Project Finance in Construction

Project finance in construction procurement has spread worldwide from power stations and waste-disposal plants to telecommunication facilities, bridges, tunnels, railway networks, and now also to the building of hospitals and schools. Despite a financial assessment of PF projects being fundamental to the lender's decision, there is little understanding of how the use of finance is perceived by individual stakeholders; why and how a financial assessment is performed; who should be involved; where and when it should take place; what data should be used; and how financial assessments should be presented. The steps outlined in this guide provide a basic understanding for all those involved in structuring or assessing project finance. Secondary contracts involving constructors, operators, finance providers, suppliers and offtakers can be developed and assessed to determine their commercial viability over a project's life cycle. Any uncertainty in financial markets prompts sponsors of construction project financings to carefully consider bank liquidity, the higher cost of finance, and general uncertainty for demand. This results in the postponement of projects and the drastic reduction of governments' tax receipts, which in turn affects their ability to finance infrastructure projects. Project Finance in Construction offers a structured process for determining the commercial viability of large construction projects procured with project finance (PF). It explains how to use economic metrics in the decision-making process and provides a detailed case study showing how stakeholders apply the concept of project finance. This guide will enable students and academics involved in project finance as well as project managers worldwide to develop their own assessment structures and be confident in their use.