sounding.

Effect of the Bonus Point System

The incentive system (Trial +5 pts / Market Sounding +3 pts) functioned as a meaningful motivator for early private-sector engagement. The final solicitation attracted two applicants (two joint venture entities), with the consortium led by Daiwa Lease Group ultimately selected.

The bonus point system creates a mechanism where private operators understand that not participating in sounding puts them at a competitive disadvantage in the actual solicitation. This design encourages a habit of early engagement in the lead-up to Park-PFI solicitations.

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The following addresses the key design considerations for municipalities wishing to implement a bonus point system.

Legal Basis

Bonus points are legally grounded when explicitly stated in the "Evaluation Criteria (Clause 9)" section of the solicitation guideline. The MLIT guidelines explicitly state that "municipalities may consider awarding bonus points in the evaluation criteria to operators who participated in market sounding."

Setting the Point Value

Bonus point values should balance "sufficient to function as an incentive" against "not so large as to constitute an unfair advantage." At Kaiseizan Park, Trial +5 pts and Market Sounding +3 pts against a 500-point total represents an approximately 1.6% premium.

As a practical reference:

If the bonus is too large, the system may effectively predetermine the winner among sounding participants, raising concerns about the fairness of the solicitation. If it is too small, it will not function as an incentive.

Clarifying Eligibility

The guideline must explicitly specify which sounding type(s), at what timing, and under what participation conditions will generate bonus points. Ambiguity about "which sounding qualifies" creates the risk of post-selection disputes with applicants.

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The quality of a sounding is largely determined by the quality of its questions. The key emphasis shifts at each stage; design accordingly.

Round 1 (Concept Phase) Question Items

At this stage, prioritize breadth of perspective. Design for minimal burden on participants, maximizing the number of operators who provide input.

Round 2 (Scheme Development Phase) Question Items

At this stage, the purpose is to confirm specific solicitation conditions. Disclose the conditions draft and identify what needs to be revised.

Key Considerations in Question Item Design

Advantages of individual interview format: In group formats, participants tend to withhold candid opinions in the presence of potential competitors. Individual interview format is strongly recommended for the second-round market sounding in particular.

Protecting participant information: If operators fear that their proprietary information may reach competitors, participation rates will decline. Clearly stating in writing that "individual interview content will not be shared with other participants" and "specific operator information will not be disclosed publicly" increases participation rates.

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Disclosing sounding results within a defined scope is recommended. The benefits include the following:

1. Attracting additional operators: Once industry participants know that a sounding has taken place, operators who were not originally aware of the project begin paying attention.
2. Ensuring solicitation fairness: Demonstrating process transparency builds trust in the integrity of the solicitation.
3. Building momentum for future sounding rounds: Creating the perception that "participating in sounding provides useful information" encourages future engagement.

What to Disclose vs. What to Withhold

At Kaiseizan Park, summaries of each sounding round were published on Koriyama City's official website, and findings were incorporated into the project overview document. This level of transparency contributed materially to building confidence in the overall project.

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One of the worst possible sounding outcomes is zero participation. The following outlines both prevention measures and corrective actions.

Prevention Measures

1. Targeted invitation format: Switch from open solicitation to individually inviting operators known to have relevant expertise. This prevents the "nobody knew about it" failure mode.
2. Early information dissemination: Beyond posting on the municipal website, distribute information through industry associations, chambers of commerce, and local financial institutions.
3. Lowering participation barriers: Keep eligibility conditions for the first sounding as simple as possible. Create a welcoming environment for first-time participants.
4. Pre-announcing the bonus point system: Before sounding begins, publicly announce that sounding participation will carry bonus points in the subsequent solicitation.

Corrective Actions After Zero Participation

Diagnose the cause of zero participation and apply the appropriate correction.

Cause 1: Low awareness → Remedy: Strengthen outreach If the park or sounding opportunity is simply unknown, intensify outreach through local media, social media, and industry publications.

Cause 2: Conditions are too strict → Remedy: Revise conditions If usage fees are too high, the private burden for improvement costs is too heavy, or the track record requirements are prohibitively high, revise accordingly.

Cause 3: Location or visitor draw is the issue → Remedy: Reconsider business type or pursue phased improvement If the location is inherently unsuitable for commercial viability, consider reframing toward problem-solving business types (childcare, welfare) or invest first in environmental improvements before re-initiating the sounding.

Cause 4: Timing is unfavorable → Remedy: Change the timing Industry trends and economic conditions can influence participation appetite. Keeping the option open to re-run sounding at a different time is advisable.

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A final note on how Park-PFI sounding differs from sounding for public facilities in general.

The "designated park facility improvement obligation" may function as a participation barrier: Because Park-PFI requires not only revenue facilities but also park infrastructure improvements, the initial investment burden for the private operator is higher. Understanding this concern through early sounding — and calibrating the cost-sharing ratio accordingly (e.g., public 90% / private 10%) — is essential.

The "20-year special provision" becomes a discussion point in sounding: Longer permit terms generally increase private entry motivation. Asking in sounding "what minimum permit term would make your participation viable?" provides reference data for setting the term in the guideline.

Collecting feedback on evaluation criteria is also valuable: At the market sounding stage, gathering input on whether the proposed scoring structure fairly rewards the applicant's strengths is a useful complement to condition-related questions. Biased evaluation criteria can inadvertently exclude a diverse range of operators.

The Sounding Design Template and Implementation Guide (general purpose) provides a useful complement to this article for understanding the broader sounding framework alongside Park-PFI-specific design elements.

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Sounding design is not a box to check — it is an investment that determines the quality of the next phases (guideline drafting, evaluation criteria design). Defining the purpose of each stage clearly, and designing the bonus point system, question items, and disclosure approach as a coherent strategy, is the most direct path to solicitation success.

For support designing and implementing Park-PFI-specific market sounding, please contact ISVD.

References

Park-PFI Utilization Guidelines for Improving the Quality of Urban Parks (Revised May 30, 2025) (2025)

Park-PFI Implementation Status (as of March 31, 2025) (2025)

Koriyama City, Kaiseizan Park Park-PFI Project: Solicitation Guideline (2022)

Koriyama City, Kaiseizan Park Park-PFI Project: Trial Sounding Invitation (2020)

Koriyama City, Kaiseizan Park Park-PFI Project (Official Page) (2022)