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Provided by: Financial Training Associates Ltd Project finance modelling masterclass - 3 daysAccounting and Finance |
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This course provides the opportunity for delegates to practise and improve their ability to build project finance models using Excel. The course is conducted in a work shop format, with the emphasis on a learning by doinga .
On this course, and as a key learning tool, participants start with a blank spreadsheet and create a project finance model from scratch. Delegates are guided through a complete model build up and are shown all the steps they need to take. All through the course plenty of guidance and assistance is given by the course instructor.
As part of their work on the course delegates create a full cash flow forecast for a project. Delegates can then consider the impact of a change in project parameters, analysing how the project performs under stress and how key financial ratios and bank covenant tests respond with a change in circumstances.
On this course, and as a key learning tool, participants start with a blank spreadsheet and create a project finance model from scratch. Delegates are guided through a complete model build up and are shown all the steps they need to take. All through the course plenty of guidance and assistance is given by the course instructor.
As part of their work on the course delegates create a full cash flow forecast for a project. Delegates can then consider the impact of a change in project parameters, analysing how the project performs under stress and how key financial ratios and bank covenant tests respond with a change in circumstances.
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Training
Provided by Financial Training Associates Ltd
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Project finance modelling masterclass - 3 days
Day 1
Session 1: the role of the project finance model
Key elements of a project finance model
Typical project finance contract structure
Implications for modelling
Group exercise. Course participants work in small teams to create a structure diagram for a project finance model
Session 2: introduction to modelling case study (i)
Starting to build the model
Sources of revenue
Assumption setting: identifying and separating key assumptions
Escalating revenues: pitfalls in escalation factors
What do we conclude about good model structure and design: right from the start?
What have we discovered already about good modelling practice?
Modelling. Delegates work in small groups to build a model that incorporates the key elements of a typical project finance deal
Session 3: model time lines
Coping with delay
How can we build in flexibility e. g. changes in:
Financial close
Construction period
Start date
Operations
Modelling case study. Delegates look at how they could modify their own model to incorporate flexibility
Session 4: modelling case study - expenses
How might we model expenses
In this project?
In other projects?
Escalating expenses
Modelling case study. Delegate teams build expenses into their own project model
Session 5: modelling cash flow
Modelling the cash flow
Key linkages to other parts of the model
Modelling case study. Delegate teams complete a cash flow forecast in their project model
Day 2
Session 6: modelling capex
Phasing up front cap ex within the model
Project delay: how could we design the model so that it accommodates delay?
What contractual arrangements need to be reflected in the model?
Incorporating ongoing operational cap ex
Modelling case study. Delegate teams forecast capex in their project model
Session 7: modelling capital structure
Sources and uses of funding
Fees on the deal
Mapping out a capital structure for the deal
Incorporating a simple funding structure within the project model
Forecasting a simple debt schedule
Linking to other statements and adjusting cash flow
Modelling case study. Teams translate capital structure for the deal into their project model
Session 8: determining debt capacity and structuring debt
Modelling a more complex and realistic debt structure
Discussion around the role of different debt instruments
How might we model debt different debt instruments?
The influence of different debt structures in projects
Estimating and optimising debt capacity
Real debt structuring case study. Delegates review a real debt structure and model extract prepared and released publicly by a well-known investment bank. Based on what you have learned, how has this analyst got it wrong? What could you do better? Delegates work in small groups to model the deal a different way, reaching a dramatically different conclusion
Session 9: modelling tax
Looking at the project model, which items are likely to flow straight through to the tax return?
Which are going to be spread over time?
How do we model the tax expense?
How do we model tax losses?
Modelling case study. Delegate teams forecast tax expense in their model and incorporate it into cash flow
Day 3
Session 10: defining key model outputs
What are the most important outputs?
DSCR, LLCR, PLCR
How can they be presented clearly?
How is your deal doing?
Any breaches?
Conditional formatting
Modelling case study. Teams complete a new sheet within their model - something that contains key outputs and is quickly and easily readable
Session 11: the link to project appraisal
Investment appraisal crash course
How is DCF calculated in a project model?
Why do we discount?
How is the discount rate determined?
How is NPV calculated?
Elephant traps: using Excel to calculate NPV
Understanding IRR
3 ways of understanding/ calculating IRR
Elephant traps: using Excel to calculate IRR
Modelling exercises. Delegates review simple exercises in investment appraisal and consider how investment appraisal could be incorporated in their project model
Session 12: introduction to modelling case study (ii)
Introduction to real Harvard Business School case study
The challenge: investment appraisal for a real and complex project finance deal
There is a lot of information here
Who are the key players? What are their roles?
What is the likely contractual structure? What are key contractual risks?
What are the financing options for the project?
Peculiarities of this deal
Pros and cons of the financing options
How would you structure a project model for this deal?
How would you conduct your investment appraisal?
What is the role of the boutique advisory firm involved?
What really happened?
Case study. Delegates work in small groups to gain an understanding of project structure, implications for the model and investment appraisal
Session 13: other topics
Excel tips and help
Delegates are provided with the opportunity to examine and get help with key Excel functions that are new to them
Good modelling practice guidelines
Model audit
How might we audit a model?
