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About the course
Large capital-intensive projects in all major industries require substantial - and mostly risky - investments in the acquisition, exploration, and subsequent operation and maintenance of new organizational assets.
The decision whether or not to invest in new capital projects, starts with critical decisions during the exploration phase of a new development, or the expansion of an existing field. The decision-making tools used to analyze project risk under conditions of uncertainty will help companies to determine the probability of success or loss, and will drive the decision to develop or abandon the well.
Of paramount importance therefore, is the systematic and comprehensive evaluation of potential investments, and the development of detailed cash-flow analyses to determine as accurately as possible, the expected returns to the organization under varying conditions of uncertainty over the expected productive life of the project.
This requires the development of sound, realistic, and carefully structured cash-flow projections, reflecting both the initial capital expenditures required for the acquisition of the asset, as well as the operational expenditures required for successful operation and maintenance of the asset over its anticipated productive life.
World-wide an alarming number of large capital projects fail to meet, or overrun their planned budgets, failing to realize both the financial and strategic goals of the organization - the very reason for their being undertaken in the first place - often with sizable increases in capital and operational expenditures, and with substantial financial losses to the organization. In the majority of cases, this is the inevitable consequence of failing to apply the tools and techniques of modern project decision-making, evaluation, financial planning, capital management and cash flow analysis when considering investment into new capital projects.
This Oxford training seminar will highlight:
- Understanding the decision-making process
- The power of the business case
- Financial decision-making tools
- The importance of Project Risk Management
- How to identify risks during development and respond appropriately
At the end of this Oxford training seminar, you will learn to:
- Understand how to manage organization's investments in large capital-intensive projects
- Identify how to make and understand financial decisions and be able to present these back to the stakeholder community
- Identify how to manage the cash flow of projects and manage and appraise the financial risk mitigation strategies
- Understand proper cash-flow and sensitivity analyses to forecast and control potential future conditions
- Define and manage project success factors and maximize the return on the capital invested in projects
- Understand how to define financial strategies and incorporate these into project risk mitigation strategies
Delegates will develop project management skills supported by financial analysis and cash flow management skills through formal and interactive learning methods. This Oxford programme includes individual exercises, team projects, applicable case studies and group discussions that will bring to life the skills acquired throughout the course.
The material has been designed to enable delegates to apply all of the material with immediate effect back in the workplace.
Additionally, this Oxford Project Analysis training seminar does not assume prior knowledge of the topics covered in the course. New concepts and tools are introduced gradually to enable delegates to progress from the fundamental to the advanced concepts of asset-based financial engineering.
Application of sound project appraisal and quantification techniques will enable the organisation to forecast and control potential future conditions that might jeopardise the chances of project success, thereby maximizing the organisation's return on capital invested in projects. A trip through the life of a project allows us to understand how to forecast the future based on existing information.
- Participants will enhance their understanding of the time value of money, as well as learn how to use the basic tools of financial engineering such as Net Present Value, Internal Rate of Return, and Annual Worth calculations
- Participants will learn how to evaluate and compare various alternative solutions over differing time horizons
- Detailed explanations of the tools and techniques to determine and continuously monitor project feasibility, will enable participants to select projects with the best capital investment potential
- Participants will learn how to identify, plan, structure and manage risks to the overall delivery of projects – a powerful forecasting and control element leading to project success
Day 1 Fundamentals of Decision Analysis
- What is Project Management Decision Analysis?
- The Purpose of the Project Business Case
- The Need for Systematic Risk Management for Decision Making
- Risk and Uncertainty on Projects
- Option Analysis
- Identifying Key Decision-making Factors
Measures of Project Profitability
- Fundamental Tools of Engineering Economics
- Time Value of Money
- Appraisal Methods - Discounted Cash Flow Projections
- Time Equivalence
Day 2 Cash-Flow Modelling and Project Decision Analysis
- Financial Modelling and Project Evaluation
- Rate of Return Computations (IRR)
- Determining the Internal Rate of Return (IRR)
- The Risk of not understanding IRR
Analysing Project Specifics
- Understanding the Project Context to assist in decision-making
- Determine stakeholders and their level of influence
- Capture Requirements
- Determine Scope of Work
Day 3 The Cost of Capital
- Capital & Operating Expenditures (CAPEX/OPEX)
- Estimating the Cost of Capital for a Project
- Benefit- Cost Ratio (BCR)
Risk Modelling in Practice
- Identify Risks
- Forecasting Risk Impacts & Probabilities
- Opportunity Costs, Sunk Costs & Salvage Value of a Project
- Determining the Risk Priorities
- The Need for the Company Cash Flow
DAY 4 Decision Analysis: Expected Value Concept
- Basic Probability Concepts
- Fundamental Probability Concepts
- Mutually & Non- Mutually Exclusive, Independent Events
- Qualitative Project Risk Analysis
- Semi-Quantitative Bow-Tie Process
- Detailed Risk Qualification and Prioritisation
- Expected Monetary Value
- Scenario Planning
- Sensitivity Analysis Tools
- Simulation Process
- Tornado Diagram
- Defining the Variables- PERT
DAY 5 Decision Trees, EMV, Risk Responses and ROI
- Decision Tree Analysis
- Developing Decision Trees
- Solving Decision Trees
- Risk Responses
- Developing Risk Responses
- Evaluating Response Relevance
- ROI Analysis
- Understanding ROI
- Identifying ROI
- Evaluating and Presenting your Project Options
Who should attend
This Oxford Project Analysis training seminar is designed for programme and project management professionals, project leaders, project engineers, cost engineers, and other senior project control and business services professionals who are responsible for or involved in evaluating projects and managing cash flow throughout the duration of project delivery.