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Circle Circle
PCM - 02
5 days
Doha
9 January, 2022
10900 QAR

Project Analysis: Tools and Techniques for Managing Risk & Uncertainty Virtual

Course Overview:

The decision to invest in new capital projects starts with critical decisions during the conceptual phase of new projects or the expansion of existing operations. The decision-making tools used to analyze project risk under conditions of uncertainty will help companies to determine the probability of success or loss and will drive the decision to invest in the new venture.

Of paramount importance, therefore, is the systematic and comprehensive evaluation of potential investments, and the development of detailed cash-flow analyses to determine as accurately as possible, the expected returns to the organization under varying conditions of uncertainty over the expected productive life of the project.

Course Objective:

By the end of this training, participants will be able to:

  • Use qualitative and quantitative methods to assess the exposure of the project to particular risks in real and measurable terms
  • Perform a detailed financial appraisal of potential capital projects to ensure consistent and reliable decision-making processes
  • Understand and apply the principles and methods of modern economic engineering
  • Apply the fundamentals of discounted cash flow analysis to project evaluations
  • Determine the Internal Required Rate of Return of the project as the basis for sensitivity analyses to establish the risk exposure to the organization
  • Apply the concept of Expected Monetary Value to compare various alternatives

Who should attend?

  • Project Team Leaders
  • Risk Management Team Leaders
  • Production Engineers
  • Cost Engineers
  • Financial Staff

Course outline:

Module (01) Fundamentals of Decision Analysis & Engineering Economics

  • What is Project Management Decision Analysis?
  • Risk and Uncertainty on projects
  • Identifying all possible outcomes
  • Identifying key decision-making factors
  • Fundamental tools of engineering economics
  • Time Value of Money
  • Simple and Compound Interest
  • Appraisal Methods – Discounted Cash Flow Projections
  • Net Present Value Analysis (NPV)
  • Comparing Projects with Equal and Unequal Lives

Module (02) Rate of Return (IRR), Cost of Capital and Cost-Benefit Analysis

  • Determining the Internal Rate of Return (IRR)
  • IRR for a Single O&G Project
  • Incremental Analysis
  • Estimating the Cost of Capital for a Project
  • Weighted Average Cost of Capital (WACC)
  • Estimating the Benefit-Cost Ratio for a Single Project
  • Comparing Mutually Exclusive Projects Using Incremental Benefit-Cost Ratio

Module (03) Financial Project Risk Analysis

  • Overview of the Risk Management Process
  • Detailed Risk Quantification and Prioritization
  • Risk Quantification and Expected Monetary Value
  • Scenario Planning
  • Developing Risk Mitigation Strategies
  • Implementing Mitigation Strategies
  • Decisions Under Conditions of Uncertainty
  • Multiple Option Decisions
  • Combining Risk and Cash Flow Analyses
  • Calculating the Expected Monetary Gain or Loss

Module (04) Risk Scenario Planning – Case Study & Application

  • Cash flow projections – Tunnel Case Study
  • Risk Profile EMV Calculation before Mitigation
  • Identification of Risk Triggers & Probability
  • Identification of Risk Receptors & Impact
  • Combined EMV Risk Profile before Mitigation
  • Developing Probability Mitigation Strategies
  • Developing Impact Mitigation Strategies
  • Replotting the Projected Risk Profile after Mitigation
  • Examining the J-Curve to Derive the Most Economic Mitigation Point
  • Final Risk EMV and Project Feasibility Calculations after Mitigation 

Module (05) Cash-Flow Modelling and Project Decision Analysis

  • Preparing Cash Flow Projections
  • Incremental Costs and Benefits
  • Working Capital Requirements and Operating Costs
  • Forecasting Cash Flows
  • Risk Premiums
  • Pessimistic and Optimistic Forecasts
  • Opportunity Costs and Sunk Costs
  • Determining the Economic Life of a Project
  • Quantifying the Effects of Inflation
  • Variable Inflation Rates Over the Life of the Project
  • Relevant Cash Flows over Differing Time Horizons
  • Depreciation
  • Interest, Insurance, and Tax Costs
  • Corporation Tax Rates & Taxable Profits
  • Capital Allowances
  • Incorporating Tax in Cash Flow Models
Qatar Skills Training Centre
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