Project finance is concerned with the long-term financing of infrastructure and industrial projects. The attraction of funding also requires projects to be prepared in sufficient detail.
- Investment projects of the private sector are not funded based on the balance sheet of the investor, but rather based on the project cash flows. The need for equity capital depends on the decisions of lenders and if the investment is riskier, additional securities are required. The skills of a consultant in the process of project funding are instrumental in:
- working out the business model;
- performing market analysis and the economic environment analysis;
- performing financial projections and profitability calculations;
- preparing the business plan;
- developing the funding strategy; and
- in negotiations with financiers.
- The grants of the European Union and other support funds co-finance public interest projects based on their priority. The preparation of a funding application and a cost-benefit analysis as its part requires experience, and the skills of a financial consultant are of great help in this.
The methods applied in the assessment of a support project can also be used for instance in the analysis of projects implemented by the private sector, which are of high public interest and impact. And also in the priority ranking of public investment projects.
- In public private partnership (PPPs), the services are contracted by the state and a private partner is responsible for making the investment, funding and the provision of service during the term of the contract (so-called life-cycle model). PPP has different forms depending on the scope of duties delegated to the private partner, the termination terms of the contract, the rights to earn revenue and other terms and conditions.
Regardless of the specific form of PPP, profound preparation of the project is always essential in order to attract the interest of the private sector in the project, to secure sufficient competition and the entry into contracts with the best service providers. The skills of an experienced financial consultant are instrumental both to the public sector in the process of the preparation of procurement and negotiations as well as the private sector for the preparation of the tender and for negotiations with financiers.
Keywords:
project funding, profitability analysis, feasibility study, cost-benefit analysis, analysis of economic impact, private partnership, PPP, concession agreements, applications for support, business plan.