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Financing Capital Projects Program at Rice - Jan 2002
| Project Finance |
Financing Capital Projects Program at Rice
Private website for program participants - Jones Graduate School of Management, Rice University
Established by Paul Allen, Adjunct Professor in the Practice of Management
January 2002
Converting to 5-evening program in June 2003 - July 2003. THIS is the former material in a 4-day program
3 evenings on the material, 1 evening on Homework Review of Risk Mitigation & Offering Memorandum, 1 evening
on project turnaround management within the financing arena. Please expect this program renovation to be
complete by January 2003.
Rice University Course Listing
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This program introduces the basic and advanced skills necessary to understand and professionally manage the
financing of projects over the project life cycle. Participants will gain a comprehensive appreciation and
understanding of the financing of projects from concept to completion, whether using venture, conventional or
innovative financing approaches for a variety of projects whether capitalized industrial type project or software
development and internet (.com) type companies.
What it is - It is a course in "how to" for those with project management experience and a desire to learn the project
development skill of "financing" projects. It focuses on the advanced skills necessary to successfully finance projects
by understanding the various options, project risks, allocation and mitigation of those risks, and deal structures
facilitating the financing, by emphasizing the "project finance" discipline.
What it isn't - It is NOT an introductory course to starting businesses, project management nor project controls in
projects. While the "financial management of projects" section suggest project controls - the controls introduced in
this program are specifically targeted to the financing utilized. The "introduction to projects" and "project controls"
skills are made available in the Advanced Project Management program.
to include financing "internet" and "software development" projects.
This will expand the overall content below with inclusion of these particular interest items.
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PROGRAM CONTENT
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DAY ONE - 8:30AM - 4:30PM
Introduction to Financing Projects (15m)
USING "VENTURE FINANCE" for FINANCING PROJECTS (45m)
Venture project financing is a financing technique that is commonly used for new ventures, such as internet (dot
com) companies and software development projects.
USING "PROJECT FINANCE" for FINANCING PROJECTS (1h 15m)
Project financing is an innovative and timely financing technique, emerging as the preferred alternative to
conventional methods of financing capital projects worldwide.
Break - 15m from 10:45 to 11:00
FINANCIAL RISK ALLOCATION and MITIGATION in PROJECTS (45m)
Risks can be distributed among project participants (sponsors, lenders, third-party contractors, state-owned
enterprises, and/or the end user) on the basis of who is best positioned to manage them (risks) efficiently.
LUNCH at the Faculty Club and tour of facilities (1h 15m from 11:45 to 1:00)
FINANCIAL RISK ALLOCATION and MITIGATION in PROJECTS (continued 1h 00m)
Break - 15m from 2:00 to 2:15
USING "CONVENTIONAL FINANCE" for FINANCING PROJECTS (1h 00m)
Conventional financing of projects for companies utilizing their organic financial resources and credit worthiness will
be covered, including development of the project's financial plan, accounting methodologies, measurement and
control procedures.
Break - 15m from 3:15 to 3:30
APPLYING FINANCIAL MANAGEMENT BASED ON THE FINANCING USED (1h 00m)
Rationale, environment and criteria for success in financial management of projects, including project evaluation,
viability analysis, modeling, control systems, and use of financial, legal and third-party advisors for the initial (seed)
funding, project funding and re-financing alternatives.
Day One class over at 4:30PM
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DAY TWO - 8:30AM - 4:30PM
APPLICATIONS of FINANCIAL INSTRUMENTS in FINANCING PROJECTS (1h 30m)
Instruments available in financing, including: specialized venture capital firms, captive finance companies, term
loans, private placements, industrial revenue bonds, export credits, commercial paper, backup credit facilities, and
construction financing. Additional "take out" or "exit ramps" for equity investors using IPOs, etc. will be discussed for
all types of projects.
