I. Introduction
India is a developing country and transportation forms the backbone of the Indian economy. Rail transport is the most used system for long range and large quantity commodity transport. However, it has some limitations. Most of the times, the large-scale projects like road development were taken up by the Government solely, however, this increased the financial as well as labour stress on the Government bodies. Therefore, an alternative arrangement in the form of Private Participation Projects (Public Private Participation) under the headings like Build – Operate – Transfer (BOT) can be applicable.
In the process of the financing planning, there are many assessment methods such as NPV (net present value), BCA (benefit cost
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The types of risks are several at the different at each stage of the project and hence need to be mitigated appropriately.
1.1.1) Project Start - up phase
During this phase, equipment is tested, raw material inputs are ordered, project staffing is completed, and marketing starts. Loan exposure may rise slightly during this phase due to working capital requirements and final payments to contractors and equipment suppliers. Only then can proper risk assessment be done.
1.1.2) Engineering & Construction Phase
The Project Company draws down the majority of the loan to finance construction activity, equipment purchase, and other pre operating costs. This phase can last several years, depending on the size of the
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These projects are usually funded with a considerable reliance on external debt, although in most cases liberal grants from the project owners serve to keep leverage moderate Levels. The financing structure is also reviewed for the exposure to interest rate and refinancing risks, given the limited appetite of the Indian capital markets for fixed interest rate long duration (in excess of 10 years) project finance debt. Floating interest rate structure could potentially affect debt servicing, particularly during periods of rising interest
This project will most likely involve debt financing. This means that interest expense would occur and should be taken into account in the analysis of the project. Interest expense is a cash expense and is automatically included when the net cash flows are
592 Week 1 DQ 1 WBS Construction PROJ 592 Week 1 DQ 2 Project Cost Estimates and Assumptions PROJ 592 Week 2 DQ 1 Cost Components PROJ 592 Week 2 DQ 2 Estimating Processes PROJ 592 Week 3 DQ 1 Project Schedules PROJ 592 Week 3 DQ 2 Sensitivity Analysis PROJ 592 Week 4 DQ 1 Resource Allocation and Leveling PROJ 592 Week 4 DQ 2 Advanced Schedule Techniques PROJ 592 Week 5 DQ 1 Earned Value Calculation PROJ 592 Week 5 DQ 2 Project Monitoring and Control & EV PROJ 592 Week 6 DQ 1 Forecasting Project Completion Cost PROJ 592 Week 6 DQ 2 Project Control PROJ 592
Working to understand the risks a project may endure along with the cost associated is critical in every project management plan. Understanding potential risks based on the project type, resources needed, timeline and budget still leaves gaps that creates uncertainty for actually predicating the outcome of the project. There is not a true way to predict when and where a project risk will occur but designing a plan to properly address and manage those risks will increase confidence while eliminating the element of surprise.
Risk or threat is common and found in various fields of daily life and business. This concept of risk is found in various stages of development and execution of a project. Risks in a project can mean there is a chance that the project will result in total failure, increase of project costs, and an extension in project duration which means a great deal of setbacks for the company. The process of risk management is composed of identifying, assessing, mitigating, and managing the risks of the project. It
Project finance is a kind of Financing that has a priority does not depend on the creditworthiness of the sponsors proposing the business idea to launch the project. Approval does not even depend on the value of assets sponsors are willing to make available as collateral. Instead, it is basically a function of the project’s ability to repay the debt contracted and remunerate capital invested at a rate consistent with the degree of
The Term Loan represents 85% of the capital structure. A Project backed by a long term EPA with a strong investment grade off-taker somewhat mitigate the risk.
risks and determine the likelihood and consequence of that risk occurring during the project. The
In order to perform project risk management effectively, the organization or the department must know the meaning of the risk clearly. With regards to a project, the management must focus on the potential effects on the objectives of the project, for example, cost and time (Loosemore, Raftery and Reilly, 2006). Risk is a vulnerability that really matters; it can influence the objectives of the project
Project Finance – Cost would be 150bps upfront fee + floating interest 137.5 to 162.5bps spread over LIBOR + 75bps for floating to fixed rate swap contract.
A public private partnership (PPP) is a concurrence between the government and private sector for the motive of provisioning of public services or infrastructure. With a general apparition in place, the public and private sector bring to the table their own experiences and strengths ensuing in achievement of mutual objectives. The Government of India (GoI) has been focusing on the expansion of enabling tools and activities to persuade private sector investments in the country through the PPP format. Private funds amounting to US$150 billion is unsurprising to bridge the infrastructure gap of US$500 billion over the period 2007-20121. As a part of meeting this financing gap, the PPP model is slowly more
• Develop a detailed NPV model in excel showing Cash Inflows, Cash Outflows and NPV
Project finance transactions are typically either (i) limited recourse, where lenders do not assume the entire financial risk of the project and instead rely on mechanisms such as completion guarantees or parent guarantees, or (ii) non-recourse, where the revenues generated from the project and the project’s assets repay the indebtedness owed to the lenders. In addition to providing funds to complete new projects, the scope of project finance also allows project companies to expand existing projects or refinance existing indebtedness on existing projects at more favorable terms.
This project evaluates the discounted Net Present Value which shows the estimated cash flow. The cash flow forecast is for 10 year which incorporates International complexities as well as the cost of capital.
In the last decade, PE has emerged as a significant source of capital for funding infrastructure projects. Traditionally, equity for infrastructure projects was typically contributed by the sponsors and developers of the project. A major portion of the project investment was often obtained through debt financing, which accounted for about 6o%-7o% of the total investment required. Non-sponsor investment has been largely in the form of debt, except in the case of public equity offerings. The rise of PE investment has led to the availability of a new pool of capital for infrastructure projects, where the need for capital is substantial. Unlike other external sources of funding, PE investors are active investors. They usually provide
Project finance is best understood in terms of a risk allocation which reconciles the potentially conflicting objectives of borrowers and lenders by utilizing the long-term economic and commercial linkages between the sponsors, lenders and third party participants involved with a project. (Howcroft &Fadhley, 1998).