Working with the model
What scenarios could we run?
How could we structure the model to cope with them?
Note: the time spent on this session depends on time available on day 3 and the extent of delegate interest.
Course conclusion. Best practice project finance modelling
Delegates who have improved their understanding of and have had experience of modelling project finance deals
Simple and clear reference Excel models - providing participants with a platform for future analysis and decision making
Participants who, at the end of the course, understand the drivers on project finance deals and how project parameters can be structured to suit the various parties
Session 1: the role of the project finance model
Key elements of a project finance model
Typical project finance contract structure
Implications for modelling
Group exercise. Course participants work in small teams to create a structure diagram for a project finance model
Session 2: introduction to modelling case study (i)
Starting to build the model
Sources of revenue
Assumption setting: identifying and separating key assumptions
Escalating revenues: pitfalls in escalation factors
What do we conclude about good model structure and design: right from the start?
What have we discovered already about good modelling practice?
Modelling. Delegates work in small groups to build a model that incorporates the key elements of a typical project finance deal
Session 3: model time lines
Coping with delay
How can we build in flexibility e. g. changes in:
Financial close
Construction period
Start date
Operations
Modelling case study. Delegates look at how they could modify their own model to incorporate flexibility
Session 4: modelling case study - expenses
How might we model expenses
In this project?
In other projects?
Escalating expenses
Modelling case study. Delegate teams build expenses into their own project model
Session 5: modelling cash flow
Modelling the cash flow
Key linkages to other parts of the model
Modelling case study. Delegate teams complete a cash flow forecast in their project model
Day 2
Session 6: modelling capex
Phasing up front cap ex within the model
Project delay: how could we design the model so that it accommodates delay?
What contractual arrangements need to be reflected in the model?
Incorporating ongoing operational cap ex
Modelling case study. Delegate teams forecast capex in their project model
Session 7: modelling capital structure
Sources and uses of funding
Fees on the deal
Mapping out a capital structure for the deal
Incorporating a simple funding structure within the project model
Forecasting a simple debt schedule
Linking to other statements and adjusting cash flow
Modelling case study. Teams translate capital structure for the deal into their project model
Session 8: determining debt capacity and structuring debt
Modelling a more complex and realistic debt structure
Discussion around the role of different debt instruments
How might we model debt different debt instruments?
The influence of different debt structures in projects
Estimating and optimising debt capacity
Real debt structuring case study. Delegates review a real debt structure and model extract prepared and released publicly by a well-known investment bank. Based on what you have learned, how has this analyst got it wrong? What could you do better? Delegates work in small groups to model the deal a different way, reaching a dramatically different conclusion
Session 9: modelling tax
Looking at the project model, which items are likely to flow straight through to the tax return?
Which are going to be spread over time?
How do we model the tax expense?
How do we model tax losses?
Modelling case study. Delegate teams forecast tax expense in their model and incorporate it into cash flow
Day 3
Session 10: defining key model outputs
What are the most important outputs?
DSCR, LLCR, PLCR
How can they be presented clearly?
How is your deal doing?
Any breaches?
Conditional formatting
Modelling case study. Teams complete a new sheet within their model - something that contains key outputs and is quickly and easily readable
Session 11: the link to project appraisal
Investment appraisal crash course
How is DCF calculated in a project model?
Why do we discount?
How is the discount rate determined?
How is NPV calculated?
Elephant traps: using Excel to calculate NPV
Understanding IRR
3 ways of understanding/ calculating IRR
Elephant traps: using Excel to calculate IRR
Modelling exercises. Delegates review simple exercises in investment appraisal and consider how investment appraisal could be incorporated in their project model
Session 12: introduction to modelling case study (ii)
Introduction to real Harvard Business School case study
The challenge: investment appraisal for a real and complex project finance deal
There is a lot of information here
Who are the key players? What are their roles?
What is the likely contractual structure? What are key contractual risks?
What are the financing options for the project?
Peculiarities of this deal
Pros and cons of the financing options
How would you structure a project model for this deal?
How would you conduct your investment appraisal?
What is the role of the boutique advisory firm involved?
What really happened?
Case study. Delegates work in small groups to gain an understanding of project structure, implications for the model and investment appraisal
Session 13: other topics
Excel tips and help
Delegates are provided with the opportunity to examine and get help with key Excel functions that are new to them
Good modelling practice guidelines
Model audit
How might we audit a model?
Working with the model
What scenarios could we run?
How could we structure the model to cope with them?
Note: the time spent on this session depends on time available on day 3 and the extent of delegate interest.
Course conclusion. Best practice project finance modelling
Delegates who have improved their understanding of and have had experience of modelling project finance deals
Simple and clear reference Excel models - providing participants with a platform for future analysis and decision making
Participants who, at the end of the course, understand the drivers on project finance deals and how project parameters can be structured to suit the various parties
About The Training Provider: Financial Training Associates Ltd
Financial Training Associates Ltd - Financial Training Associates Ltd is a company that provides finance related training courses. Course areas encompass excel financial modelling training, project finance, corporate finance and company valuation as well as other related course subject areas such as risk management, corporate credit analysis, private equity, loan restructuring and energy risk management.
