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Yang Chu is a graduate of the School of Mechanical, Aerospace and Civil Engineering at the University of Manchester and a research consultant with Oriel Group Practice specialising in the areas of project finance and risk modelling. He is currently carrying out risk management research at Manchester Business School.
Faisal Al-Thani is Senior Development Manager, Middle East for Maersk Oil based in Doha and a board member of the Marsh International Risk Council.
List of illustrations | |
List of tables | |
About the Authors | |
Preface | |
Introduction | |
The development of project finance | |
Financial assessment | |
What is financial assessment? | |
Why perform a financial assessment? | |
Who is involved in the risk assessment process? | |
Where should a financial assessment be performed? | |
When should a financial assessment be performed? | |
What data are to be used? | |
How should assessment outputs be presented? | |
Purpose of this guide | |
Scope of the guide | |
Project finance | |
Introduction | |
Definition of project finance | |
The key characteristics of project finance | |
Special project/purpose vehicle | |
Contractual arrangement | |
Non-/limited recourse | |
Off-balance sheet transaction | |
Robust income stream of the project as the basis for financing | |
Legal and financial considerations in project finance | |
Legal | |
Financial | |
Financial instruments and cash flow modelling | |
Introduction | |
Debt finance | |
Senior debt | |
Mezzanine finance | |
Subordinate debt | |
Bond finance | |
Equity finance | |
Sources of debt and equity | |
Cash flow modelling and project financing | |
Risk management | |
Introduction | |
Risk | |
Risk management process | |
Risk identification | |
Risk analysis | |
Risk response | |
Typical risks in project financing | |
The financial assessment process | |
Introduction | |
The financial assessment structure | |
SPV assessment | |
Lenders' assessment | |
SPV and lender final assessment | |
Case study | |
Introduction | |
Independent power project | |
Supply and offtake contracts | |
Supply contracts | |
Offtake contracts | |
Applications of supply and offtake contracts | |
Assumptions for initial assessment | |
Developing the base case model | |
Introduction | |
SPV's initial assessment | |
Identify the estimated activities, time, costs and revenues of the project | |
Development of the base case model | |
Identify major project risks | |
Assessment of base case model incorporating risks | |
Initial economic assessment by lenders | |
Introduction | |
Financial package assessment | |
Finance package (1) | |
Finance package (2) | |
Finance package (3) | |
Conclusions | |
Financial engineering | |
Introduction | |
Financial instruments used in financial engineering | |
Forward rates | |
Financial futures | |
Swaps | |
Options | |
Caps, floors, collars, swaptions and compound options | |
Asset-backed securities | |
Refinancing | |
Reappraising public-private partnerships | |
Techniques applied in the reappraisal of PPP concession agreement | |
Other financial engineering techniques | |
Final assessment to determine project commercial viability | |
Introduction | |
Detailed risk assessment | |
Financial engineering | |
Tax holiday | |
Financial collar | |
Extending the concession | |
Increasing debt | |
Grace period | |
Phasing construction and operation | |
Upfront payments | |
Existing concession revenues | |
Summary | |
Financial close | |
Introduction | |
Due diligence | |
Technical | |
Legal due diligence | |
Trigger step in rights | |
Model audit and sensitivity analysis | |
Risk valuation | |
Term sheet | |
Inter-creditor agreement | |
Hedge strategy | |
Letters of credit | |
Reserve account | |
Escrow and ring-fenced facilities | |
Economic indicators | |
Taxation | |
Insurance | |
Financial close | |
Credit committee approval process | |
Due diligence report | |
Technical closure | |
Financial close | |
Technical commencement | |
Execute interest rate swaps | |
Islamic finance and project finance | |
Introduction | |
Islamic finance | |
Shariah | |
Qiyas and Litihad | |
Core principles of Islamic finance | |
Sharing (profit/loss and risk) | |
No unfair gain | |
No speculation | |
No uncertainty | |
No investments that are not in the public interest | |
No hoarding of money | |
Deception | |
Islamic financial institutions | |
Shariah supervisory boards | |
Project finance | |
The Ijara principle | |
Ijara Mawsufah Fi Al Dhimmah (forward lease) | |
Istisna'a | |
Sukuk | |
Sukuk al Istisna'a | |
A typical SAI deal | |
Hedging | |
Swaps | |
Other Islamic finance techniques for projects | |
Musharaka (equity financing) | |
Bai salam (forward financing) | |
Risks and liabilities | |
Summary | |
Conclusions and recommendations | |
Review | |
Conclusions | |
Recommendations | |
Appendix | |
Glossary | |
References | |
Index | |
Table of Contents provided by Publisher. All Rights Reserved. |
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