Break - 15m from 10:00 to 10:15
SPECIAL ISSUES in FINANCING PROJECTS (1h 30m)
Contracts, agreements, credit enhancements, zero-balance budgets, post-closing activities, project company
governance, legal concerns, intellectual property and licensing, and host country requirements. Other issues
particular to financing the hypertrack project life-cycle projects and investments in such will be addressed.
LUNCH - a "working" lunch in class to discuss the material covered and its application (45m) from 11:45 to 12:30
PREPARING the FINANCING PLAN and the OFFERING MEMORANDUM (1h 15m)
Includes debt commitment letters, project collateral, use and application of risk minimization and control tools
(including insurance, hedges, guarantees) and planning/preparing for the 'extensive documentation' required to be
successful in 'project finance' financial closing.
Break and Project Finance Example (used in class) Discussion (30 m) prior to starting case studies)
CASE STUDIES in EVALUATING FINANCING PROJECTS (2h 00m)
Evaluation of material covered through case studies review in financing projects for better understanding. The goal is
to understand the critical points of capital project financings, including software development and internet project
financings. Critical points in other subjects may be added if participant(s) identify a specific need not addressed in
the current material.
Course evaluation and improvement session and closure. (15m)
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DAY THREE (The "Financing Projects Workshop") - 8:30AM - 4:30PM
WHERE YOU ACTUALLY PUT IT ALL TOGETHER (after having two weeks between DAY TWO to
DAY THREE to structure your project financing deal: executive summary, business plan, pro forma financial
plan, risk mitigation plan, documentation review, etc.
(3h 00m then LUNCH from 11:30 to 12:15 then 4h 00m.
Workshop evaluation and improvement session and closure - 15m)
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DAY FOUR (The "Project Turnaround Management Workshop") - 8:30AM - 4:30PM
WHERE YOU ACTUALLY PUT IT ALL "BACK" TOGETHER - after having completed "Financing Projects" and
understanding clearly how to get to and through financial closing, you are now faced with the challenge of rescuing
the project during the execution phase - where you have to "parachute in", assess the situation, and put it back on
track.
Now, time is of the essence! You must stop the hemmoraging, assess critical activities, decide on actions, and
implement them rapidly to bring the project "back on track" through the "recovery" (or "salvage," if you are too late)
phase. You will learn what and how to do this successfully through the application of project turnaround techniques
and leadership. The focus IS NOT on "salvage," but on saving the project! This is not a course on exculpating and
explaining failure. It is for project developers, project management executives, and project finance executives who
may be thrust into a crisis situation with a mission to turn things around, make tough decisions under fire, address
problems when they occur and prevent them from happening again.
The course does not deal in the aftermath of a crisis. It is not presented for spin doctors, arbitrators, media
handlers, public relations specialists, bankruptcy liquidators, surety underwriters, expert witnesses or any other type
of "claim / blame" experts. It is not designed to help you keep your head in the sand, sweep your dirt under the rug,
cover your behind, pass the buck, and pin the blame on someone else.
This "wrapper" helps you understand how to turnaround projects in trouble successfully through proven techniques
and a systematic approach - by giving you the skills you need to "do it right." Put projects back on track and keep
them on track by preventing them from falling off the tracks. And this is one of the best ways to prevent failures i.e.,
by knowing what must be done (and how) if a project starts to go wrong.
LEADERSHIP ISSUES & TECHNIQUES in PROJECT TURNAROUNDS (1h 30m)
Break - 15m from 10:00 to 10:15
PROJECT TURNAROUND MANAGEMENT TECHNIQUES (1h 30m)
LUNCH - a "working" lunch in class to discuss the material covered and its application (45m) from 11:45 to 12:30
CASE STUDIES for "EVALUATING" TURNAROUNDS of PROJECTS (1h 15m)
Evaluation of material covered through case studies review in project turnarounds for better understanding. The goal
is to understand the critical points of turnaround management and leadership in project recovery. Critical points in
related disciplines and other subjects may be added if participant(s) identify a specific need not addressed in the
current material.
