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: September 25th 2023

Glossary of Project Finance terms

Section 1 - Introduction

Introduction to 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
Cashflow waterfall
Sources and uses of cash
Model solving
Scenario and sensitivity analysis

Section 3 - Construction costs

Project costs
EPC and other construction costs
Development costs
Development & success fees
Construction delays
Liquidated damages

Section 4 - Operations

Operating revenues
Operating costs
Working capital
Inflation
Tariff indexation structures

Section 5 - Currencies

Multiple currency 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
How interest rate swaps are priced
Working capital facility

Section 8 - Investor returns

IRR & NPV
Limitations of IRR
IRRs with multiple sponsors

Section 9 - Reserve accounts

Debt service reserve accounts
Maintenance reserve account
Working capital reserve account
Decommissioning cost reserve

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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