What Are The Advantages And Disadvantages Of A Ppp Project

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.

risks and determine the likelihood and consequence of that risk occurring during the project. The

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

It is used as a means of input to the risk management plan processes (Heldman, 2005). It usually helps the project managers and the project team to recognize the components of a project that are at risk or certain risks that are unique to a specific area of the project than compared to a risk that is commonly found throughout the project. There also various qualitative analysis that can be used to in identifying and analyzing risk in a project. The method of qualitative risk analysis involves the assignment of a numeric value to the scales. This risk analysis is normally used for projects that are larger and that risks have a greater and more significant impact (Heldman, 2005). There are various software tools and methods that can be used, an example would be the use of Monte Carlo analysis for calculating values for projects that are large and difficult. There are various values that are assigned to the magnitude or intensity of the risk, for example, High-.80, Medimum-.50, Low-.10; these are used to rate and prioritize the risks (Heldman, 2005). A risk registry is also an essential documentation that can be used analyze the quantitative aspect related to risk and threats that are found throughout the project. The Risk Breakdown Structure is created to identify the various risks categories in the project so that they can be in the prioritized response plan (Heldman,

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.

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

| 50% of the loan amount needs to be repaid once the construction had been completed.

Finance- when a PPP includes building or rehabilitating the asset, the private party is typically also required to finance all or part of the necessary 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

The structure of a project’s financing depends on the industry the transaction is taking place, the underlying business model and in particular the allocation of risks and responsibilities between the individual partners (Weber & Alfen, 2010).

There are a diverse range of definitions given for the term project finance, but in essence the underlying theme that runs through them all is that it involves the creation of a legally autonomous project financed with equity from one or more sponsoring firms and non-recourse debt for the purpose of investing in a capital asset (Esty, 2006: 213). In simpler terms, according to R. J. Herring (2006), project finance can be defined as a form of financing structure that is specialised in order to offer a few cost advantages when there is a large amount of capital being invested. Project finance involves the use of funds that are raised for a specific self-contained venture such as construction or a developmental project (Qfinance, 2009: 1). It is a useful and innovative financing technique that has helped with the timely financing of many important and high-profile corporate projects such as EuroTunnel, EuroDisneyland, Enron’s Dabhol Power Plant, Iridium, Globalstar, Global Crossing – the Atlantic Crossing and Pacific Crossing cables, Canary Wharf and so forth (Esty, 2006: 214). This type of financing can help with the facilitation and start of projects anywhere in the world, but is especially good for projects that are undertaken in developing countries in which great difficulty arises when trying to secure financial resources for a new project (Henrique and Sabal, 2006: 5). Project finance uses a well engineered finance mix in order to

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.

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

Phase I of the project, costing Rs. 1818 crore has been funded with a debt of Rs. 1157 crore from banks at 11.5 per cent rate of interest, which is lower than usual charge of 12 per cent. The rest of the money has come from equity (Rs. 65 crore) and internal accrual (Rs. 596 crore). Land development

• Develop a detailed NPV model in excel showing Cash Inflows, Cash Outflows and NPV