Course Schedule

The 10-day Project Risk Assessment and Financial Appraisal Program

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Code Course Title Venue Date Fees Join Now
PM19 The 10-day Project Risk Assessment and Financial Appraisal Program Istanbul - Turkey, 20190422 22 Apr - 03 May 2019 $9,500 Register
PM19 The 10-day Project Risk Assessment and Financial Appraisal Program Dubai - UAE, 20190922 22 Sep - 03 Oct 2019 $7,500 Register

COURSE OVERVIEW

Effective Project Risk Analysis and Management lies at the very core of successful project delivery. The systematic identification, quantification and analysis of project risks, as well as the development of detailed risk treatment strategies to mitigate all relevant risks that threaten the intended outcomes of the project, are essential to the achievement of project success.

Large capital projects often require substantial and risky investments in the acquisition, operation and maintenance of new organizational assets. Development of a sound, realistic, and carefully structured financing plan, reflecting both the initial capital expenditures required for the acquisition of the asset, as well as the operational expenditures required for the successful operation and maintenance of the asset over its anticipated productive life.

Additionally, the systematic identification, quantification and analysis of project and financial risks, as well as the development of detailed risk treatment strategies to mitigate all relevant risks that threaten the intended outcomes of the project, are essential to the achievement of project success.

This 10-day Project Risk Assessment and Financial Appraisal Program will enable delegates to apply the tools and techniques of modern project and program management, risk management and financial analysis effectively.

IMPORTANT FEATURES

The important features of the 10-day Project Risk Assessment and Financial Appraisal Program are:

  • Identify risk categories related to your organization’s operations and projects
  • Identify project-specific risks and uncertainties related to design, planning, operation and maintenance
  • Use a proven set of skills and techniques for the quantification, analysis and mitigation of identified risks, and
  • Develop a systematic and dynamic Risk Management Plan
  • Detailed and comprehensive appraisals of capital projects to ensure the achievement of the organization’s financial and strategic goals
  • Protect the investment of the organization in capital-intensive assets
  • Understand and apply the principles and methods of engineering economics
  • Merge the processes of financial management, cash flow analysis and risk management to ensure profitable projects

LEARNING OBJECTIVES

By attending this course the 10-day Project Risk Assessment and Financial Appraisal Program, delegates will learn how to:

  • Identify project-specific risks and uncertainties related to the various project phases, including the project schedule
  • Use qualitative and quantitative methods to assess the exposure of the project to particular risks in real and measurable terms
  • Prioritize and rank risks in order to deal with them systematically
  • Apply the concept of expected monetary value to develop adequate contingency levels
  • Employ the six primary risk treatment strategies to develop pro-active responses to potential risks
  • Apply a dynamic risk mitigation process to reduce the risk profile in order to comply with organizational thresholds
  • Apply discounted cash flow analysis to project evaluations
  • Perform present and annual value calculations (NPV and EAV)
  • Determine the project’s internal rate of return (IRR) as the basis for establishing the risk exposure to the organization
  • Evaluate and rank various project alternatives using tools such as NPV, IRR, BCR, EAV/C
  • Incorporate risk analysis into the cash flow predictions during project feasibility studies
  • Consistently manage project cash flows and predict outcomes and problems that require early interventions

TARGET AUDIENCE

The 10-day Project Financial Appraisal and Risk Assessment Program is designed for all professionals responsible for or involved in project risk management, e.g.

  • Project and program managers
  • Project leaders & project engineers
  • Production and operations engineers
  • Cost engineers and financial staff
  • Project planners and risk managers
  • Project control and business services professionals who are responsible for or involved in securing project financing and managing cash flow on projects

TRAINING METHODOLOGY

Delegates on the 10-day Project Risk Assessment and Financial Appraisal Program will develop advanced project assessment, risk analysis and financial management skills and knowledge through formal and interactive learning methods. The training includes individual exercises, team projects, applicable case studies, group discussions and video material 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 at the office. Additionally, the 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 project risk management.

Pre & Post course assessments will be used to measure the effectiveness of this training.

COURSE CONTENTS

DAY 1 –Fundamental Principles of Project Risk Management

  • Description:

    A review of the fundamental principles of Project Risk Management.

  • KeyTopics:

    • Definitions – What is risk?
    • The triple constraint & stakeholder analysis
    • Risk management processes & model
      • Establish risk context and criteria
      • Identify the risk events, risk triggers (causes), and risk receptors (effects)
      • Analyze risk events by qualitative or quantitative methods
      • Formulate risk treatment strategies and analyze the effect of each on the risk cost
      • Implement the selected risk strategies
    • Identifying potential risk events
    • Techniques for identifying risk events
    • Identifying triggers, indicators and receptors
    • Risk scenario description

DAY 2 –Project Risk Analysis, Assessment & Quantification

  • Description:

    Various methods used for qualitative and semi-quantitative risk analysis.

  • KeyTopics:

    • Qualitative and semi-quantitative risk analysis techniques
    • Risk matrices and risk ranking
    • Techniques for identifying risk events
      • Regular expert panel meetings
      • Brainstorming
      • Delphi technique
      • Nominal group technique (NGT)
      • Crawford slip
      • Fishbone Diagramming
    • Qualitative descriptions of probability
    • Qualitative descriptions of impact
    • Qualitative risk analysis matrix
    • Risk response strategies
    • Progressive risk management plan development

DAY 3 –Project Risk Analysis and Outcomes Modelling

  • Description:

    More advanced techniques for quantitative risk analysis by estimating probability and impact.

