The structuring is a framework in which ownership structure, project structure, risk structure, and financial structure decisions are made and tied together in the project’s legal structure which, in turn, forms a foundation for funding the project on a limited recourse basis.
- Ownership Structure: The ownership structure is how the special purpose vehicle/company (SPC/SPV) is organized; that is, as a corporation, unincorporated joint venture, limited liability partnership, etc. Depending on the type and size of projects, our expert project support services team provides complete guidance for most suitable project ownership structure.
- Team Structure: The way a project team is structured can play a major role in how it functions. Different styles of team will have different characteristics. Careful consideration of team composition and reporting relationships can make a big difference to the results. The various roles in the team will depend on the nature of the project. Project roles and resources needs to be identified as part of the planning, estimating and resourcing process. The resources and optimum way of working normally change during the project. Often an initial high-powered team will define the business solution, followed by a much broader team to deliver it, and then a fine management and operational team to operate it. There needs to be a core team that would remain fully involved throughout the project, but others that will need to be brought in as required. Team structure will probably be adjusted at each stage to meet the evolving nature of the project. The right structure for a small, high-powered, business-design team is unlikely to work for a large applications development team.
- Risk Breakdown Structure (RBS): The risk breakdown structure (RBS) is a hierarchical framework of potential sources of risk to a project. Risks include anything unplanned and unforeseen that can have a negative impact on the project’s costs, timing or quality. Our expert project support services team helps manage the risks effectively and get the project on track by formulating a project specific Risk Breakdown Structure (RBS). RBS is a hierarchical representation of risks, starting from higher levels and going down to finer levels of risks. To sum it up, we help structure the prioritization and mitigation of risks after the identification, assessment, and allocation process is completed.
- Capital Structure: This is required for financing any project through a combination of debt, equity and other sources. Some of these sources maybe external, such as lending institutions, and the proportion of funding from such sources is called the gearing ratio. We help capital structuring of projects by putting in place a variety of forms of finance, the availability of which depend on several factors. We compile a budget for the project you plan to execute (estimates from material suppliers, quotations from contractors, and calculate the amount of time it will take).This includes costs of licenses and permits, staff overtime payments, payroll taxes and employee benefits for the duration of the period. We identify the value of the equity your company holds by calculating the total value of all assets, including unexercised stock options, inventory value and retained earnings enabling you to determine how much finance you can raise against your project by offering an investor a share of it. A higher percentage of financing obtained from equity means a lower gearing ratio or percentage that needs to be obtained through creating debt. We also help calculate how much of your equity you can afford to risk on financing the project. Equity finance has a lower borrowing cost than debt financing does but may carry a higher risk. We help you make a resource allocation decision, which means deciding how much of your company’s value to offer to an investor. Our expert project support services team works out the return on investment you can expect from the project, also called the internal rate of return (IRR) to help you convince all external lenders whom you approach that the project is viable. We make sure the capital structure yields a return that is higher than the minimum acceptable rate of return, also known as the hurdle rate. We help you choose a combination of financing options that together help to reduce the hurdle rate as much as possible. Lenders will need conclusive proof that the project will yield a satisfactory return. If the project’s risk profile is high and the anticipated return on investment lower than the lender find acceptable, we help you source your capital through alternative funding methods.
- Financial Structure: The way in which a company’s assets are financed, such as short-term borrowings, long-term debt, and owners equity. Financial structure differs from capital structure in that capital structure accounts for long-term debt and equity only. A considerable cost associated with the project is the cost of capital or the costs of obtaining the financial resources to implement the project. To correctly estimate these costs, the financial model must accommodate a fundamental problem in project finance where the required money for the initial investment will come from. Our expert project support services team assist project sponsors with the financial structuring of their projects.
- Legal Structure: The project’s legal structure is the web of contracts and agreements negotiated to make financing possible. Financial structure refers to the mix of financing used to fund a project, which includes equity, short‐ and long‐term loans, bonds, trade credits, etc. and the cash flows to equity providers and the lenders.