Course Outline

Course Outline

Project Analysis: Quantifying Risks for Consistent Decision-Making and Better Economic Projections

Ref No. Dates Venue Fee (US$)  
PM 007 06 - 10 Jul 2020 Amsterdam 5000 Register
PM 007 28 Dec 2019 - 01 Jan 2021 Kuala Lumpur 5000 Register

Project Analysis: Quantifying Risks for Consistent Decision-Making and Better Economic Projections


The decision to invest in new capital projects starts with critical decisions during the conceptual phase of new projects or the expansion of existing operations. The decision-making tools used to analyse project risk under conditions of uncertainty will help companies to determine the probability of success or loss, and will drive the decision to invest in the new venture. Of paramount importance is the systematic and comprehensive evaluation of potential investments, and the development of detailed cash-flow analyses to determine as accurately as possible, the expected returns to the organization under varying conditions of uncertainty over the expected productive life of the project.

This PROCLAD Academy training course on Project Analysis will significantly enhance the skills and knowledge of participants. It will improve their ability to quantify risks in order to ensure a more consistent decision-making process, thereby producing vastly better results in economic projections. No prior knowledge of the topics covered in the course is required. New concepts and tools are introduced gradually to enable participants to progress from the fundamental to the advanced concepts.

The key features of PROCLAD Academy’s Project Analysis training course are:

  • Apply sound project appraisal and quantification techniques to forecast and control potential future risk conditions that might jeopardize project success
  • Focus on achieving the organization's overall strategic objectives by applying the techniques of decision analysis and economic evaluation
  • Understand the techniques used for advanced risk quantification and the development of risk mitigation strategies that will ensure or improve the financial feasibility of the project
  • Understand the implications of the time value of money on the financial projections of the project
  • Understand and apply the fundamental principles of financial engineering, such as Net Present Value, Cost of Capital and Internal Rate of Return
  • Evaluate and compare alternative project solutions with different time horizons
  • Determine and continuously monitor project success and feasibility
Learning Objectives

By attending PROCLAD Academy’s Project Analysis training course, participants will learn how to:

  • Use qualitative and quantitative methods to assess the exposure of the project to particular risks in real and measurable terms
  • Perform a detailed financial appraisal of potential capital projects to ensure consistent and reliable decision-making processes
  • Understand and apply the principles and methods of modern economic engineering
  • Apply the fundamentals of discounted cash flow analysis to project evaluations
  • Determine the Internal Required Rate of Return of the project as the basis for sensitivity analyses to establish the risk exposure to the organization
  • Apply the concept of Expected Monetary Value to compare various alternatives
Target Audience

PROCLAD Academy’s Project Analysis training course is designed for:

  • Project Team Leaders
  • Risk Management Team Leaders
  • Production Engineers
  • Cost Engineers
  • Financial Staff

It is also beneficial to all those responsible for, or involved in project appraisal and planning, risk analysis, financial decision-making, project execution and ongoing business operations.

Training Methodology

Participants on PROCLAD Academy’s Project Analysis training course will develop advanced skills required to manage risk & uncertainty, in addition to mastering important financial analysis and cash flow management skills through formal and interactive learning methods. The course includes individual exercises, team projects, applicable case studies, group discussions and video material that will bring to life the skills acquired throughout the course.

Course Outline
  • What is Project Management Decision Analysis?
  • Risk and Uncertainty on projects
  • Identifying all possible outcomes
  • Identifying key decision-making factors
  • Fundamental tools of engineering economics
  • Time Value of Money
  • Simple and Compound Interest
    • Future value of a present sum
    • Present value of a future sum
  • Appraisal Methods – Discounted Cash Flow Projections
  • Net Present Value Analysis (NPV)
  • Comparing Projects with Equal and Unequal Lives
  • Determining the Internal Rate of Return (IRR)
  • IRR for a Single O&G Project
  • Incremental Analysis
  • 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)
  • Estimating the Benefit-Cost Ratio for a Single Project
  • Comparing Mutually Exclusive Projects Using Incremental Benefit-Cost Ratios
  • Overview of the Risk Management Process
  • Detailed Risk Quantification and Prioritization
  • Risk Quantification and Expected Monetary Value
  • Scenario Planning
    • Best case scenario
    • Base case scenario
    • Worst case scenario
  • Developing Risk Mitigation Strategies
  • Implementing Mitigation Strategies
  • Decisions Under Conditions of Uncertainty
  • Multiple Option Decisions
  • Combining Risk and Cash Flow Analyses
    • Minimizing Probability
    • Minimizing Impact and Consequences
  • Calculating the Expected Monetary Gain or Loss
  • 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
  • Replotting 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
  • 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 of 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
  • Corporation Tax Rates & Taxable Profits
  • Capital Allowances
  • Incorporating Tax in Cash Flow Models