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Project Finance for Business Development

Book Description

Raise the skill and competency level of project finance organizations

Project Finance for Business Development helps readers understand how to develop a competitive advantage through project finance. Most importantly, it shows how different elements of project finance, such as opportunity screening and evaluation, project development, risk management, and due diligence come together to structure viable and financeable projects—which are crucial pieces missing from the current literature.

Eliminating misconceptions about what is really important for successful project financings, this book shows you how to develop, structure, and implement projects successfully by creating competitive advantage. By shedding light on project finance failures, it also helps you avoid failures of your own.

• Offers a roadmap for successful financing, participant roles and responsibilities, and assessing and testing project viability

•    Considers project finance from a broad business development and competitive advantage

•    Provides a strategic decision-forecasting perspective

•    Delves deeper than existing treatments of project finance into decisions needed to create and implement effective financing plans 

Helping readers develop, structure, and implement projects successfully by creating competitive advantage, this book is a useful tool for project sponsors and developers, helping them structure and implement projects by creating competitive advantage. 

Table of Contents

  1. Cover
  2. Title Page
  3. Preface
  4. Acknowledgments
  5. About the Author
  6. CHAPTER 1: Introduction
    1. 1.1 ORIGINS OF PROJECT FINANCE
    2. 1.2 PROJECT FINANCE ADVANTAGES AND DISADVANTAGES
    3. 1.3 CORPORATE AND STRUCTURED VERSUS PROJECT FINANCE
    4. 1.4 THE PROJECT FINANCE MARKET
    5. 1.5 WHY A BUSINESS DEVELOPMENT APPROACH TO PROJECT FINANCE?
    6. 1.6 STRUCTURE OF THE BOOK
    7. 1.7 USE OF THE BOOK TO MAXIMIZE BENEFIT
  7. CHAPTER 2: Overview of Project Finance
    1. 2.1 PROJECT TAXONOMY
    2. 2.2 PROJECT FINANCE PHASES
    3. 2.3 KEY ELEMENTS OF PROJECT FINANCE
    4. 2.4 OWNERSHIP AND FINANCING STRUCTURE CONSIDERATIONS
    5. 2.5 PRIMARY PROJECT FINANCE ACTIVITIES
    6. 2.6 COMMON MISCONCEPTIONS AND MYTHS
  8. CHAPTER 3: The Record of Project Finance
    1. 3.1 THE RECORD OF PROJECT FINANCE DEALS
    2. 3.2 REASONS FOR PROJECT FAILURES
    3. 3.3 LESSONS LEARNED
  9. CHAPTER 4: Project Financing Processes
    1. 4.1 VARIANTS OF PROJECT FINANCING PROCESSES
    2. 4.2 NATURE OF PROJECT FINANCING PROCESSES
    3. 4.3 ACTIVITIES IN PROJECT FINANCE PROCESSES
    4. 4.4 MILESTONES OF PROJECT FINANCE PROCESSES
    5. 4.5 SUCCESSFUL PROJECT FINANCE PROCESS CHARACTERISTICS
  10. CHAPTER 5: Project Finance Organizations
    1. 5.1 THE NEED FOR PFOs
    2. 5.2 BUSINESS DEFINITION OF PFOs
    3. 5.3 PFO SKILLS AND QUALIFICATIONS
    4. 5.4 PFO CHALLENGES
    5. 5.5 PFO PERFORMANCE EVALUATION MEASURES
    6. 5.6 CHARACTERISTICS OF SUCCESSFUL PFOs
  11. CHAPTER 6: Project Development
    1. 6.1 PROJECT DEVELOPMENT PREREQUISITES
    2. 6.2 PREFEASIBILITY ASSESSMENT
    3. 6.3 PROJECT DEFINITION
    4. 6.4 TECHNICAL DESIGN AND ASSESSMENT
    5. 6.5 FEASIBILITY STUDY
    6. 6.6 DUE DILIGENCE
    7. 6.7 PROJECT AND FINANCIAL STRUCTURES
    8. 6.8 AGREEMENTS AND NEGOTIATIONS
    9. 6.9 PROJECT MARKETING AND RAISING FINANCING
    10. 6.10 DEVELOPMENT COSTS AND SUCCESS FACTORS
  12. CHAPTER 7: Participants and Responsibilities
    1. 7.1 ROLES OF THE PROJECT TEAM
