Project Analysis: Tools & Techniques for Managing Risk & Uncertainty (Endorsed by ILM Under “professional Project Analyst”)
An alarming number of capital projects worldwide fail to realize the financial and strategic goals of the investing organization, causing financial losses, waste of resources and missed opportunities. This is often an inevitable consequence of failing to apply the tools and techniques of modern project analysis, overly optimistic budgeting, insufficient risk mitigation and ill-informed decisions.
The decision whether or not to invest a substantial amount in a new capital project is made with a lot of uncertainty. Project analysis tools and techniques help companies conduct a systematic and comprehensive evaluation of potential investment opportunities, assess their probability of success and drive the decisions to develop or abandon them. This involves development of sound, realistic, and carefully structured cash flow projections, thorough examination of the underlying assumptions and thoughtful consideration of potential future scenarios.
Competent application of project analysis tools helps estimate expected returns, evaluate risk exposure and select appropriate risk mitigation strategies. This should result in improved decision making and increased effectiveness of investments.
This seminar will highlight:
- The importance of thorough project definition and analysis
- The advantages, disadvantages and practical applications of various profitability models
- Core financial analysis principles and modern concepts of risk management
- Tools and techniques for making decisions under risk and uncertainty
- Application of decision trees, scenario and sensitivity analysis in risk mitigation and investment decisions
Event Management Specialist is a fully endorsed programme and upon completion of the seminar and assessment, successful applicants will also be awarded a Certificate from the ILM.
By the end of this seminar, you will be able to:
- Make or recommend investment decisions and compellingly present them to the stakeholders
- Appraise project risk, identify and manage risk mitigation strategies
- Apply robust cash-flow, scenario and sensitivity analysis techniques to evaluate potential future conditions and select effective investment strategies
- Define and manage project success factors and maximize the return on invested capital
- Critically evaluate investment decisions and financial risk mitigation strategies
Delegates will develop advanced cash flow analysis skills through formal and interactive learning methods. The programme includes individual exercises, team projects, practical case studies and group discussions that will immediately apply and bring to life the skills acquired throughout the programme.
The seminar does not assume prior knowledge of the topics covered in the programme. New concepts and tools are introduced gradually and carefully built on to enable delegates to progress to the advanced concepts.
Application of sound project appraisal and quantification techniques will enable the organization to forecast potential future conditions that might create strategic opportunities or jeopardize project success, thereby maximizing the organization’s return on capital invested in projects.
- enhance their understanding of the project cash flow analysis, as well as learn how to use the basic tools of engineering economics such as Net Present Value, Internal Rate of Return, Equivalent Annual Value and Expected Monetary Value calculations
- learn how to plan and structure cash flow projections for their projects – the single most important forecasting and control tool for project success
- discover how to evaluate and compare alternative mutually exclusive investment options, even when they occur over differing time horizons
- understand how to assess and address project risk and uncertainty
Detailed explanations of the tools and techniques to determine and continuously monitor project feasibility will enable participants to select and recommend projects with the best investment potential.
Day1 - Fundamentals of Decision Analysis
- What is project decision analysis?
- Selecting projects to meet organizational goals
- Defining projects, identifying key decision-making factors
- Risk and uncertainty in projects
- Fundamental tools of engineering economics
- Time value of money, compounding, discounting, annuity
- Appraisal methods (payback, Discounted Cash Flow, Net Present Value (NPV), Equivalent Annual Value (EAV)
- Financial analysis using Microsoft Excel
Day2 - Rate of Return and the Cost of Capital
- Rate of return computations (IRR)
- Advantages and disadvantages of profitability models
- Estimating the cost of capital for a project
- Benefit-Cost Ratio (BCR)
- Comparing mutually exclusive projects with equal lives; comparing projects with unequal lives
- Using NPV, IRR, BCR, EAV in project selection
- Comparing mutually exclusive projects using incremental benefit-cost ratios
Day3 - Cash-Flow Modelling and Project Decision Analysis
- Project decisions and total cost of ownership
- Financial modelling and project evaluation: Capital Expenditures (CAPEX), Operating Expenditures (OPEX), Working Capital requirements, Incremental costs and benefits, Terminal cash flows
- Preparing cash flow projections (cash flows vs accounting profits, inflation, opportunity costs, overheads and synergies, sunk costs, depreciation, taxation, interest, insurance, etc)
- Developing cash flow models and testing assumptions
- Business case content
Day4 - Decision Analysis: Expected Value Concept
- Overview of the risk management process
- Risk tolerance and risk prioritization
- Risk quantification and Expected Monetary Value (EMV) concepts
- Decisions under certainty, risk and uncertainty
- Basic Probability Concepts
- Probability applications: Program Evaluation Review Technique (PERT), Monte Carlo Analysis
- Assessing the probability of completing a project within the desired budget
Day5 - Decision Analysis: Decision Trees, Scenario, Sensitivity Analysis and Simulation
- Decision tree analysis
- Scenario analysis
- Sensitivity analysis and tornado diagram
- Integrated practical application
- Presenting decision analysis
- A Certificate of Completion from Oxford Management Centre will be issued to all participants who attend the programme from the beginning to the end.
- Upon completion of the optional assessment, successful participants will also receive a certificate from the ILM.
Who should attend
This programme is suitable to a wide range of professionals but will greatly benefit:
- program project professionals
- project leaders
- project engineers
- cost engineers
- project advisors
- and other project and business services professionals who are responsible for or involved in evaluating projects and managing cash flow on projects