Project Development Fundamentals
Inter-related system of nodes and links
What is the definition of infrastructure?
The amount of phases in the project development process
5
The three Front End Loading (FEL) stages before EPC bidding
What is Conceptual Design, Preliminary Engineering, Project Feasibility?
A form of finance that has been around since the 18th century
What is project finance?
True or False: It is best to set up a special purpose vehicle to insulate each project
True
Two of the four domains of development
What is Technical, Commercial, Social and Financial?
The document that will help you plan and navigate your project in development and into construction
What is the Project Development Plan?
As rule of thumb, anywhere between 4 to 10% of total project CAPEX
What is the total cost of engineering?
Liability and recourse are limited only to assets in the specific vehicle
What is non-recourse project finance?
Stage to start investing time and money into core project agreements
What is FEL-1/project pre-feasibility stage?
Firms or entities that are ultimately interested in purchasing infrastructure projects when they have steady cash flows
What is Pension and/or Insurance Firms?
The five phases of project development
1. Concept phase (FEL-1)
2. Pre-feasibility (FEL-2)
3. Feasibility (FEL-3)
4. Permitting and EPC Selection (BID)
5. Financial Close
Two EPC contract structures
Any one of: what is Fixed Price (Lump Sum); Cost Plus Fee; Guaranteed Maximum; Unit Price?
Metrics used to evaluate the financial viability of a project
What is IRR and/or MOIC?
A major risk typically faced in off-take agreements
Any one of: what is off-taker credit and performance; project performance guarantee; deadlines and off-taker approvals; project collateral support requirements?
Three “things” Ken (Alex) would like you to leave DevU remembering
What is Goal, Approach, Perspective?
The contract that must be well negotiated during development to mitigate countless construction risks
What is the EPC contract?
True or False: More Engineering = Better Defined Scope = Lower EPC Bids
True
Two options for debt in project finance
What are bonds and bank loans?
An item that will impact raising financing for projects and question the credibility of developers
Any one of: what are insufficient project documents; poorly negotiated commercial agreements; high project costs; major project gaps; etc.?
Producing documents as fast and as cheap as possible until deciding to either stop or continue funding
What is the fundamental objective of project development?
3 common pitfalls that happen during project development that cause delays in achieving FID
Any reasonable answer is correct (Ken to judge)
One common mistake when EPC price comes in too high
Any one of: what is go out for more bidding; changing technology; cutting contingency; self-performing; cutting costs that will affect performance and quality?
An action to address the perceived risk of new technology i.e., new technology risk
What is acquiring an independent engineer’s report on the technology?
A possible structure to engage legal counsel
What is budget-based billing; dead discount; portfolio approach; flat gee; success fee?