    2. 7.2 ROLES OF THE HOST GOVERNMENT
    3. 7.3 ROLES OF PROJECT SPONSORS
    4. 7.4 ROLES OF THE PROJECT COMPANY
    5. 7.5 ROLES OF THE LENDERS
    6. 7.6 ROLES OF ADVISORS, CONSULTANTS, AND INSURERS
    7. 7.7 ROLES OF MULTILATERAL AND UNILATERAL INSTITUTIONS
    8. 7.8 ROLES OF THE EPC CONTRACTOR
    9. 7.9 ROLES OF TECHNOLOGY AND EQUIPMENT PROVIDERS
    10. 7.10 ROLES OF PROJECT OFFTAKERS AND SUPPLIERS
    11. 7.11 ROLES OF THE O&M COMPANY
  13. CHAPTER 8: Project Finance Forecasting
    1. 8.1 WHAT IS A GOOD FORECAST?
    2. 8.2 WHAT TO FORECAST AND SOURCES OF FORECASTS
    3. 8.3 FORECAST ASSUMPTIONS
    4. 8.4 PROJECT FORECASTING PROCESS
    5. 8.5 PROJECT DEMAND ANALYSIS
    6. 8.6 FORECASTING METHODS AND TECHNIQUES
    7. 8.7 FORECAST SANITY CHECKS
    8. 8.8 CAUSES AND CONSEQUENCES OF FORECAST FAILURES
    9. 8.9 FORECAST MONITORING AND REALIZATION PLANNING
  14. CHAPTER 9: Project Contracts and Agreements
    1. 9.1 STRUCTURE, PREREQUISITES, AND COSTS OF CONTRACTS
    2. 9.2 CONTRACT DEVELOPMENT AND NEGOTIATION PROCESS
    3. 9.3 COMMON PROJECT FINANCE CONTRACTS
    4. 9.4 CHALLENGES OF PROJECT FINANCE CONTRACTS
    5. 9.5 PROJECT CONTRACT SUCCESS FACTORS
  15. CHAPTER 10: Project Risk Management
    1. 10.1 OBJECTIVES AND IMPORTANCE OF RISK MANAGEMENT
    2. 10.2 TYPES OF PROJECT RISKS
    3. 10.3 SOURCES OF PROJECT RISKS
    4. 10.4 RISK MANAGEMENT UNDERTAKINGS
    5. 10.5 RISK MANAGEMENT PROCESS
    6. 10.6 RISK MANAGEMENT INSTRUMENTS AND MITIGANTS
    7. 10.7 RISK MANAGEMENT BENEFITS, CHALLENGES AND SUCCESS FACTORS
  16. CHAPTER 11: Project Due Diligence
    1. 11.1 DUE DILIGENCE COSTS AND BENEFITS
    2. 11.2 HOST COUNTRY AND INDUSTRY DUE DILIGENCE
    3. 11.3 TECHNICAL DUE DILIGENCE
    4. 11.4 ENVIRONMENTAL DUE DILIGENCE
    5. 11.5 COMMERCIAL DUE DILIGENCE
    6. 11.6 LEGAL DUE DILIGENCE
    7. 11.7 FINANCIAL DUE DILIGENCE
    8. 11.8 OPERATIONAL DUE DILIGENCE
    9. 11.9 RISK MANAGEMENT DUE DILIGENCE
    10. 11.10 GENERAL AREAS OF DUE DILIGENCE
    11. 11.11 REPORT, ASSESSMENT, AND QUALITY CHARACTERISTICS
  17. CHAPTER 12: Funding Sources and Programs
    1. 12.1 OFFICIAL PROJECT FINANCE SOURCES
    2. 12.2 PRIVATE SOURCES AND INSTRUMENTS
    3. 12.3 BENEFITS OF OFFICIAL FUNDING SOURCE PARTICIPATION
  18. CHAPTER 13: Structuring Project Finance
    1. 13.1 ELEMENTS OF PROJECT FINANCING STRUCTURING
    2. 13.2 EQUITY AND DEBT INVESTOR REQUIREMENTS
    3. 13.3 DECISIONS FROM SPC OWNERSHIP TO FINANCING STRUCTURE
    4. 13.4 DETERMINANTS OF PROJECT FINANCING
    5. 13.5 AMALGAMATION OF FINANCING
  19. CHAPTER 14: Project Financial Model
    1. 14.1 USES OF THE FINANCIAL MODEL
    2. 14.2 FINANCIAL MODEL INPUTS
    3. 14.3 FINANCIAL MODEL CALCULATIONS AND OUTPUTS
    4. 14.4 PROPERTIES OF GOOD PROJECT FINANCIAL MODELS
  20. CHAPTER 15: Trends Impacting Project Finance
    1. 15.1 MAJOR RELEVANT MEGATRENDS
    2. 15.2 MEGATREND SOURCES AND CHARACTERISTICS
    3. 15.3 DEMOGRAPHIC TRENDS
    4. 15.4 TECHNOLOGY AND INDUSTRY TRENDS
    5. 15.5 TRENDS IMPACTING THE GOVERNMENT SECTOR
    6. 15.6 TRENDS IMPACTING SPONSORS AND INVESTORS
    7. 15.7 TRENDS IMPACTING FUNDING SOURCES AND FINANCING
    8. 15.8 ANALYSIS OF TRENDS AND THEIR IMPACT
  21. CHAPTER 16: Project Finance
    1. 16.1 SOURCES OF COMPETITIVE ADVANTAGE
    2. 16.2 MANIFESTATIONS OF COMPETITIVE ADVANTAGE
    3. 16.3 CREATING COMPETITIVE ADVANTAGE
    4. 16.4 COMPETITIVE ADVANTAGE REALITY CHECK
  22. APPENDIX A: Common Project Finance Abbreviations
  23. APPENDIX B: Commonly Used Project Finance Definitions
  24. Bibliography
  25. Index
  26. End User License Agreement