P1: Project Finance & Project Financial Modelling Training (3-5 days)

Learn the principles of project financial modelling and the practical application of these to real-world situations through the use of spreadsheet financial models.

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Pre-requisites

Although not mandatory, attendees will get a lot more out this course if they complete some online training in Excel functions before attending. We have partnered with Excel University to provide high-quality, low-cost online training and recommend their Volume 2 Course as good preparation for this course.  If attendees are a little less familiar with Excel, Volume 1 would also very useful.

Course Objectives

To provide participants with a sound understanding of project finance and project evaluation concepts.

To provide participants with the ability to design and build their own project finance model from scratch.

To provide participants with an understanding of spreadsheet modelling best practices.

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Agenda Highlights

This course provides a sound understanding of both the principles of project financial modelling and the practical application of these to real-world situations through the use of spreadsheet financial models.

The course builds upon the financial modelling principles and practices learned to apply these to project evaluations.  In this, participants improve their mastery of project finance principles and concepts, and how to apply these in practical applications.

Project Finance Fundamentals

Introduction to Project Finance

  • Project finance overview & key concepts

Activity

Group discussions: what is project finance, & what has been its impact on economic development?

  • How is project finance different to other types of finance?

Activity

Choosing between project finance and corporate finance

  • When is project finance applicable?

Activity

Group discussion: macroeconomic trends and factors to consider when forecasting demand for infrastructure

  • Impact of limited recourse
  • Key parties involved in typical project finance projects

Activity

Group exercise: roleplay the different project finance parties to assess risks and opportunities in a project finance deal.

Project Finance Structures, Risks & Contracts

  • Typical legal structures, considerations and contracts involved

Activity

Case Study: considering the best structure for a sample project

  • Risk assessment & evaluation for typical projects

Activity

Group discussion: key risk areas, potential impacts and risk mitigation strategies

  • Renewable energy projects & special considerations
  • Role of the financial model
  • Typical project stages & key considerations
  • Types of project finance
  • Advantages and disadvantages of Project Finance

Financing Projects

Sources of Funds

  • Who finances large projects?
  • Debt vs equity

Activity

Group discussion: funding sources plus debt vs equity instruments

Designing Security Arrangements

  • Lending requirements
  • Direct security interests
  • Security arrangements for completion & debt service
  • Types of purchase & sale contracts
  • Credit support requirements
  • The role of insurance

Activity

Extended Case Study: power generation agreements and project structure

Preparing the project financing plan

  • External funding required
  • Debt/equity ratios
  • Common financial ratios
  • Debt drawdowns
  • Cash flow considerations
  • Estimating the borrowing capacity of a project

Activity

Case Study: financing rail infrastructure. We will examine a series of scenarios in this case study and consider different financing options together with the impact these have

Developing the Financial Model

Financial Modelling in Excel

Key functions and functionality for building efficient, robust, reliable financial models:

  • Working with large data sets
  • Summarising and aggregating data
  • Extracting data that matches criteria using flexible formulas
  • Error handling
  • Ways of improving structure
  • Techniques for keeping formulas consistent yet flexible
  • Combining and splitting cells according to the content they contain
  • Advanced techniques for creating automatically expanding charts and ranges

Project Finance Modelling

Introduction to the Case Study

  • Overview of the project
  • The 7 key steps in building a project finance model
  • Sources of information
  • Best practice guidelines and spreadsheet modelling standards
  • Common pitfalls and how to avoid them

Key Components of the Financial Model

Time Series

  • Allowing for multiple project phases
  • Building flexibility to allow for changes in project start dates and delays
  • Building the time series with flexible reporting in mind
  • Modelling principles and practices to create flexibility

Activity

Individual exercise to modify the case study model to build flexibility in time series calculations.

Revenue & Expenses Modelling

  • Setting revenue & expenses assumptions
  • Allowing for what-if scenarios and sensitivities
  • Escalation pitfalls to avoid

Activity

Individual exercise to extend the case study model and build the revenue and expense forecasts.

Capital Expenditure Modelling

  • How to incorporate flexibility and delays
  • Depreciation modelling

Activity

Individual exercise to build capital expenditure forecasts into the case study model.

Cash Flow Modelling

  • How to translate the revenue, expenses and capital expenditure into the cash flow model to forecast free cash flows
  • Tax considerations

Activity

Individual exercise to build the cash flow component into the case study model.

