financial management for capital projects
Post on 14-Sep-2014
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Financial management tools and techniques for Capital ProjectsTRANSCRIPT
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