  • KeyTopics:

    • Detailed risk quantification and prioritization
    • Risk characteristics
    • Risk matrices and risk ranking
      • Estimating probability
      • Estimating impact
      • Weighted probability & impact rating
    • Risk ranking
    • Progressive risk management plan development
    • Expected Monetary Value concepts (EMV)
    • Risk quantification and EMV
    • Decisions under conditions of uncertainty

DAY 4 -Project Risk Strategy Development

  • Description:

    Explores the development of risk mitigation strategies aimed at minimizing the potential impact of risk events on the project

  • KeyTopics:

    • Risk Quantification and Expected Monetary Value
      • Best case scenario
      • Base case scenario
      • Worst case scenario
    • Decisions under conditions of uncertainty
    • Risk treatment objectives
    • Procedure for risk strategy development
    • Risk response development matrix
    • Risk strategy development and implementation
    • Forecasting annual project cash flows over the economic life
    • Financial scenario planning and risk mitigation

DAY 5 –Project Risk Scenario Planning & Mitigation

  • Description:

    The relationship between project risk and the financial feasibility of the investment.

  • KeyTopics:

    • Advanced scenario planning
    • Advanced risk mitigation strategies
    • Procedure for risk strategy development
    • Risk response strategies
      • Risk acceptance
      • Risk prevention
      • Risk avoidance
      • Risk mitigation
    • Risk transfer & contracting
    • Implementing mitigation strategies
    • Multiple option decisions
    • Combining risk and cash flow analyses

DAY 6 –Fundamental Principles of Economic Appraisal

  • Description:

    Day Six discusses the fundamentals of project finance and examines the impact of the time value of money on project feasibility.

  • KeyTopics:

    • Principles of the time value of money and the discount rate
      • Compound Interest
      • The time value of money
      • Future value of money
      • Present value of money
      • Compounding/discounting table
    • Project Evaluation
    • Fundamental criteria for appraisal
      • Mixed stream cash flow
      • Expanded mixed stream cash flow
      • Weaknesses of payback period
    • Discounted cash flow projection
    • The timing of cash flows
    • Projects with different time horizons
    • Equivalent annual cost/worth method (EAC)

DAY 7 – Rate of Return (IRR), Benefit-Cost Ratio (BCR) and Cost of Capital

  • Description:

    Day Seven describes the importance of the Internal Rate of Return as an indicator of the amount of financial risk that can be tolerated by the project. It also explains the principles of calculating the cost of capital for projects.

  • KeyTopics:

    • Determining the Internal Rate of Return (IRR)
    • IRR for a single project
      • IRR for a single project using present worth
      • IRR for a single project using annual worth
    • Incremental analysis
      • Mutually exclusive projects
    • Using IRR to analyze options with different lives
    • Costs, benefits, and non-benefits
    • Estimating the benefit-cost ratio for a single project
    • Estimating the cost of capital for a project
      • The cost of debt capital
      • The cost of equity capital
      • Weighted Average Cost of Capital (WACC)
      • Financial gearing (Structuring)

DAY 8 – Financial Project Risk Analysis and Expected Value

  • Description:

    Day Eight deals with the process of risk analysis as applied to project cash flows, and explains the use of Expected Value as a means to quantify risk on projects in financial terms. Three-point scenario analyses are used to predict the most probable financial outcome of the project.

  • KeyTopics:

    • Overview of the Risk Management Process
    • Detailed Risk Quantification and Prioritization
    • Probabilistic Methods
    • Expected Monetary Value Concepts
    • Risk Quantification and Expected Monetary Value
    • Scenario Planning
      • Best case scenario
      • Base case scenario
      • Worst case scenario
    • Decisions Under Conditions of Uncertainty
    • Multiple Option Decisions

DAY 9 – Financial Scenario Planning – Case Study

  • Description:

    Day Nine provides advanced applications of Risk Scenario Planning to project cash flows based on three-point scenario analyses and risk impact projections.

  • KeyTopics:

    • Cash flow projections – Tunnel Case Study
      • Base Case Scenario
      • Best Case Scenario
      • Worst Case Scenario
    • Risk profile EMV calculation before mitigation
    • Identification of risk triggers & probability
      • Plotting the event probability
    • Identification of risk receptors & impact
      • Plotting the financial impact
    • Combined EMV risk profile before mitigation
    • Developing probability mitigation strategies
    • Developing impact mitigation strategies
    • Re-plotting the projected risk profile after mitigation
    • Examining the J-curve to derive the most economic mitigation point
    • Final risk EMV and project feasibility calculations after mitigation

DAY 10 –Financial Modeling and Project Evaluation

  • Description:

    Day Ten deals with the essential elements of a detailed cash flow analysis, with specific attention to the various categories of cost, inflation, taxation, depreciation and interest to determine the financial feasibility of the investment over the life of the project.

  • KeyTopics:

    • Preparing cash flow projections
    • Incremental costs and benefits
    • Working capital requirements and operating costs
    • Forecasting Cash Flows
      • How to deal with inflation
      • How to deal with uncertainty and risk
      • Risk premiums
      • Pessimistic and optimistic forecasts
    • Opportunity costs and sunk costs
    • Determining the economic life of a project
    • Quantifying the effects of inflation
      • Effects of inflation on working capital
      • Effects of inflation on taxation
      • Effects of inflation on cost of capital
      • Variable inflation rates over the life of the project
    • Relevant cash flows over differing time horizons
    • Depreciation
      • Straight-Line method
      • Declining Balance method
    • Interest, insurance and tax costs
    • Taxation
      • Corporation tax rates
      • Taxable profit
      • Capital allowances
      • Incorporating tax in cash flow models

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