Break - 15m from 1:45 to 2:00
MOCK TURNAROUND SITUATIONS - APPLYING PROJECT TURNAROUND MANAGEMENT TECHNIQUES (2h 00m)
Application of the techniques and approaches to several project scenarios where things have "gone wrong." This
tests how well the participants have learned the techniques and grasped the discipline. The goal here is to reinforce
the participants' confidence in their ability to save a project by having the right skills, and knowing where and when
to apply them.
Course and Workshop evaluation and improvement session and closure (15m)
Financing Projects Program closure (15m)
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PROGRAM BENEFITS
Participants enhance their abilities to assess, develop, plan, fund, control, monitor, and manage financially, while
maintaining a strategic business mindset and focus during the capital project life-cycle.
The rationale for alternative methods of financing projects to control project risk
How the financing of a project affects its financial management
How to maintain budgetary control of the project during its life cycle
How to deal with special issues arising from legal concerns and host country requirements
WHO SHOULD ATTEND
Project Executives, experienced Project Managers, and Project Finance executives and managers involved in
development, execution, financing, and/or financial management of capital projects (capital project investment
decision-makers and stakeholders).
PROGRAM LENGTH
4 days: 2 consecutive days, 8:30 A.M. - 4:30 P.M. followed by 2 consecutive days two weeks later.
Friday and Saturday, December 1, 2, 15, and 16, 2000
"This course is designed for experienced management professionals who wish to further enhance capital project
financial development, assessment and management skills." - Paul Allen, Instructor
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Paul Allen, Instructor Feb 2000
The ROAD Group, L.L.C. and CSSC, Inc. - Sugar Land, TX
Chairman and Managing Director of The ROAD Group LLC, an automated facilities project development organization,
responsible for global business and project development, project oversight, and strategic alliances in this market
sector. Activities include development and execution of mechanized automated marine terminal projects and
integrated automation systems for the distribution, logistics, and transportation industries. Works closely with various
automation systems providers (mechanized, physical, logical and people), enterprise integration, licensing and
management of automation projects. Participates in appropriate project development opportunities in role as
advisor, partner, lead project developer and/or equity player with responsibility as appropriate.
Director of Project Management of CSSC, Inc. with responsibility for global project management training and
certification processes, business development in existing industry and growing industry sectors in the Southwest, and
general management of the Texas office. Activities include liason and coordination in supporting major automation
systems projects for software development and quality assurance excellence for automation systems and capital
projects utilizing automation for major companies.
Paul was formerly employed by Fluor Daniel, Inc. the global engineering, construction and diversified services
company of Fluor Corporation, publically traded on the New York Stock Exchange under FLR.
He was a Project Director II in Project Operations; Group Director of the Ports, Harbors, and Terminals Group with
global responsibilities: business development, project oversight, strategic planning, alliances, project risk analysis,
and mergers & acquisitions in this market sector; and Project Director for enterprise systems working with the
Enterprise Integration & Communications Systems Group with experience and focus on logistics, logical systems,
and business process reengineering & design.
Project Experience
Types of Projects Experience - Advanced Technologies, Mechanized Automation, Automated Systems, Business
Enterprise Automation, Bulk Handling & Storage, Coal, Dynamic Simulation, Education, Gas, Government, Grain
Processing, Hazardous Chemicals, Hazardous Materials, Infrastructure, Marine - Offshore, Module Yard, Packaging,
Petroleum, Petrochemicals, Port Facilities, Solids Handling & Storage, Liquids Handling & Storage, Transportation,
Marine Transportation, Warehouse-Distribution, Logistics.
Memberships
He is a founding member and VP of Administration of the Risk Management SIG of the Project Management Institute,
a member of the Project Management Institute, a member of the American Project Management Forum's ISO 10006
(Project Management) Standards Committee, a member of the American Production and Inventory Control Society
(APICS), and a member of the APICS Complex Industries SIG.
