Project Finance Modelling Training Course

Attend this three-day intensive training course, packed with numerous practical workshops, and learn how to:

• Design models to maximise flexibility and reliability
• Quantify cashflow volatility of identified project risk
• Overcome the most complex aspects of building a reliable project finance model
• Facilitate the control of the model for scenarios,sensitivities and break-even analysis
• Use practical tips on layout, functions and style in building a user-friendly model

Scroll down for agenda

Model Design

• The layout of the model
• Designing the analysis worksheet
• Planning the functionality of the model
• Organisation of model inputs
• The logic flow throughout the model
• The status worksheet, debugging the model
• The log, maintaining model discipline

Best Practice

• Model efficiency
• The importance of consistent timelines
• Consistent formulae across columns
• Hard coding in formulae
• Which circular references are permissible and which are not
• Best practice for macros

Financing

• The cashflow profile of different project financing sectors

Practical Session - Modelling annuity-based amortisation

Practical Session - Modelling straightline amortisation with dynamic capability

Practical Session - Modelling cash sweeps

The Role of the Model Within Project Finance

• Limitation of recourse
• Risk and the allocations of risk
• Free cash flow
• Project dynamics
• The three stage analytical process
  – risk identification
  – quantification of risk - volatility
  – structuring risk protection

The Different Types of Financial Modelling

• Valuation models
• Transaction structuring models
• Statistical probability modelling
• Data manipulation

Pre-Completion

• Review of the construction stage of the project
  – liquidated damages
  – performance bonds
  – completion guarantees
  – interest during construction
  – multiple tranche drawdons

Practical Session - Building the construction phase worksheet

IRR and NPV

• The defects of the IRR and NPV functions in Excel
• Comparing and contrasting IRR, MIRR, XIRR and XMIRR
• Which method of calculation should be used in project finance models
• The importance of semi-annual timelines for structured financings
• Illustration of implementations

Particular Modelling Challenges

Some of these will be implemented as practical exercises and some as illustrations with self-tuition files for implementation after the course.

• The modelling of currency exposures
• The modelling of depreciation
• Implementation of cash sweeps
• Modelling of the cashflow waterfall
• Implementing the Loan Life Cover Ratio
• Different methods of implementing scenario analysis
• Implementing sensitivity analysis

Walk-Through of a Project Finance Model

• The Revenue Worksheet
  – modelling offtake agreements – volumes and prices
  – modelling concession terms
  – elasticity of demand calculations
• The Operating Costs Worksheet
  – explanation of the origins of cashflow volatility
  – determining the cost drivers
  – modelling the cost profiles
  – estimating the changes in structure when the scenarios are altered
  – differential escalation of costs
• The Tax Worksheet
  – the generic issues pertaining to tax [tax is jurisdictionally specific]
  – assessable income vs accounting income
• Accounting Reconciliations Worksheet
  – terms of trade
  – accounting depreciation using VDB function
• Financing Worksheet
  – different types of amortisation
• Financial Statements Worksheet
• Cashflow Waterfall Worksheet
  – explanation of the objective
  – dealing with the ‘what ifs’
  – the lockup ratios
  – default ratios – LLCR and ADSCR
• Analysis Worksheet
  – scenario analysis
  – break-even analysis
  – sensitivity analysis

Reviewing Models

• Procedures upon receiving a model supplied by others
  – identifying the model's architecture
  – tracing the logic flow
  – the use of audit software

Gain a high level of expertise in building financial models which are reliable and flexible to accommodate the changing requirements occurring during the life of a project. Learn solutions to specific problems associated with the building of project finance models and all the available techniques and how to apply them practically through the use of Excel. Extensive practical PC exercises will be used to illustrate all the principles covered.