Finalising the Financial Model

Financial Structuring

  • Advantages and disadvantages of alternative legal ownership structures, including tax implications
  • Financial structures: various forms of debt and equity and factors to consider in financial structuring
  • Reserve accounts, return of equity to investors and cash waterfall modelling

Activity

Individual exercise to build a cash waterfall into the case study model that incorporates debt, reserve accounts and equity payments.

Ratios, Valuation & Reporting

  • Calculating project ratios & measures
  • Calculating key project measures: Internal rate of return (IRR), Net Present Value (NPV), Payback period
  • Sensitivity analysis
  • Summarising results & highlighting anomalies

Activity

Individual exercises to calculate key ratios and present these in case study model, provide an annual summary of results, calculate sensitivities on key variables and provide recommendations.

Control of Financial Models

Financial Model Auditing/Review

  • Why audit?
  • Excel’s auditing tools
  • Automated testing tools: role, purpose and limitations, demonstration
  • Model documentation

Automated Model Generation Tools

  • Overview: purpose, advantages, disadvantages, demonstration

Activity

Group exercise to audit key aspects of a sample model using automated testing tools.

  • Demonstration of automated project finance modelling software

Discussion of advantages & disadvantages

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Who should attend?

  • Business & Finance Analysts
  • Investment & Corporate Bankers
  • Finance Managers
  • Investment Managers
  • Investment Analysts
  • CFO’s
  • Financial Modellers
  • Project Managers
  • Project Accountants
  • Investment & Corporate Bankers
  • Corporate Finance Managers
  • Finance Professionals

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Facilitator: Jeff Robson

Masters (Applied Finance), BCom (Accounting & Information Systems), FAIM, F Fin, MAICD, CISA, MS Excel Expert

Jeff Robson is the Principal and Founding Director of Access Analytic, a specialist consultancy that focuses on financial modelling, forecasting, valuation, model auditing, and management reporting for clients throughout the world. He is skilled in the development and maintenance of analytical tools and financial models for corporates, at all levels of complexity, in both domestic and international settings.

He has worked extensively with clients in the property sector over many years.  He has trained and consulted to property specialists from a wide variety of companies including property developers, property managers, property valuers, government housing departments, plus listed and unlisted property syndicators.

He provides training in financial modelling for companies throughout the world. Jeff is the author of a number of white papers on financial modelling on subjects such as Financial Modelling Best Practices and Financial Model Auditing.

Highlights from his property experience include:

  • Development of an extensive series of models for reporting and management of hundreds of property syndications for a listed property syndicator.
  • Development of financial models for evaluating potential property investment opportunities and obtaining finance for a listed property development company.
  • Development of a 20-year financial model for a property valuation & investment company

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Benefits & Inclusions

Practical: Highly experienced facilitators who actively and regularly consult to clients also.
Applicable: apply what you learn to your job to further your career.
Hands-on: the course is designed to provide maximum hands-on experience.
Passionate: Our facilitators love this subject!
Clear: we specialise in translating complex subjects into concepts that are easy to understand.
On-going help: you can always e-mail the facilitator.
Comprehensive course notes.
Networking: meet industry peers and hear how they approach this subject.
Certificate of completion.
… and much more!

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Clients who have 3-4 or more people interested in this course normally prefer to run this course on an in-house basis in their offices.

We can bring all the equipment for up to 8 people so all you need is a room!

Benefits

  • Flexibility: we can combine content from multiple courses to create a custom course just for you, add-on a workshop or some mentoring sessions then run everything at the times that suit you.
  • Timing options: if you’re in Perth, we can split courses into half or single days and schedule these at times to suit you
  • No hidden extras: our fixed fee includes all materials and equipment costs for up to 10 participants
  • Cost effective: in-house courses are often 50-80% cheaper than sending the same number of people to public training

In-House Details & Pricing

  • Structure: half-day or full-day sessions
  • Location: all courses are available in-house, many are also available in open sessions
  • Provided: projector, laptops, manual,

In-house Course Fees

Call us on +61 8 6210 8500 to discuss your requirements.

Notes:
– We are happy to customise our courses to suit your requirements
A 10% discount applies when booking 10+ full days of training in any 30 day period
– Many courses can also be split into half-days (please enquire)
– Fees for locations outside of Perth do not include equipment