Project Finance Modelling
A project finance model is not a corporate model with debt added. The debt is the point. Sizing, sculpting, coverage and covenant behaviour are the model, and everything else exists to feed them.
We build models that lenders can interrogate: debt sized off cash flow rather than assumption, coverage tested in every period, and downside cases that show exactly where the structure stops working.
From $5,000. Typically 2 to 4 weeks. Fixed fee quoted before we start.
Common Failures
Where most project finance models fail
Debt sized as an input rather than an output
If the facility amount is typed into a cell, the model is describing a structure rather than solving for one. Debt should be sized from cash available for debt service under the target coverage ratio, and the sizing should resolve without a manual iteration nobody remembers to rerun.
CFADS defined loosely
Cash available for debt service is the number the entire structure rests on, and there is no single universal definition. What is included, what is excluded, whether it sits before or after tax, how reserve movements are treated: all of it needs to be explicit and consistent with the facility agreement, not assumed.
Coverage tested only at the summary line
A model showing an average DSCR of 1.45x can still breach in a single period. Lenders test minimum, not average, and they test it in every period under every case.
Circularity handled by switching iteration on and hoping
Interest during construction, debt sizing and fees create genuine circular dependencies. They need a controlled resolution with a documented convergence check, not a calculation setting.
No refinancing or tail analysis
If the facility does not amortise fully within the asset life, the refinancing assumption is doing enormous work and needs to be visible and stress-tested.
Scope
What we build
Construction phase
Drawdown schedule, interest during construction, capitalised fees, cost overrun scenarios and contingency drawdown, with the funding mix maintained through the build.
Debt sizing
Solved from CFADS at the target coverage ratio, with the resolution controlled and documented. Supports multiple tranches with differing tenor, margin, amortisation and ranking.
Repayment profiles
Annuity, straight line, and sculpted to a target DSCR. Sculpting is where most models fall over, because it has to solve against a coverage constraint that is itself a function of the repayment.
Reserve accounts
Debt service reserve, maintenance reserve and any structure-specific accounts, with funding, drawdown and replenishment logic.
Cash waterfall
Full priority of payments from revenue through operating costs, tax, debt service, reserves and distributions, with distribution lock-up where coverage tests fail.
Scenarios and stress testing
Lender base case, sponsor case, and downside cases run against the variables that actually threaten coverage. We identify the break-even point on each: the level at which DSCR reaches 1.00x and the structure stops working.
Refinancing and tail
Where relevant, refinancing assumptions modelled explicitly with sensitivity to the rate available at refinancing, plus tail coverage after facility maturity.
Applications
What we use it for
Debt raising
Sizing the facility, supporting the information memorandum, answering lender questions during credit approval.
Refinancing
Modelling the existing structure against alternatives, quantifying the benefit and identifying where the new structure is tighter than it looks.
Acquisition of an operating asset
Where the acquisition is debt-funded and the coverage profile determines what can be paid.
Ongoing compliance
Covenant compliance reporting and lender information packs, run periodically off the same model rather than rebuilt each quarter.
Sectors
Where we work
Infrastructure and transport. Power generation, including renewables. Real estate development and income-producing assets. Manufacturing capacity expansion. Telecommunications infrastructure. Healthcare and education assets.
We work most often across Pakistan, the GCC and cross-border structures where the asset sits in one jurisdiction and the lender in another.
Rate Risk
Why the rate environment matters here more than anywhere
In a corporate model, rates are one assumption among many. In a project finance model, they determine whether the structure exists.
A structure sized at one rate environment and refinanced into another can move from comfortable to breaching without anything happening to the underlying asset. Floating rate exposure, hedging cost, and the rate assumed at refinancing all need to be modelled explicitly and stress-tested, not embedded in a single blended input.
Already Have One
Already have a model?
If a model exists and you need to know whether it will survive lender diligence, start with a review. Project finance models are among the most valuable to review, because the errors are concentrated in the debt mechanics where they are hardest to spot and most expensive to get wrong.
Pricing and Timeline
What a build costs
| Fee | From $5,000, typically $5,000 to $20,000. Project finance builds usually sit toward the upper end |
|---|---|
| Timeline | 2 to 4 weeks |
| Included | Live Excel model you own, documentation, walkthrough session, 30 days of support |
Complexity drivers: number of tranches, whether sculpting is required, multi-currency structures, reserve account complexity, and whether the model must support ongoing covenant reporting.
Common Questions
FAQ
Start with a scoping call
Bring the term sheet or facility agreement if you have one. Thirty minutes, no charge, and we will tell you what the model needs to do and roughly what it will cost.