Tony Merna

Project Management Strategy—project management represented as a process based set of management domains and the consequences for project management strategy

Abstract Project Management is not as consistently effective as it ought to be. If we re-examine some of the examples of failures or poor performance we can see that the causes often originated in poor management particularly at the front-end during strategy formulation, rather than poor downstream execution. Yet most of the project management literature concentrates on the execution tools and techniques rather than the effective development and deployment of project management strategy within a total process concept. An initial process model of project management was presented at the IPMA 15th World Congress in May 2000. This paper reports on further research, developing the model and its deployment, to place project management and project management strategy in the context of business development. Adding value to the business and leading to a reappraisal of the role of project managers in a global energy company.

The Allocation of Financial Instruments to Project Activity Risks

The types of financial instruments available for financing proj-ects have always been of concern to investors and promoters. In many infrastructure projects, the debt-equity ratio is seen to be a measure of the risk in that project; the greater the risk, the greater the amount equity sponsors are compelled to invest. However, the defined debt-equity structure does not provide a breakdown of the financial instruments associated with the risk identified on each project activity. This article examines the allocation of financial instruments, those being senior debt, mezzanine/subordinated debt, and equity. An example shows the way this mechanism is used.

Portfolio Analysis for a Bundle of Projects

In both the United Kingdom and Germany under the relevant Private Finance Initiatives (PFIs), usually on the basis of Public Private Partnerships (PPPs), projects now are being procured or considered in bundles rather than on an individual, stand-alone basis. For the purpose of financial analysis, bundled projects can be considered as portfolios of projects. When projects are considered individually, some may be commercially viable as stand-alone projects and others may not. However, when projects are bundled together, an overall portfolio of projects may meet a promoters minimum acceptable rate of return (MARR) and be deemed commercially viable. The authors suggest that when projects are undertaken as commercially viable projects under the PFI, they should piggyback non-commercially-viable projects to ensure such projects are privately financed. These non-commercially-viable projects can be financed with the help of cross-collateralization to make them viable as parts of project portfolios.

Development of a Model for Risk Management at Corporate, Strategic Business, and Project Levels

The management of risk is one of the most important issues facing organizations today. This article focuses on the need for risk management at corporate, strategic business, and project levels within an organization. The authors interviewed personnel from 25 FTSE-listed organizations from different industry sectors to survey current risk management practice. The model described in this article utilizes the findings from those interviews.

Risk management of an agricultural investment in a developing country utilising the CASPAR programme

Abstract This paper describes how the software programme Computer Aided Simulation for Project Appraisal and Review (CASPAR) can be used to determine the commercial viability of an agricultural investment. A case study involving the purchase of a farm and subsequent crop production of tobacco and paprika over a ten-year operation period in a developing country is presented. Initially a base estimate is prepared and a risk analysis performed. Risks are then mitigated and the risk analysis is performed again. The results of the risk analysis can then be used as part of the business plan.

Quantitative Evaluation of the Relationship BetweenSupply and Off-Take Contracts in Petroleum Refinery Projects Utilizing Project Finance

The petroleum industry is one of the fastest growing sectors in the world in terms of private participation and financing. The risk and uncertainty associated with the crude oil supply and product demand influence the overall economic viability of petroleum refinery projects. Issues associated with the security of a project’s cash flow are of primary concern to investors using project finance in the procurement of petroleum refineries. This article reviews the characteristics of petroleum refinery projects, the concept of project finance, and issues associated with its application, with emphasis on the investigation and appraisal of the arrangement of supply and off-take contracts in relation to risks and economic returns. A mechanism is developed to aid contractual arrangements of supply and off-take strategies in support of project finance transactions in the procurement of petroleum refineries. The mechanism is tested in a case study through computer simulation.