Project Feasibility & Time Value of Money

Project Feasibility & Time Value of Money Anjum Asim Shahid Rahman Chartered Accountants. Member firm of Grant Thornton International

Scope of work Project Concept SWOT Analysis Financial Analysis Way Forward Project Feasibility Market Assessment Investors Benefit • A decision making toll to do or forgo a project. It includes: • Justification of Project Need • Viability/do ability of a project • Financial & Economic Analysis • Risks identification and mitigation • Option Analysis Anjum Asim Shahid Rahman Chartered Accountants. Member firm of Grant Thornton International Anjum Asim Shahid Rahman Chartered Accountants. Member firm of Grant Thornton International

Scope of work Project Concept SWOT Analysis Financial Analysis Way Forward Project Feasibility - Justification of Project Need Market Assessment Investors Benefit • Demand & Supply Gap • Better Quality or increased efficiency • Cost Reduction • Strategic objective • Regulatory Requirement Anjum Asim Shahid Rahman Chartered Accountants. Member firm of Grant Thornton International Anjum Asim Shahid Rahman Chartered Accountants. Member firm of Grant Thornton International

Scope of work Project Concept SWOT Analysis Financial Analysis Way Forward Project Feasibility - Viability/do ability of a Project Market Assessment Investors Benefit • Project feasibility access project viability from following perspectives : • Legal • Technical • Financial • Environmental • Social Anjum Asim Shahid Rahman Chartered Accountants. Member firm of Grant Thornton International Anjum Asim Shahid Rahman Chartered Accountants. Member firm of Grant Thornton International

Scope of work Project Concept SWOT Analysis Financial Analysis Way Forward Project Feasibility - Financial & Economic Analysis Market Assessment Investors Benefit • Financial Analysis is investors perspective and includes • Determining Investment Requirement • Bankability of Project • Opportunity Cost • Estimation of Required Return • Projections of Expected Return • Economic analysis measures overall benefit to economy and is normally from government perspective for prioritizing a project. Anjum Asim Shahid Rahman Chartered Accountants. Member firm of Grant Thornton International Anjum Asim Shahid Rahman Chartered Accountants. Member firm of Grant Thornton International

Scope of work Project Concept SWOT Analysis Financial Analysis Way Forward Project Feasibility-Risk Identification & Mitigation Plan Market Assessment Investors Benefit • Normal Project Risks • Cost overrun • Time overrun • Performance Risk • Natural Hazards • Demand Risk • Economic Risks • Government Support • Mitigation plan involves structuring project so as to pass through maximum possible risks Anjum Asim Shahid Rahman Chartered Accountants. Member firm of Grant Thornton International Anjum Asim Shahid Rahman Chartered Accountants. Member firm of Grant Thornton International

Scope of work Project Concept SWOT Analysis Financial Analysis Way Forward Infrastructure Projects & Feasibility Market Assessment Investors Benefit • High Capital Costs • Long duration of projects • No easy exits Anjum Asim Shahid Rahman Chartered Accountants. Member firm of Grant Thornton International Anjum Asim Shahid Rahman Chartered Accountants. Member firm of Grant Thornton International

Scope of work Project Concept SWOT Analysis Financial Analysis Way Forward Time Value of Money Market Assessment Investors Benefit • This is about perceived value of time and is so different for different people /groups • It is based on concept of equal purchasing parity over different time periods. • Normally it is defined as “Interest Cost” Anjum Asim Shahid Rahman Chartered Accountants. Member firm of Grant Thornton International Anjum Asim Shahid Rahman Chartered Accountants. Member firm of Grant Thornton International

Scope of work Project Concept SWOT Analysis Financial Analysis Way Forward Time Value of Money- Infrastructure Projects Market Assessment Investors Benefit • Cost of delaying a project • 100 Billion -------> 150 Billion (50 Billion) • In addition there are other costs including Poor quality of life for delayed period and other economic losses. Anjum Asim Shahid Rahman Chartered Accountants. Member firm of Grant Thornton International Anjum Asim Shahid Rahman Chartered Accountants. Member firm of Grant Thornton International

Scope of work Project Concept SWOT Analysis Financial Analysis Way Forward TVM – Project Prioritization Toll Market Assessment Investors Benefit • limited availability of capital requires prioritization of projects. • Different projects may have different cash flow patterns over the project life . • TVM equates cash flows of each project in present value terms .All else equal, the project with highest NPV should be taken first Anjum Asim Shahid Rahman Chartered Accountants. Member firm of Grant Thornton International Anjum Asim Shahid Rahman Chartered Accountants. Member firm of Grant Thornton International

Scope of work Project Concept SWOT Analysis Financial Analysis Way Forward Market Assessment Investors Benefit • Thank you Anjum Asim Shahid Rahman Chartered Accountants. Member firm of Grant Thornton International Anjum Asim Shahid Rahman Chartered Accountants. Member firm of Grant Thornton International

Project Feasibility & Time Value of Money