Project Finance
Banks and financing institutions (whether
or not involved with venture capital) need an independent assessment of
project's technical and economic feasibility, together with supervision
services during execution.
The Project Financing approach is being widely used for the development
of new investment projects.
At an early stage it is important to identify and select only those
projects that can demonstrate to have a low degree of risk and can
secure reimbursement of debt. Nevertheless, it is difficult and costly
to gather information and all the professional skills that are needed to
produce a reliable assessment for a "go-no-go" decision. All aspects of
the project have to be analyzed in detail: background, infrastructure,
location, Engineering and technology, O&M, organization and execution
plan, planning & budgeting, cash flow, IRR, DSCR, etc.). A quantitative
risk analysis is performed on the basis of the Monte Carlo methodology
supported by the Prima3 expert system. Short-cut selection parameters
are often identified, just like the probability that the IRR and final
debt fall below defined cut-off ceilings.
It is often necessary to define or review the contract frame that would
ensure the feasibility of the project. Proper securities have to be
incorporated properly in all the key contracts, like Sales & Purchase
agreements, EPC contracts, license agreements, etc. (see also Business
Information).
The use of an expert system like Prima3 (Project Investment Management)
enables to gather and analyze the available information and to quickly
support the "go-no-go" decision.
In case of need, BEN supplements data with its own information to
complete the analysis.
Once the project has been given a start, it is necessary to control the
activities and notify any deviation with respect to time, cost and
quality. Physical progress, cost and quality are to be monitored during
all the phases of project execution, including O&M. A key tool for the
analysis of cost and progress is the Prima3 expert system.
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