SESSION 1: Fundamentals of Asset-Based Financial Engineering

Introduction to Project Financing

• Project Financing versus Direct Financing
  
• Analysis of Project Viability
• Risk and uncertainty
• Implications of Risk for Project Financing
• Aligning Projects with Corporate Strategy
• Security arrangements
• Legal structures

Basic Tools for Economic Appraisal

• Simple Project Payback Period
  
• Time Value of Money
• Simple and Compound Interest
• Nominal and Effective Interest Rates

Appraisal Methods – Discounted Cash Flow Projections

• Net Present Value Analysis (NPV)
  
• Internal Rate of Return Analysis (IRR)
• Comparing NPV and IRR Analyses
• Interpolation and Non-linearity
• Time Equivalence

SESSION 2: Project Risk Exposure and the Cost of Capital

Rate of Return Computations (IRR)

• Determining the Internal Rate of Return (IRR)
  
• IRR for a Single Project using Present and Annual Worth
• Incremental Analysis
• Using IRR to Analyse Options with Different Lives

Benefit-Cost Ratio (BCR)

• Costs, Benefits, and Non-benefits
  
• Estimating the Benefit-Cost Ratio for a Single Project
• Comparing Mutually Exclusive Projects Using Incremental Benefit-Cost Ratios

SESSION 3: Financial Modelling and Project Evaluation

Financial Considerations for Project Planning

• Preparing Cash Flow Projections
  
• Accounting Years and Tax Years
• Incremental Costs and Benefits
• Working Capital Requirements and Operating Costs

Forecasting Cash Flows

• Opportunity Costs and Sunk Costs
  
• Determining the Economic Life of a Project
• Quantifying the Effects of Inflation
• Relevant Cash Flows over Differing Time Horizons

SESSION 4: Depreciation, Insurance and Taxation Costs

Depreciation

• Straight-Line Method
  
• Declining Balance Method
• Depreciation versus Amortization

Taxation

• Corporation Tax Rates
  
• Taxable Profit
• Capital Allowances
• Tax Payments
• Incorporating Tax in Cash Flow Models

Assessing the Terminal (Salvage) Value of a Project

• Perpetuity (Annuity) Method
  
• Price/Earnings Ratio Method
• Book Value Method
• Cash Flows for a Replacement Project
• Preparing Projected Financial Statements
• Sensitivity Analysis

SESSION 5: Preparing the Financial Plan

• Project Financing
  
• Long-term Financing
• Tax Considerations
• Estimating the Borrowing Capacity of a Project
• Loan Repayment Parameters
• Borrowing Capacity: Full Drawdown
• Borrowing Capacity: Periodic Draw-downs
• Owner Financing Using Bonds

This seminar is designed for program and project professionals, project leaders, project engineers, cost engineers, and other middle - senior project control and business services professionals who are responsible for or involved in securing project financing and managing cash flow on projects.