Overview

This workbook draws on the author's thirty years of practical real world experience and provides a detailed description of how to plan and build a pre-financial close Project Finance cash flow model. Providing sufficient theory to give the context for each modelling topic, it focuses on detailed practical methods. Topics covered include treatment of flexible timing assumptions, inflation, multiple currencies, circular calculations, debt and equity calculations, cover factors and IRRs and the use of the model to produce alternative base case scenarios and sensitivity cases. This edition is based on the updated 2010 second edition, produced by a new publisher following withdrawal of Euromoney from book publishing. It includes a section on optimization, covering the theory and practice of optimising revenues and/or funding structures to meet specific constraints such as cover factor and IRR requirements, whilst targeting outcomes such as lowest achievable NPV of project revenues, relevant to PFI and PPP funding structures. The workbook concludes with a series of exercises which work through the process of building a model from a set of illustrative data. Excel files illustrating topics in the book and supporting the exercises are available via the author, (contact details given in the text). Where relevant, information is given for both Excel 2003 and 2007, versions which bridge the main change in Excel functionality from menu to ribbon control.

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9780995673007

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Reviews

This book by Penny Lynch is a masterpiece in the field of project finance modelling. It is a well written book, following the best techniques to enable you to become a good project finance modeller. ... from building the model to checking it & auditing - it will become a reference point in the industry. --Roger Moralles review of earlier edition Penny's book is an excellent introduction to the world of modelling for project finance (which is so different from other types of financial modelling). The book is filled with suggestions on how to build your model from the ground up, so that the model is robust enough to accomodate virtually all types of sensitivity request. By following the guidelines in the book, you will significantly reduce the number of times you will say the model can't do that. ..I highly recommend this book. I can say that the tips and tricks learned from this book have saved me countless hours of sleep AND possibly many problems with my models. George Z. review of earlier edition

This book by Penny Lynch is a masterpiece in the field of project finance modelling. It is a well written book, following the best techniques to enable you to become a good project finance modeller. ... from building the model to checking it & auditing - it will become a reference point in the industry. --Roger Moralles review of earlier edition Penny's book is an excellent introduction to the world of modelling for project finance (which is so different from other types of financial modelling). The book is filled with suggestions on how to build your model from the ground up, so that the model is robust enough to accomodate virtually all types of sensitivity request. By following the guidelines in the book, you will significantly reduce the number of times you will say the model can't do that. ..I highly recommend this book. I can say that the tips and tricks learned from this book have saved me countless hours of sleep AND possibly many problems with my models. George Z. review of earlier edition

Author Information

Penny began working in the City of London in 1981 with the financial modelling team of Morgan Grenfell, a British merchant bank. The team used the bank's mainframe computer with an in-house modelling language written in Fortran. She was therefore involved from the very beginning with the use of spreadsheets for cashflow modelling, when PCs running Lotus 123 first became available. Her work with Morgan Grenfell, and later with Chase Investment, bank included modelling across industry, including North Sea oil and gas, power, road, rail, water and telecomms. Funding structures modelled included leasing, BOT and PFI deals and DCF project valuations as well as pure project finance deals. In 1992 she left Chase to start Lynch Financial Modelling and has continued to provide modelling, model review and training services to project developers, advisors, funders and sponsors. In 1997 Euromoney comissioned the first edition of Financial Modelling for Project Finance.

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