The 10-Day Advanced Project Economics & Risk Management

• What is project management decision analysis?
• The purpose of the project business case
• The need for systematic risk management for decision-making
• Risk and uncertainty on projects
• Option analysis
• Identifying key decision-making factors

• Fundamental tools of engineering economics
• Time value of money
• Appraisal methods - Discounted Cash Flow Projections
• Time equivalence

• Financial Modelling and Project Evaluation
• Internal Rate of Return computations (IRR)
• Determining the Internal Rate of Return (IRR)
• The risk of not understanding IRR

Analysing Project Specifics

• Understanding the project context to assist in decision-making
• Determine stakeholders and their level of influence
• Capture requirements
• Determine scope of work

• Capital & Operating Expenditures (CAPEX / OPEX)
• Estimating the cost of capital for a project
• Benefit-Cost Ratio (BCR)
• Dis-benefits

Risk Modelling in Practice

• Identify Risks
• Forecasting risk impacts & probabilities
• Opportunity costs, sunk costs & salvage value of a project
• Determining the Risk Priorities
• The need for company cash flow

• Basic Probability Concepts
  • Fundamental probability concepts
  • Mutually & non-mutually exclusive, independent events
• Quantitative Project Risk Analysis
  • Semi-quantitative bow-tie process
  • Detailed risk quantification and prioritisation
  • Expected monetary value
  • Scenario planning
• Sensitivity Analysis Tools
  • Simulation process
  • Tornado diagram
  • Defining the variables - PERT

• Decision Tree Analysis
  • Developing decision trees
  • Solving decision trees
• Risk Responses
  • Developing risk responses
  • Evaluating response relevance
• ROI Analysis
  • Understanding ROI
  • Identifying ROI
  • Evaluating and presenting your project options

• A brief history of energy usage
• Principles of development economics
• Understanding of economic terms
• Inflation and its impact on nominal & real cashflows
• Project financing

• Handling uncertainty in capital projects
• Understanding probability concepts
• The expected value concept: features and pitfalls
  • Expected Monetary Value (EMV)
  • Expected Profitability Index (EPI)
  • Expected Opportunity Loss (EOL)

• Risk & uncertainty
• Risk aversion and risk premium
• Exploration project threats and opportunities
• Economic decision criteria
• Decision tree analysis
• Probability distribution
• Monte Carlo simulation

• Spreadsheet Calculations
  • Cashflow analysis
  • Sensitivity analysis calculations
  • Tornado diagrams
• Introduction to Monte Carlo simulations using @Risk

• Developing an integrated economic model
• Developing and using an @Risk Model Analysis
• Project sensitivity analysis utilizing data from @Risk Model
• Training course final review and close