Module 1: Project Analysis : Tools & Techniques for Managing Risk & Uncertainty
Day 1
Fundamentals of Decision Analysis
- What is project management decision analysis?
- The purpose of the project business case
- The need for systematic risk management for decision-making
- Risk and uncertainty on projects
- Option analysis
- Identifying key decision-making factors
Measures of Project Profitability
- Fundamental tools of engineering economics
- Time value of money
- Appraisal methods - Discounted Cash Flow Projections
- Time equivalence
Day 2
Cash-Flow Modelling and Project Decision Analysis
- Financial Modelling and Project Evaluation
- Internal Rate of Return computations (IRR)
- Determining the Internal Rate of Return (IRR)
- The risk of not understanding IRR
Analysing Project Specifics
- Understanding the project context to assist in decision-making
- Determine stakeholders and their level of influence
- Capture requirements
- Determine scope of work
Day 3
The Cost of Capital
- Capital & Operating Expenditures (CAPEX / OPEX)
- Estimating the cost of capital for a project
- Benefit-Cost Ratio (BCR)
- Dis-benefits
Risk Modelling in Practice
- Identify Risks
- Forecasting risk impacts & probabilities
- Opportunity costs, sunk costs & salvage value of a project
- Determining the Risk Priorities
- The need for company cash flow
Day 4
Decision Analysis: Expected Value Concept
- Basic Probability Concepts
- Fundamental probability concepts
- Mutually & non-mutually exclusive, independent events
- Quantitative Project Risk Analysis
- Semi-quantitative bow-tie process
- Detailed risk quantification and prioritisation
- Expected monetary value
- Scenario planning
- Sensitivity Analysis Tools
- Simulation process
- Tornado diagram
- Defining the variables - PERT
Day 5
Decision Trees, EMV, Risk Responses and ROI
- Decision Tree Analysis
- Developing decision trees
- Solving decision trees
- Risk Responses
- Developing risk responses
- Evaluating response relevance
- ROI Analysis
- Understanding ROI
- Identifying ROI
- Evaluating and presenting your project options
Module 2: Advanced Project Economics, Risk & Decision Analysis
Day 6
Development Economics
- A brief history of energy usage
- Principles of development economics
- Understanding of economic terms
- Inflation and its impact on nominal & real cashflows
- Project financing
Day 7
Uncertainty in Investments
- Handling uncertainty in capital projects
- Understanding probability concepts
- The expected value concept: features and pitfalls
- Expected Monetary Value (EMV)
- Expected Profitability Index (EPI)
- Expected Opportunity Loss (EOL)
Day 8
Risks and Uncertainties
- Risk & uncertainty
- Risk aversion and risk premium
- Exploration project threats and opportunities
- Economic decision criteria
- Decision tree analysis
- Probability distribution
- Monte Carlo simulation
Day 9
Setting-up Spreadsheet Calculations Using Excel
- Spreadsheet Calculations
- Cashflow analysis
- Sensitivity analysis calculations
- Tornado diagrams
- Introduction to Monte Carlo simulations using @Risk
Day 10
Practical Use of the @Risk add-on
- Developing an integrated economic model
- Developing and using an @Risk Model Analysis
- Project sensitivity analysis utilizing data from @Risk Model
- Training course final review and close