Designing and Conducting Market Sounding — With 8-Item Question Template [2026 Edition]

Market sounding is a dialogue-based market survey in which private sector operators are consulted for their opinions and ideas regarding a public asset, prior to the issuance of a public tender. The assumption that "operators will come if we open a public tender" is particularly risky for small-scale facilities in regional areas. Sounding functions as a safety mechanism that verifies in advance "whether the private sector actually wants to participate."

Positioned as Phase 3 in 5 Steps to Implementing Small Concession, sounding is the most critical process determining whether a project succeeds or fails.

Sounding comes in three varieties. Phased implementation of these types is the success pattern.

Trial Sounding

A method in which the facility is made available to the private sector for a set period (one week to one month) for experimental use — typically including food and beverage pop-ups or event hosting.

The Kaiseizan Park case featured in 5 Park-PFI Success Cases conducted a one-month trial sounding in October 2020. Participants were awarded 5 bonus points in the public tender as an incentive for early engagement.

Advantages: Issues not visible on paper — such as traffic flow, equipment condition, and actual demand — become apparent when private operators physically use the facility. Disadvantages: Requires time and cost to implement. Facility use permit procedures are necessary.

Pre-Sounding

A method for broadly gauging private sector intent at the feasibility study stage. Email or web form inquiries are common formats.

Advantages: Can be implemented at low cost and within a short timeframe. Collects opinions from a large number of operators. Disadvantages: Depth of dialogue is limited. Responses often remain at the level of "interested, but the details are unclear."

Market Sounding

A method involving one-on-one dialogue with individual private sector operators, conducted immediately before finalizing solicitation guidelines. Specific opinions are exchanged on project schemes, cost allocation, and enabling conditions.

Advantages: Enables concrete understanding of operators' participation conditions and challenges. Findings can be directly incorporated into the design of solicitation conditions. Disadvantages: Implementation typically requires 1–3 months. Care is required in publishing dialogue content to avoid disclosing information that could affect competitive positioning.

The following question template is provided for use in market sounding. Please customize it to suit the specific characteristics of your facility.

Template (8 Items)

1. Interest in the Facility

• Level of interest in utilizing this facility (high / moderate / low / none)
• If interested, what type of use is envisioned?

2. Preferred Business Content

• Specific business content and type of operation
• Intended user base (target audience)
• Projected annual footfall or number of users

3. Facility Renovation and Development

• Required renovation content and estimated costs
• Maximum renovation costs the applicant is willing to self-fund
• Development items to be requested of the municipality

4. Business Conditions

• Preferred project duration (number of years)
• Acceptable level of rent or usage fees
• Whether revenue sharing (returning a portion of sales to the municipality) is feasible

5. Project Scheme

• Preferred approach (PPP/PFI, lease, designated management, etc.)
• Solo participation or consortium
• If consortium, what structure is envisioned?

6. Barriers to Entry

• Issues and concerns in considering participation
• What enabling conditions are being requested of the municipality?
• Are there regulatory or permit-related hurdles?

7. Community Contribution

• Local employment plan
• Community engagement policy (resident participation, local procurement, etc.)
• How would the operator handle public responsibilities such as disaster response?

8. Schedule

• Earliest possible start date for participation
• Time required for preparation (design, permits and approvals, construction, etc.)

Sounding is conducted in the following 5 steps.

Step 1: Announcement (2–4 weeks in advance) Post the implementation guidelines on the municipal website. Specify the overview of the target facility, the purpose of the sounding, application procedures, and dialogue scheduling.

Step 2: Registration (2–3 weeks) Receive participation applications. Requesting advance submission of a company profile and a brief facility reuse proposal improves the efficiency of dialogue.

Step 3: One-on-One Dialogue (30–60 minutes per company) Conduct dialogue following the 8-item template. Take notes for subsequent results compilation. Explain confidentiality protocols in advance.

Step 4: Results Compilation Aggregate opinions from all operators by item. Extract common requests and challenges, and examine whether they can be incorporated into the solicitation conditions.

Step 5: Publishing Results Publish a summary (number of participants, general trends in opinions) on the municipal website. Omit information that could identify individual companies.

Publishing sounding results has the effect of attracting the next wave of operators. The fact that other operators have expressed interest encourages additional parties to consider participating in the public tender. Withholding results represents a missed opportunity.

What should be published:

• Number of participating operators (company names not disclosed)
• Trends in proposed uses (distribution of business types)
• Common challenges to entry
• Direction of solicitation conditions informed by the sounding

When outsourcing sounding design and implementation to an external consultant, costs generally range from ¥1.5 million to ¥5 million.

Decision criteria: External consulting is effective for municipalities conducting sounding for the first time, or for projects where major operators are expected to participate. Where prior sounding experience exists and staff expertise has been developed, in-house implementation is also viable.

If sounding yields zero respondents, address the situation with the following three approaches.

1. Easing Conditions

Consider adjusting conditions to lower barriers to entry: reducing rent, extending the project period, or expanding the municipality's cost share. Diagnose why operators did not participate (information not reaching target audiences, conditions too demanding, facility condition too poor, etc.) and address the root cause.

2. Changing Methods

Re-examine the Small Concession approach itself. If concession is too complex, consider switching to a lease arrangement; if PPP Act procedures are burdensome, consider simplifying to a comprehensive partnership agreement. Explore downgrading the project approach.

3. Expanding the Scope

Expand from the individual facility to a broader area-based development plan that encompasses the surrounding vicinity, thereby increasing the overall appeal for operators. Approaches such as packaging multiple facilities — as in the cases described in Small Concession Cases — are also worth considering.

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Sounding is not merely a "listening" exercise; it is a process of co-creating a project through public-private dialogue. The quality of the design determines the success or failure of the public tender.

ISVD provides free support for sounding design, including question template customization, dialogue facilitation, and results analysis.

References

Small Concession Promotion Policy (2024)

Kaiseizan Park Park-PFI Project: Public Solicitation Guidelines (2022)

Small Concession Platform (2024)