Project Finance Modelling Handbook
I'm writing my next book, the Project Finance Modelling Handbook. As I did with the Financial Modelling Handbook, I'm publishing drafts of each chapter online as I write so that I can get as much feedback and input from fellow professionals as possible.
The Project Finance Modelling Handbook will build on the core model structuring and model-build skills shared in the Financial Modelling Handbook.
I look forward to your comments.
Last updated: October 1st 2024
Table of contents
Glossary of Project Finance terms
Section 1 - Introduction
- What is Project Finance?
- Model structure
- Core model build skills
- Stages of a Project Finance transaction
Section 2 - Setting up the model
- Start model
- Timeline options in PF models
- Timeline flexibility
- What is a cash flow waterfall in Project Finance?
- Setting up the cash flow waterfall in our model
- What is a Sources and Uses statement in Project Finance?
- Setting up the sources and uses of cash in our model
- Model solving
- Scenario and sensitivity analysis
Section 3 - Construction costs
- Introduction to modelling the construction period
- The difference between Construction costs and Project Costs
- EPC and other construction costs
- Development costs
- Development & success fees
- Dealing with construction delays
- What are liquidated damages in Project Finance
- Modelling liquidated damages
- Understanding Contingencies in Project Finance
Section 4 - Operations
- Operating revenues
- Operating costs
- Working capital
- Inflation
- Tariff indexation structures
Section 5 - Currencies
- What are the issues in modelling multiple currencies in Project Finance models?
- Multiple currencies and inflation
Section 6 - Construction financing
- CFADS & Debt sizing
- Techniques to maximise debt sizing
- Drawdown priorities
- Share capital
- Shareholder loans
- Senior construction debt
- Equity bridge loans
- Long-dated equity bridge loans
- Construction period revenues as a source of funding
- Use of holding companies
Section 7 - Term debt
- Debt interest
- IFRS 9 effective interest rate
- Debt repayment & sculpting
- Debt service cover ratios
- Loan life cover ratios
- Project life cover ratios
- Average cost of debt
- Average loan life
- Multiple tranches of debt
- Multiple currency debt
- Mini-perm debt and refinancing
- CPI linked debt
- Balloon repayment
- What are interest rate swaps and how are they used in Project Finance
- How interest rate swaps are priced
- Modelling a mix of fixed and floating rate date
- Working capital facilities
Section 8 - Investor returns
- IRR & NPV
- Limitations of IRR
- IRRs with multiple sponsors
Section 9 - Reserve accounts
- What are Debt service reserve accounts?
- Modelling Debt service reserve accounts
- What are Maintenance reserve accounts?
- Modelling maintenance reserve accounts
- What are Working capital reserve accounts?
- Modelling Working capital reserve accounts
- What are Decommissioning cost reserve accounts?
- Modelling decommissioning cost reserve accounts
Section 10 - Extracting trapped cash
- Shareholder loan
- Early redemption of share capital
- Upstream loans
Section 11 - Tax considerations
- Corporate income tax
- Withholding tax
- VAT
- VAT facilities
Section 12 - Accounting treatments in PF transactions
- IFRS & IAS
Section 13 - Check and alerts
- Typical checks & alerts
Section 14 - Sector-specific case studies
- Renewables
- Calculating yields using excel probability functions
- Social infrastructure PPPs
- Water desalination
- Toll roads
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