1). How important is project documentation?
High quality project documentation is absolutely essential for the success of your project.
Globally, there are more projects seeking finance than there is international finance available to fund them.
Consequetly, in this competitive financial environment, investors, who are busy people do not waste time on projects with inadequately prepared documentation.
Lenders have to be absolutely convinced that your project is a solid investment before they will invest in it. Your project documentation is the primary means of achieving this.
2). What documentation do I need to prepare my project for financing?
Each project is unique but each project requires documentation produced to international investment standards typically including a bankable market feasibility study with competition analysis; a financial feasibility study modelled on cash flow with detailed departmental costs, profit-center projections, a five year forecast, profit and loss projections, a risk analysis, hard and soft costs and detailed exit year calculations; a bankable business plan with
professional management structure and non-compete agreements; a development budget with a detailed statement of all expenditure to be incurred prior to the project opening including contingency provisions; an initial outline architectural master plan; a final architectural master plan and a private placement memorandum with an executive summary of the feasibility studies, due diligence search findings, architectural concepts and profit and loss calculations.
Additionally, an environmental impact assessment and a social impact assessment, including a defense anticipating possible objections from the public, local or government authorities or other organizations may be required. Each project also typically requires the appropriate local and government authority permits to allow the construction of the project.
3). Who should produce the documentation for my project?
International investors are only interested in a ruthlessly objective view of your project so it is essential that your project documentation is independently prepared by internationally experienced analysts with a proven track record.
You too should only be interested in an independent and objective view of your project, if your project does not stand up to independent objective scrutiny you should consider whether it is a good use of your time searching for investment from the international project finance market as such a search may well prove futile.
4). Can you produce the documentation for my project?
Yes. We are happy to produce your project documentation as this gives us control over its quality. We have a very highly experienced team which produces comprehensive market and bankable financial feasibility studies, bankable business plans, architectural plans, environmental surveys and all aspects of project documentation.
We produce the documentation for most, but not all, of the projects which we approve for financing. To obtain our finance provision fees we need your project to attract finance so we typically carry out these works at cost.
5). Do you insist on producing the documentation for my project?
No. You are completely free to engage a third party to produce your project documentation but it must be produced to international investment standards. We do not provide finance for projects which have inadequate documentation. If your project documentation is produced by a third party it will be necessary for us to analyze and approve it before we can approve your project for financing.
6). My project documentation was prepared by internationally experienced analysts, will you approve it?
Possibly! We will have to perform our own independent analysis of your documentation to determine whether it meets the appropriate international standards.
7). What mistakes are made by managers who have never developed a significant project before?
A common error made by managers who have not developed a significant project is to employ accountants or others who have never developed a significant project, to prepare their project documentation. This almost invariably results in documentation which international investors find completely unconvincing.
8). My project documentation was prepared by an Accountant – will this be adequate for raising project finance?
No, it is most unlikely. Your project documentation must be of sufficient quality to convince experienced international investors to invest in your project. If the people who prepared your project documentation do not have a proven and successful international track record of producing documentation for your type and scale of project it is very unlikely that your documentation will attract the attention of serious professional investors.
9). My project documentation is inadequate by international project finance investment standards – will you consider approving my project for financing?
No. We only approve projects which have international standard documentation prepared by experienced international analysts. You must arrange for the production of documentation of this quality either through us or through a third party acceptable to us.
10). Why do you only approve projects with high quality documentation?
We usually have to provide lenders with financial guarantees for the first three years of a project’s operation. If your project fails to meet the financial targets stated in the project documentation we forfeit our security, so we have no interest in projects which have inaccurate, incomplete or unsupported data. It is not possible to raise international project finance with inadequate documentation and therefore we only approve projects supported by international investment standard documentation.
11). How is the data for the financial feasibility study derived?
It is essential that the data in your financial feasibility study is derived from the real-world cash flow performance of comparable existing projects and is not based on assumptions. Financial feasibility studies based on assumptions uncorroborated by real-world data comparisons carry no weight with international investors. To attract finance, your project must have a realistic profit and loss forecast and be able to demonstrate an acceptable internal rate of return.
12). Should I have a material disclosure statement in my project documentation?
Yes. You should incorporate a material disclosure statement in your project documentation confirming that you have not supplied data for the market feasibility study or the financial feasibility study. This gives potential investors confidence that the financial data in the core project studies is independent and objective.
13). My project is viable but my lack of management and operational experience is a weakness in my business plan. Can you help me?
Yes. Lenders are averse to risk and are therefore disinclined to invest in projects in which the managers do not have strong operational and managerial experience. We provide managers who have strong industry experience to incorporate into the business plan management structure to give confidence to the investors that their investment will be protected by experienced and proven managers. All such provision of personnel is subject to contract.
14). What happens while the project documentation is being prepared?
While the project documentation is being prepared we usually start our due diligence procedure and the project financing process.