For many years, project finance has been the core technique for financing infrastructure and other large-scale projects worldwide. Project financing has long been used to fund large-scale infrastructure, social sector and natural resource projects like, education, health, pipelines, refineries, electric generating facilities, renewable energy production, airplane production, space ventures, dams, transportation etc. It has also been used on many high-profile corporate projects, including Three Gorges dam, Euro Disneyland and Euro Tunnel. Project financing discipline includes understanding the rationale, preparing the financial plan,assessing the risks, designing the financing mix, and raising the funds. In addition, this technique helps us to understand why some financing plans succeed and others fail. We also compare the viability and feasibility of the projects. This course provides students with the theoretical, quantitative and conceptual tools necessary for financial analysis and decision making in relation to selection or rejection of the project. This course comprises modules on introductory finance, introductory project management, public private partnership, project finance and financial analysis of projects. Thus the course is extensive covering various facets of project financing knowledge.

Major Topics

Introduction to Finance, Financial Statements, Balance Sheet Equation, Financial Ratios, Debt, Equity, Bonds and Stocks, Introduction to Project Management, Public Private Partnership, Cost Concepts, Project Finance (Financing Methods, Recourse and Non-Recourse Debt etc.) and Financial Analysis of Projects based on Time Value of Money, NPV, Payback Period, Benefit Cost Ratio, IRR, Profitability Index and ROI. Consumer Surplus approach and Earned Value Management are also covered for evaluation of projects.

 

Major Objectives

 

1. To learn the basic concepts of Project Management and Finance.
2. To learn how Public Private Partnership helps in Project Financing.
3. To analyze how firms structure, value, finance and negotiate large capital investments.
4. To learn the concepts of capital budgeting from the point of view of financial analysis of projects.
5. To understand the concept of Time Value of Money and apply project evaluation techniques to conduct financial analysis of projects.

6. To learn about recourse and non-recourse funding for projects.

7. To learn apply Earned Value Technique for evaluation of projects.

8. To learn apply consumer surplus approach to conduct financial analysis of public sector infrastructure projects.

 

Cognitive skills
1. To provide students with the necessary theoretical and conceptual tools for financial analyses and decision-making in relation to risk and Project Finance.
2. To learn Earned Value Technique and methods for evaluating investments
3. To provide a solid grounding in the techniques of Project Finance and the key issues in its practice by providing a balanced mix between technical readings and specialized case studies.
4. To analyze cases related to real world project financing scenarios in various countries.
5. Solve quantitative finance problems to conduct financial analysis and cost-benefit analysis of projects

 

Key Transferable Skills
To provide the students with the opportunity to undertake project evaluation.
2. To learn insight of project financing through case studies.

 

Ethical and social understanding
To provide participants with an exposure to how the credit crunch has tempered the pace of investments and how the recent infrastructure spending plans initiated by governments around the world need a significant private capital participation in order to have a meaningful chance of being rational and ethical.Social aspects of infrastructure projects are also addressed from the standpoint of project financing.

 

Training Course Contents

 

1.         Introduction to Project Management

            a.         Introduction and Objectives of the Course

b.         Project, Program and Portfolio Management. Project Management, Project             Management Office, Project Life Cycle, Project Environment

c.          Project Organizations, Functional, Matrix and Projectized Organizations.

d.         Five Process Groups Initiating, planning, executing, controlling and closing and Nine

2.         Introduction to Finance

            a.         Introduction to Finance, Financial Statements, Balance Sheet Equation

b.         Financial Ratios, Debt, Equity, Bonds and Stocks

3.         Public Private Partnership

            a.         Definition, Types of PPP, Characteristics of PPP

b.         Arrangements and Participants of PPP

c.          Reasons for Private Sector Involvement, Systems of PPP

d.         BOT, BOOT, BRT, LDT, LDO, DBFO, DCMF, Advantages of BOOT Structure

4.         Project Finance

            a.         What is Project Finance?

b.         Key Aspects of Project Finance. Structuring Projects, Valuing Projects,

Managing Risky Projects, Financing Projects

c.          Nonrecourse debt or a nonrecourse loan

d.         Financing Structures: Secured Debt, Vendor Financed Debt, Subsidiary Debt, Lease, Joint Ventures, Asset Backed Securities (ABS), Privatizations or Municipal

Development, Leveraged Buyouts, Commercial Real Estate Development, Project

Holding Companies, Share Capital, Term Loans, Debenture Capital,Deferred Credit, Incentive Sources, Miscellaneous Sources

e.         Implications – Capital Market Imperfections

 

5.         Cost Concepts

a.         Direct Cost, Indirect Cost, Fixed Cost, Variable Cost, Total Cost, Average Cost, PeriodCost, Overhead, Opportunity Cost, Sunk Cost, Relevant and Irrelevant Cost, Breakeven Point, Marginal Cost, Economies of scale/scope,  Margin, Turnover, ROI

6.         Time Value of Money,

a.         Investment Decisions and Principles of Investment

b.         Capital Budgeting, Mutually Exclusive and Independent Projects

c.          Definition of Cash Flow, Financial Evaluation and Time Diagram for Cash Flows

d.         Compounding and Discounting Techniques

7.         Methods for Evaluating Investments

a.         Net Present Value Method

b.         Accounting Rate Of Return (ARR)

c.          Pay Back Method

d.         Internal Rate of Return Method

e.         Benefit Cost Ratio

f.          Cost of Capital

 8.        Earned Value Technique

9.         Learning Curve Effect

10.      Public Sector Project Evaluation Using Consumer Surplus Approach

11.      Cost-Effectiveness Analysis

12.      Case Analysis