Objectives

Upon completion of this course, participants will be able to:

• Understand the various models and contractual structures of PPPs (e.g., BOT, BOOT, DBOF).
• Develop and audit integrated, project-finance-based financial models for PPPs.
• Identify, quantify, and allocate financial and non-financial risks between the public and private partners.
• Evaluate the financial viability of a PPP project using key metrics (e.g., IRR, DSCR, LLCR, equity returns).
• Understand the public sector's perspective on **Value for Money (VFM)** assessments.
• Analyze the sources and structure of project financing (debt, equity, subordinated debt).
• Navigate the unique accounting and financial reporting standards for PPP transactions.
• Manage the procurement process, due diligence, and financial closing of a PPP deal.
• Assess the impact of political, regulatory, and foreign exchange risks on project returns.
• Develop strategies for managing project lifecycle events (e.g., refinancing, termination).

Target Audience

• Project Finance Analysts and Managers
• Investment Bankers and Commercial Lenders specializing in infrastructure
• Government Officials and Treasury/Finance Staff involved in PPP units
• Financial Consultants and Advisers to public and private sector partners
• Corporate Development and Strategy Professionals in infrastructure firms
• Senior Accountants and Auditors dealing with PPP disclosures
• Legal and Transaction Advisory Professionals

• Hands-on workshops building and interpreting a simplified PPP project financial model in Excel
• Case studies focusing on risk allocation negotiations in real-world PPP projects (e.g., toll roads, hospitals)
• Group activities simulating a public sector VFM and PSC calculation review
• Expert-led discussions on current trends in infrastructure funding and private equity involvement
• Individual assignments calculating and interpreting key project finance ratios (DSCR, LLCR, IRR)
• Role-playing a financial due diligence meeting with lenders or government officials

Unit 1: Fundamentals of PPP and Project Finance

• Defining Public-Private Partnerships and their strategic necessity
• Overview of common PPP models (e.g., Build-Operate-Transfer (BOT), Concessions)
• The rationale for PPPs: risk transfer, efficiency, and innovation
• Key success factors and common causes of PPP failure
• The legal and contractual framework governing PPP arrangements
• Stakeholder analysis in a typical PPP project (Government, Lender, Private Consortium)

• The concept of non-recourse and limited-recourse project financing
• Key financial instruments in project finance (senior debt, mezzanine, equity)
• Understanding the role of the Special Purpose Vehicle (SPV)
• The process of financial feasibility analysis and due diligence
• Typical project finance security package and intercreditor agreements
• Capital structure decisions and the optimal mix of debt and equity

Unit 2: Financial Modeling and Evaluation

• Best practices for building transparent and auditable PPP financial models
• Modeling the three financial statements: P&L, Balance Sheet, and Cash Flow (Sources & Uses)
• Key input drivers: construction costs, operational expenses, and revenue projections
• Modeling debt drawdown, repayment, and reserve accounts (e.g., DSRA, Maintenance Reserve)
• Structuring and integrating the model to calculate key financial metrics
• Performing sensitivity and scenario analysis on core assumptions (e.g., traffic volume, interest rate)

• Calculating the **Project Internal Rate of Return (IRR)** and **Equity IRR**
• Mastering the Debt Service Coverage Ratio (DSCR) and Loan Life Cover Ratio (LLCR)
• Minimum and average DSCR requirements from senior lenders
• Understanding Net Present Value (NPV) and its application in VFM analysis
• Interpreting credit ratings and their impact on borrowing costs
• Modeling project returns under different tariff or availability payment structures

Unit 3: Risk Allocation and Management

• Categorizing key PPP risks (e.g., construction, demand, operating, political, legal)
• Principles of optimal risk allocation: to the party best able to manage it
• Modeling the financial impact of key risks (e.g., delay penalties, force majeure)
• The role of insurance, guarantees, and government support in risk mitigation
• Specifics of allocating demand risk (e.g., minimum revenue guarantees)
• Contractual mechanisms for managing cost overruns and construction delays

• The concept and methodology of the **Public Sector Comparator (PSC)**
• Conducting a rigorous **Value for Money (VFM)** assessment of the PPP proposal
• Fiscal accounting implications for the public sector (on-balance sheet vs. off-balance sheet)
• Disclosure requirements and the transparency of contingent liabilities
• Techniques for measuring the cost of capital and discount rate for public funds
• Managing the public sector's financial monitoring throughout the project term

Unit 4: Accounting, Compliance, and Deal Execution

• IFRS/US GAAP standards relevant to PPPs (e.g., service concession arrangements)
• Criteria for determining control and the decision to recognize the asset on the balance sheet
• Specific accounting treatment for availability payments and demand-based revenues
• Disclosure requirements for risks, commitments, and contingent liabilities
• Differences in financial reporting between the public and private sector partners
• The role of the auditor in verifying compliance with the project agreement

• The procurement process: from EOI to financial closure
• Key conditions precedent (CPs) to financial close and their management
• The impact of refinancing on the project IRR and financial viability
• Structuring debt-service waterfalls and payment mechanisms
• Managing project hand-back, termination events, and compensation mechanisms
• Case studies of successful and challenging PPP financial closes