Project Investment Analysis GeoModes workshop Project Investment Analysis
code: J10

Project Investment Analysis

format: Virtual course
duration: 3 days
level: Advanced
accreditation: CPD




Large capital-intensive projects in all major industries require substantial – and mostly risky – investments in the acquisition, exploration, and subsequent operation and maintenance of new organizational assets.

The decision whether or not to invest in new capital projects, starts with critical decisions during the exploration phase of a new development, or the expansion of an existing field. The decision-making tools used to analyse project risk under conditions of uncertainty will help companies to determine the probability of success or loss, and will drive the decision to develop or abandon the well.

Of paramount importance therefore, is the systematic and comprehensive evaluation of potential investments, and the development of detailed cash-flow analyses to determine as accurately as possible, the expected returns to the organization under varying conditions of uncertainty over the expected productive life of the project.

This requires the development of sound, realistic, and carefully structured cash-flow projections, reflecting both the initial capital expenditures required for the acquisition of the asset, as well as the operational expenditures required for successful operation and maintenance of the asset over its anticipated productive life.

World-wide an alarming number of large capital projects fail to meet, or overrun their planned budgets, failing to realize both the financial and strategic goals of the organization – the very reason for their being undertaken in the first place – often with sizable increases in capital and operational expenditures, and with substantial financial losses to the organization. In the majority of cases, this is the inevitable consequence of failing to apply the tools and techniques of modern project decision-making, evaluation, financial planning, capital management and cash flow analysis when considering investment into new capital projects.

The course is designed for:

This course is designed for programme and project management professionals, project leaders, project engineers, cost engineers, and other senior project control and business services professionals who are responsible for or involved in evaluating projects and managing cash flow throughout the duration of project delivery.

Course objectives

Understand how to manage an organization’s investments in large capital-intensive projects
Identify how to make and understand financial decisions and be able to present these back to the stakeholder community
Identify how to manage the cash flow of projects and manage and appraise the financial risk mitigation strategies
Understand proper cash-flow and sensitivity analyses to forecast and control potential future conditions
Define and manage project success factors and maximize the return on the capital invested in projects
Understand how to define financial strategies and incorporate these into project risk mitigation strategies

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

Cash-Flow Modelling and Project Decision Analysis

Financial Modelling and Project Evaluation
Rate of Return Computations (IRR)
Determining the Internal Rate of Return (IRR)
The Risk of Not Understanding IRR

Day 2

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

The Cost of Capital 

Capital & Operating Expenditures (CAPEX / OPEX)
Estimating the Cost of Capital for a Project
Benefit-Cost Ratio (BCR)

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 3

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

sion 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



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Project Investment Analysis

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