Project Economics, Risk & Decision Analysis

Course Info

Length: 1 Week

City: Kuala Lumpur

Type: In Classroom

Available Dates

  • June-17-2024

    Kuala Lumpur

  • July-15-2024

    Kuala Lumpur

  • Aug-19-2024

    Kuala Lumpur

  • Sep-16-2024

    Kuala Lumpur

  • Oct-21-2024

    Kuala Lumpur

  • Nov-18-2024

    Kuala Lumpur

  • Dec-16-2024

    Kuala Lumpur

Dates in Other Venues

  • June-17-2024

    Istanbul

  • June-24-2024

    Singapore

  • June-24-2024

    Paris

  • July-01-2024

    Dubai

  • July-01-2024

    Barcelona

  • July-08-2024

    Amsterdam

  • July-08-2024

    London

  • July-15-2024

    Istanbul

  • July-22-2024

    Singapore

  • July-22-2024

    Barcelona

  • July-29-2024

    Paris

  • July-29-2024

    Dubai

  • Aug-05-2024

    Dubai

  • Aug-05-2024

    Barcelona

  • Aug-12-2024

    Amsterdam

  • Aug-12-2024

    London

  • Aug-19-2024

    Istanbul

  • Aug-26-2024

    Paris

  • Aug-26-2024

    Singapore

  • Sep-02-2024

    Barcelona

  • Sep-02-2024

    Dubai

  • Sep-09-2024

    Amsterdam

  • Sep-09-2024

    London

  • Sep-16-2024

    Istanbul

  • Sep-23-2024

    Singapore

  • Sep-23-2024

    Barcelona

  • Sep-30-2024

    Dubai

  • Sep-30-2024

    Paris

  • Oct-07-2024

    Dubai

  • Oct-07-2024

    Barcelona

  • Oct-14-2024

    London

  • Oct-14-2024

    Amsterdam

  • Oct-21-2024

    Istanbul

  • Oct-28-2024

    Paris

  • Oct-28-2024

    Singapore

  • Nov-04-2024

    Dubai

  • Nov-04-2024

    Barcelona

  • Nov-11-2024

    Amsterdam

  • Nov-11-2024

    London

  • Nov-18-2024

    Istanbul

  • Nov-25-2024

    Singapore

  • Nov-25-2024

    Paris

  • Dec-02-2024

    Barcelona

  • Dec-02-2024

    Dubai

  • Dec-09-2024

    London

  • Dec-09-2024

    Amsterdam

  • Dec-16-2024

    Istanbul

  • Dec-23-2024

    Barcelona

  • Dec-23-2024

    Singapore

  • Dec-30-2024

    Paris

  • Dec-30-2024

    Dubai

Course Details

Course Outline

5 days course

 

 

Introduction
 
  • Why economic evaluation
  • Objective of the course
  • Capital expenditure plans
  • Basic process of economic evaluation

 

Inflation

 

  • Inflation defined
  • Types of inflation
  • Consumer price index
  • Risk Factors (Simple Illustration)

 

Interest

 

  • Simple interest
  • Compound interest formula
  • Nominal & effective interest rate

 

The Time Value of Money

 

  • Equivalence
  • Interest tables
  • Future value of present sum
  • Present value of future sum
  • Future value of ordinary annuity and annuity due
  • Present value of ordinary annuity and annuity due
  • Project financing
  • Loan amortization schedule

 

Spreadsheet Applications
 
  • Excel’s financial functions for equivalence
  • Excel’s financial functions for loan amortization

 

Problems & Solutions

 

 

Before-Tax (BTAX) Cash-Flow
 
  • Cash-flow (CF) defined
  • Gross revenue (GR)
  • Basic data requirement
  • Forecasting product stream
  • Dependence of Capital

 

Expenditure (CAPEX)
 
  • Economies of scale
  • CAPEX during production
  • Breakdown of Operating

 

Expenditure (OPEX)
 
  • Develop rules of thumb for OPEX
  • Gas processing flow diagram
  • Typical oil production facilities
  • Sample before-tax cash-flow
  • Schematic of typical cash-flow

 

Cost Estimation
 
  • Project cost management
  • Various types of costs
  • Cost estimation tools and techniques
  • Level of cost estimates
  • Dependence of cost estimates
  • Criticality of cost estimates.

 

After-Tax (ATAX) Cash-Flow
 
  • ATAX cash-flow additional variables
  • Depreciation methods
  • Sample After-Tax Cash-Flow

 

Weighted Average Cost of Capital
 
  • Capital Asset Pricing model (CAPM)
  • Cost of equity and cost of debt
  • Weighted average cost of capital
  • Sample WACC calculations

 

Problems and Solutions

 

Relationship between cash-flow and WACC
 
Profitability indicators
 
  • Typical profitability indicators
  • Cumulative net cash-flow (discounted & undiscounted)
  • Discounted payback period
  • Internal rate of return (IRR)
  • Net present value (NPV)
  • Profitability index (PI)
  • Long-run marginal cost (LRMC)
  • Maximum sustainable risk

 

Netback Value & Indexed Pricing
 
  • Netback value (NBV)
  • Base year and ROR approach
  • LRMC approach
  • Indexed netback pricing

 

Funds Flow and Discounting Frequency
 
  • Funds flow and discounting
  • NPV dependence on CF assumptions
  • Discounting methods

 

International Petroleum Agreements
 
  • The need for collaboration
  • International agreements
  • Parties to agreement
  • Typical contract terms
  • Contractual arrangements
  • Comparison of Fiscal Systems
  • Sliding scale tranches
  • Concessionary system’s cash-flow
  • Joint venture & risk service contracts

 

Investment Selection Decision-Making
 
  • Investment types
  • Types of investment decisions
  • Investment selection decision-making
  • Revenue producing investments
  • Inherent problems with IRR
  • Multiple rates of return
  • Ranking projects – non-mutually exclusive investments
  • Service producing investments (equal lives)
  • Service producing investments (unequal lives)
  • Lease versus buy decision
  • Nominal and real cash-flow

 

Basic Probability Concepts
 
  • Probability definitions
  • Widely used probability distributions
  • Discrete probability distributions
  • Discrete probability distributions
  • Continuous probability distributions

 

Expected Value Concepts
 
  • Expected value of random variables
  • Probability table
  • Expected monetary value (EMV)
  • Sensitivity analysis
  • Correct interpretation of expected value
  • Dice rolling experiment Schematic of typical cash-flow

 

Decision Trees
 
  • Terminology used in decision trees
  • Solving a decision tree

 

Simulation in Decision Analysis
 
  • Applications in simulation
  • Simulation in decision-making
  • Obtaining random observation from PDF.

 

Management Presentation
 
  • Assumptions
  • Profitability indicators
  • Sensitivity diagrams
  • Waterfall chart
  • Multiple variable cross plot
  • Feasible profitability region

Course Video