Construction finances

Project Finance in
Construction

Project Finance in
Construction
A Structured Guide to Assessment
Anthony Merna
Oriel Group Practice
Manchester, UK

Yang Chu
Postdoctoral Research Associate
Manchester Business School
The University of Manchester
UK

Faisal Fahad Al-Thani
Senior Director and Head of Business Development
Maersk Oil
Doha, Qatar

A John Wiley & Sons, Ltd.,Publication

This edition first published 2010
C Anthony Merna
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Library of Congress Cataloging-in-Publication Data
Merna, Anthony.
Project finance in construction : a structured guide to assessment/Anthony Merna,
Yang Chu, Faisal Al-Thani. – 1st ed.
p. cm.
Includes bibliographical references and index.
ISBN 978-1-4443-3477-7 (pbk. : alk. paper) 1. Infrastructure (Economics)–Finance.
2. Industrial developmentprojects. 3. Risk management. 4. Public-private sector
cooperation. I. Zhu, Yang. II. Al-Thani, Faisal F. III. Title.
HC79.C3M47 2010
624.068 1–dc22
2010007731
A catalogue record for this book is available from the British Library.
Set in 10/13pt Palatino by Aptara R Inc., New Delhi, India
Printed in Malaysia
1

2010

Contents

List of illustrations
List of tables
About theAuthors
Preface

xi
xiii
xv
xvii

1 Introduction

1

1.1
1.2

1.3
1.4

The development of project finance
Financial assessment
What is financial assessment?
Why perform a financial assessment?
Who is involved in the risk assessment process?
Where should a financial assessment be performed?
When should a financial assessment be performed?
What data are to be used?
How shouldassessment outputs be presented?
Purpose of this guide
Scope of the guide

2 Project finance
2.1
2.2
2.3

2.4

Introduction
Definition of project finance
The key characteristics of project finance
Special project/purpose vehicle
Contractual arrangement
Non-/limited recourse
Off-balance sheet transaction
Robust income stream of the project as the basis
for financing
Legal and financial...