Financial Budgeting and Monitoring for Projects

Introduction

This course places an emphasis on a variety of tools and techniques used for the purpose of preparing a financial budget for projects and monitoring variances over a period of time in the process. This course begins with defining the project and the various elements involved through the Work Breakdown Structure. It provides a walkthrough of the process in developing a project plan and a milestone plan which determines the project budget. The content expands further and delves into the complexities of formulating the project budget using the time and material system leading to the creation of a capital budget. Once the budget is determined, you will focus on a variety of methods that could be deployed in raising project financing including the basic concepts of aspects associated with Public-Private Partnerships. The course further undertakes a walkthrough of the process involved in carrying out a basic capital investment appraisal of the project and considers basic aspects of risk and sensitivities associated with the actual project results. Finally, the course concludes with an overview of monitoring the actual financial performance of the project with reference to the Stage of Completion Method and how variances are determined and reported to senior management in the process.

Objectives

• Review the basics of project management
• Understand the differences between project and operational management
• Gain insight into the evaluation of the feasibility of projects
• Understand different techniques used to support capital investment decisions
• Explore alternative means of accessing and tapping into project finance resources
• Understand key forms of Public-Private Partnerships in project finance initiatives
• Learn to manage and account for risks in projects
• Analyze project risk using appropriate techniques
• Gain insight into techniques for monitoring financial performance on projects
• Identify and evaluate deviations from the financial plan

Training Methodology

This is an interactive course. There will be open question and answer sessions, regular group exercises and activities, videos, case studies, and presentations on best practices. Participants will have the opportunity to share with the facilitator and other participants on what works well and not so well for them, as well as work on issues from their own organizations. The online course is conducted online using MS-Teams/ClickMeeting.

Who Should Attend?

• Financial Directors and Financial Managers
• Banks, Lenders, and Project Investors
• Government Officials involved in PPP initiatives
• Program Directors and Project Managers
• Program Sponsors

Course Outline

Introduction to a Project:

Learn the basics of project management and how this differs from the traditional management of day-to-day operations. This introduction will serve as a building block to enable a better understanding of the specific financial implications of managing projects in subsequent sessions.

• Defining and scaling a project
• Project management dimensions
• Starting and initiating a project
• Defining a project team and a project organization structure
• Planning and scheduling a project
• Developing project milestones and the Work Breakdown Structure
• Assessing project risk
• Managing change and version control
• Project closure

Budgeting a Project:

This session will provide you with the basic building blocks required for the purpose of developing a budget and forecast for a project.

• Identifying project options
• Developing capital budgets
• Forecasting demand
• Understanding alternative revenue models and pricing structures

Evaluating the Feasibility of a Project:

With an acquired understanding of preparing illustrative projected financial statements, you will subsequently learn how to apply these to make capital investment decisions using different techniques.

• Cash flow analysis
• Investment techniques – the Net Present Value (NPV)

• Internal rate of return
• Profitability index
• Payback period
• Accounting rate of return
• Ranking mutually exclusive projects
• Modified IRR
• Investment evaluation and capital rationing
• Incremental cash flow analysis
• Replacement decisions
• The problem of unequal lives
• Inflation and taxation issues

Accounting for Project Risk

Illustrative financial projections and project evaluations are based on a set of assumptions that may or may not materialize. This session will introduce you to the concept of project risk and how this may be factored into the overall feasibility studies carried out for the purpose of the project.

• Using the Expected Net Present Value Method
• Attitudes to project risk
• Alternative forms of risk
• Describing and measuring risk
• Adjusting the NPV formula for risk
• Risk analysis in practice

Financing a Project:

Once the feasibility of a project is readily ascertained, promoters of such a project will need to identify appropriate ways of financing it. This session explores alternative sources of project finance and discusses the relevant advantages and disadvantages of using such sources in the process.

• Structuring a project finance company
• The mechanics of non-recourse financing
• Public-Private Partnerships
• Angel Financing and Venture Capital
• Bank and loan financing
• Other methods of financing

Monitoring the Financial Performance of a Project:

This session focuses on introducing a range of techniques on how to monitor and evaluate variations from the planned financial performance of a project during its development stage.

• Tracking and monitoring costs of a project
• Completion and cost estimation techniques
• Developing variance analysis for projects
• Establishing tolerance levels and change controls