CCS Evaluation tool

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Permalink Reply by Juha Makinen on August 9, 2008 at 9:59am

Dear Kene,

This reply may come very late taking into account when you posted your question.
However, I give my view here in briefly just in case.

All project financial valuation are better to be done by developing a tailor made cash flow analysis using Excel. Almost all financial analysis related to project development transactions are done this way (e.g. project developers, consultants, lending banks involved the projects usually share the same model which should be transparent and logically put together each party to check and get comfort how realistic are cash flows based on the assumptions used). This the most practical and flexible way to build financial model that you can amend as the project goes forward. In the early stage it is better to have a relatively simple model just calculating all the relevant project cash flows in high level (constuction costs, financing the construction costs, CCS operating calculations over the project life and operating cash flows coming out of operation calcs, and then put together cash flow analysis), for more detail modelling (i.e. when financing is planned to be raised) it is better to have more detail level financial model. Good modelling practise is to keep all the inputs as separate worksheets(s), then do the calculations and then show outcomes. This allows also keeping good track of the used assumptions (i.e. showing sources and timing where they come from or what they are based on).
Ideally someone of the project team should have enough skills to do analysis (i.e. being familiar basic accounting rules, financing (banking purposes), valuation (Sponsor project evaluation) and the project technical structure and commercial terms) rather than fully relying on using external consultants as their services become very expensive in the long run.

Kind regards,
Juha Makinen