He is a member of the Society of Naval Architects and Marine Engineers and has belonged to other professional
groups such as the International Cargo Handling Coordination Association (ICHCA - USA) and the Marine Technology
Society.
Recent Awards
In 1995, Paul was the recipient of a Global Project Development and Finance Award from Project Finance Monthly for
"The Most Innovative Project Financing of an Infrastructure Project." He is the recipient of the Outstanding Civil
Engineering Achievement Award for 1996 from the Houston Branch of the American Society of Civil Engineers
(ASCE), and the 1996 Award of Merit from the Texas Section ASCE. In 1994, he received the Outstanding
Professional Achievement Award from the U.S. Merchant Marine Academy Alumni Assn for his work in marine
terminal automation.
Faculty Experience
Paul is an Adjunct Professor of Management in the MBA Program at the Jesse H. Jones Graduate School of
Management at Rice University where he teaches MGMT 676 - Project Management / Project Finance. He has taught
senior professional courses at the United States Merchant Marine Academy as an Assistant Professor and at Texas
A&M University at Galveston as an Adjunct Professor. He has an MBA in General Management from Rice University
and pursued external PhD research in Change Management at the University of Wales, Cardiff. He teaches Project
Development discipline courses and programs in Rice Univesity's Executive Education Department: Advanced Project
Management; Financing Projects and the Project "Turnaround Management" Workshop; and Making Deals: the Art of
the Deal in Project Development. Completion of these courses leads to the "Certificate in Mastering Project
Development."
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Specific Industry-focused Project Finance material available
Any executive in this program who wishes "specific industry-focused project finance material, recommendations, or
training" can make arrangements with the instructor.
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Professional Bookstore for Financial Management of Projects
Advanced Engineering Economics
Chan S. Park, Gunter P. Sharp-Bette, ISBN: 0471799890, $92.95
BASIC CONCEPTS AND TECHNIQUES IN ECONOMIC ANALYSISAccounting Income and Cash FlowInterest and
EquivalenceTransform Techniques in Cash Flow ModelingDepreciation and Corporate TaxationSelecting a Minimum
Attractive Rate of ReturnDETERMINISTIC ANALYSISMeasures of Investment Worth--Single ProjectDecision Rules for
Selecting Among Multiple AlternativesDeterministic Capital Budgeting ModelsSTOCHASTIC ANALYSISUtility
TheoryMeasures of Investment Worth Under Risk--Single ProjectMethods for Comparing Risky ProjectsRisk
SimulationDecision Tree AnalysisSPECIAL TOPICS IN ENGINEERING ECONOMIC ANALYSISEvaluation of Public
InvestmentsEconomic Analysis in Public UtilitiesProcedures for Replacement AnalysisAppendicesIndex
"A reference guide to valuing projects and decisions regarding project prioritization." - Paul
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Project Finance
The Law and Business of International Project Finance (A Resource for Governments, Sponsors, Lenders, Lawyers,
and Project Participants)
Scott L. Hoffman (ISBN 90-4110-621-9).
Drawing on the author's 15-plus years of experience in all types of project finance, The Law and Business of Project
Finance is the first comprehensive, multi-discipline book to address project finance risks and their resolution, and to
detail each of the elements necessary for a successful project financing. Mirroring the structure of an actual project
finance deal, this all-in-one handbook examines each step of the process, from the rational of project finance,
through risk allocation and mitigation, to dispute resolution. Topics discussed include: financing sources,
environmental issues, bilateral and multilateral support, contract aspects and typical contract terms (with sample
drafting provisions), project contracts as credit support, project finance loan documents, collateral documents, and
permits. It includes an invaluable, comprehensive checklist of considerations when structuring, negotiating and
documenting a project financing. All participants in a project financing--including lenders, developers, investors, host
governments, governmental agencies, multilateral and bilateral agencies, off-take purchasers, input suppliers,
contractors, and operators--can turn to this 700+ page book as an accessible and reliable research database.
