Value Management

CONCEPT OF VALUE The concept of value can be defined as the relationship between satisfying an organization’s many conflicting needs and the resources required to meet those needs. Value can be added to projects in several ways. These include providing greater levels of client satisfaction, maintaining acceptable levels of satisfaction while lowering resource expenditures, or some combination of the two. It is also possible to improve...

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The process of financial management

Project finance involves two main types of contracts: concession agreements with the government, and off-take contracts with consumers. The process of financial management involves five major steps: 1.      Conducting feasibility studies, 2.      planning project finance, 3.      arranging the financial package, 4.      controlling...

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PRINCIPLES OF FINANCING PROJECTS

TYPES AND SOURCES OF FINANCE There are two main types of financing: equity and debt. Equity financing refers to the money subscribed by investors and shareholders, whose returns on investment are in the form of dividends and capital growth equivalent to the value of their equity in the project organization. However, the project organization can make dividend disbursements only after the interest and scheduled loan repayment obligations have...

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PAYMENT ARRANGEMENTS

Cost-reimbursable Arrangements A cost-reimbursable arrangement is often the simplest form of contract, particularly if the work is ill defined at the outset. This is also called the ‘‘cost-plus-fee’’ or ‘‘cost-plus’’ contract. It is sometimes referred to as a ‘‘limit-of-liability’’ contract, because it is normal for the sponsor to set limits on the amount of funds that he or she is willing to allocate. Cost-reimbursable Arrangements fixed-price (lump sum) – contractors can bill monthly. If the project is revised, the budget may be revised...

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