Project vs. Corporate Financial Modeling

It's been a while since you posted your question, but here's an answer if you didn't get put on the project.

Project finance is very different to corporate finance and you wouldn't normally be able to parachute straight into this area without experience in it or without a secondment. Project financing involves non-recourse debt, where the assets related to the project are at risk if there is an event of default. By separating the "project" from the rest of the company this enables a higher level of gearing than would normally be acceptable to the company. The level of debt can be anywhere from 50% to 85% depending on the project. As a result of this high level of gearing, the focus of the project finance model is on debt and metrics that measure capability to meet debt re-payments.

Project finance models and "corporate finance" models will have the same start point in that they include the projected revenues, costs, cashflows and accounting for the project. Where they start to differ is that there is a lot of additional work in looking at debt, Cashflow Available for Debt Service (CFADS), the Debt Service Reserve Account (DSRA), and debt metrics (eg. Debt Service Cover Ratio/DSCR). The main use of all this additional analysis is to identify the maximum level of gearing that the project will support given minimum acceptable debt metrics (AKA debt sizing). In doing this, equity return is also maximised. If you have a project that is a public private partnership then there is an additional layer of complexity in terms of structure, accounting and cashflow movements.

You would need to do a project finance modelling course if your company doesn't have anyone to train you up on the modelling side as it's a completely different paradigm. Practitioners never bother with books to learn PF modelling and there aren't any decent online courses as it's a very specialised area. There's usually a company that will run a basic and advanced PF modelling course near you or check with Euromoney if you don't mind paying through the nose. Any decent practitioner can tell you who is generally accepted as the best trainers in your region, as the best companies that do PF model training will also generally offer model/project consulting and model audit services.

*Even if it's under a large company, you need external financing (debt). Also, quite often you would normally want some external equity financing from Design & Construction or operators that are involved, to ensure everyone is aligned. But that depends on the type of project you have.