Financial Budgeting and Monitoring for Projects
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Financial Budgeting and Monitoring for Projects Course
Introduction:
This course highlights a range of tools and techniques used to develop a financial budget for projects and monitor deviations over time. It commences by defining the project and its various components through the Work Breakdown Structure. It then guides participants through the process of crafting a project plan and a milestone plan, which ultimately establishes the project budget. The course content further explores the intricacies of formulating the project budget using the time and material system, culminating in the creation of a capital budget.
Once the budget is determined, attention is shifted towards diverse methods for securing project financing, including an introduction to important concepts related to Public-Private Partnerships. The course continues by providing a comprehensive overview of conducting a basic capital investment appraisal for the project, taking into account essential aspects of risk and sensitivity analysis related to the actual project outcomes. Lastly, the course concludes by presenting an overview of monitoring the project's financial performance, with a focus on the Stage of Completion Method and the process of identifying and reporting variances to senior management.
Course Objectives:
At the end of this Financial Budgeting and Monitoring for Projects Course, learners will be able to do:
- Review the basics of project management
- Understand the differences between project and operational management
- Gain insight into the evaluation of the feasibility of projects
- Understand different techniques used to support capital investment decisions
- Explore alternative means of accessing and tapping into project finance resources
- Understand key forms of Public-Private Partnerships in project finance initiatives
- Learn to manage and account for risks in projects
- Analyze project risk using appropriate techniques
- Gain insight into techniques for monitoring financial performance on projects
- Identify and evaluate deviations from the financial plan
Who Should Attend?
This course is beneficial for:
- Financial Directors and Financial Managers
- Banks, Lenders, and Project Investors
- Government Officials involved in PPP initiatives
- Program Directors and Project Managers
- Program Sponsors
Course Outlines:
Introduction to a Project:
Learn the basics of project management and how this differs from the traditional management of day-to-day operations. This introduction will serve as a building block to enable a better understanding of the specific financial implications of managing projects in subsequent sessions.
- Defining and scaling a project
- Project management dimensions
- Starting and initiating a project
- Defining a project team and a project organization structure
- Planning and scheduling a project
- Developing project milestones and the Work Breakdown Structure
- Assessing project risk
- Managing change and version control
- Project closure
Budgeting a Project:
This session will provide you with the basic building blocks required for the purpose of developing a budget and forecast for a project.
- Identifying project options
- Developing capital budgets
- Forecasting demand
- Understanding alternative revenue models and pricing structures
Evaluating the Feasibility of a Project:
With an acquired understanding of preparing illustrative projected financial statements, you will subsequently learn how to apply these to make capital investment decisions using different techniques.
- Cash flow analysis
- Investment techniques – the Net Present Value (NPV)
- Internal rate of return
- Profitability index
- Payback period
- Accounting rate of return
- Ranking mutually exclusive projects
- Modified IRR
- Investment evaluation and capital rationing
- Incremental cash flow analysis
- Replacement decisions
- The problem of unequal lives
- Inflation and taxation issues
Accounting for Project Risk
Illustrative financial projections and project evaluations are based on a set of assumptions that may or may not materialize. This session will introduce you to the concept of project risk and how this may be factored into the overall feasibility studies carried out for the purpose of the project.
- Using the Expected Net Present Value Method
- Attitudes to project risk
- Alternative forms of risk
- Describing and measuring risk
- Adjusting the NPV formula for risk
- Risk analysis in practice
Financing a Project:
Once the feasibility of a project is readily ascertained, promoters of such a project will need to identify appropriate ways of financing it. This session explores alternative sources of project finance and discusses the relevant advantages and disadvantages of using such sources in the process.
- Structuring a project finance company
- The mechanics of non-recourse financing
- Public-Private Partnerships
- Angel Financing and Venture Capital
- Bank and loan financing
- Other methods of financing
Monitoring the Financial Performance of a Project:
This session focuses on introducing a range of techniques on how to monitor and evaluate variations from the planned financial performance of a project during its development stage.
- Tracking and monitoring costs of a project
- Completion and cost estimation techniques
- Developing variance analysis for projects
- Establishing tolerance levels and change controls