Project Finance (introductory treatment of Project Finance basics)
Clifford Chance ISBN: 1 873446 45 4 117 pages; £89/US$138; 1991; Reprinted: 1995
This book provides a detailed account of structures, organisation and documentation used in transactions. The
financial, political and environmental risks inherent in transactions are also examined. A detailed appendix defining
project finance terminology is included.
International Project Finance - A Legal and Financial Guide to Bankable Proposals
Joseph Tanegaand Pawan Sharma
Definition of project finance. Description of project finance markets. Project finance risks. Investment appraisal.
Optimum financing plan. Managing project financial risk. Project finance legal structures (major types). Project
finance documentation. Bankable business plan form. Legal commentary to business plan form. Case studies.
Introductory Book to the Project Finance Discipline (used in MGMT 676)
Project Financing: Asset-Based Financial Engineering
John Finnerty ISBN: 0471146315 : List: $79.95, Price via this site: $55.96, You Save: $23.99 (30%)
Project financing is an innovative and timely financing technique that has been used on many high-profile corporate
projects, including Euro Disneyland and the Eurotunnel. Employing a carefully engineered financing mix, it has long
been used to fund large-scale natural resource projects, from pipelines and refineries to electric-generating facilities
and hydro-electric projects. Increasingly, project financing is emerging as the preferred alternative to conventional
methods of financing infrastructure and other large-scale projects worldwide. With actual examples and case studies,
Project Financing takes you through the process step by step. It covers the rationale for project financing, how to
prepare the financial plan, assess the risks, design the financing mix, and raise the funds. Along with cogent
analyses of why some project financing plans have succeeded while others have failed, you'll find detailed
information on designing contractual arrangements to support project financing; issues for the host government /
legislative provisions, public/private infrastructure partnerships, public/private financing structures; credit
requirements of lenders, and how to determine the project's borrowing capacity; how to prepare cash flow
projections and use them to measure expected rates of return; tax and accounting considerations; and detailed case
studies - including Euro Disneyland and the Eurotunnel Project - that illustrate how to apply the analytical techniques
described in the book.
Reviewer's Comments and an Advisory on this book:
"Project finance is based in risk allocation and mitigation, typically memorialized in the project contracts. Yet, the
author dedicates almost no analysis to these contracts." - Inst. of International Project Finance.
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Pleasure Reading for Insight and Understanding
Against the Gods : The Remarkable Story of Risk
Peter L. Bernstein
From Booklist , 09/15/96:
Bernstein's lively history chronicles a profound transformation in attitudes about the future. How one's fate changed
from depending less on capricious outcomes and more on predictable ones forms the backbone of the narrative. His
central characters are mathematicians who began pondering the statistics of gambling, or gamblers pondering the
risks of gambling: about one sixteenth-century polymath, Girolamo Cardano, Bernstein writes that his "credentials
as a gambling addict alone would justify his appearance in the history of risk," and that comment is typical of
Bernstein's engaging presentation. Amid his recounting of the insights into probability from Pascal to Keynes, he
touches on an array of modern fields in which risk analysis is crucial--insurance, commodities futures, stock
markets, and that old standard, gambling. This cornucopia of biographical sketches, mathematical examples, and
reflections on the nature of human expectations about the future faces little risk of idling in libraries; patrons of the
business section might be keenest to read it.
Copyright© 1996, American Library Association. All rights reserved
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| Disclaimer: This is Paul Allen's personal business library. Articles and papers contained therein are for his use and reference. While this information is being made public by being published on the internet, any use of any material or guidance contained herein is at one's own risk. Neither the author Paul Allen nor Project Executive Group have any responsibility if anything is taken from this website and utilized. While we believe these articles and papers make a significant contribution to learning, beware that anyone who uses this information does so at their own risk. We make no representations to accuracy or completeness. |
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