financial management for capital projects

SEYCHELLES MINISTRY OF FINANCE

JUNE 2011

INTRODUCTION

TRAINING PROGRAMME OUTLINE (DAY 1-4)

SPECIFIC OUTCOMES

GROUND RULES

TRAINING METHODOLOGY AND APPROACH

ASSESSMENT METHODOLOGY AND APPROACH

Capital Projects

Operating and Capital Expenditure Budgets

Capital investment decisions

Projects

Types of projects

Initiation

Planning

Execution and Control

Closure

Overview of the phase

Activities and process

Identifying a business need, problem, opportunity or motive

Generating alternative capital project proposals

Screening and Evaluation of alternative solutions and/or capital project proposals

Determining the financial feasibility and viability

Selection and approval of recommended capital project proposal (initiation of capital project)

Performing a risk assessment (of selected capital project)

Performing a Cost estimation   Identifying potential sources of finance  Determining the optimal Financing/capital

structure  Drafting a Terms of Reference (Scope of

Work) document

Cost-benefit analysis

Evaluation criteria

Non-financial criteria

Accounting/average rate of return

Payback period

Net present value (NPV)

Profitability index

Internal rate of return

Equivalent annuity method

Composite risk index

Probability x Severity

Identifying priorities of risk impact analysis

Risk mitigation strategies

Objectives/deliverables

Strategic alignment (with the organizational goals and objectives)

Time-frames

Cost estimates

Quality issues

Risk assessment

Stakeholders

Appointment of project manager; recruitment of project team and establishment of a project office

Capital project planning tasks and activities

Resource plan

Financial plan (budget)

Quality plan

Risk management plan

Communications plan

Procurement plan

What (are the capital project objectives?)

How (will these objectives be achieved i.e. the tasks/activities to be performed)

Who (defining responsibilities for each of these tasks/activities)

When (defining time-frames and targets for each of these tasks/activities)

Where (defining location-specific aspects of the capital project)

Weight (defining the key performance indicators)

Refer to project plan template

Direct costs

Indirect costs

Time related costs

Labour and other staff costs

Overtime costs

Procurement costs

Transport and other logistic costs

Project Office costs

Preliminary and General costs

Capital project control function

STEP 1: Monitoring and evaluating the capital project

STEP 2: Analyze capital project results

STEP 3: Allow for action to be taken

STEP 4: Identify discrepancies from capital project plans and implement remedial actions

Financial monitoring and reporting

Cash flow management and Working capital management

Service level agreements and Efficiency of Service Provision

Cost Performance Reporting and Variance Analyses Techniques

Outsourcing

SLA

Key elements of SLA

SLA process

Evaluating selected service providers

Selection criteria

Earned value

Definitions

Earned value forecast

Earned value variances

Cost variance

Schedule variance

Project close-out

Tasks and activities

Project Audits

Summary of key points

Questions

Summative Assessment

Farewell

Thank you