Advanced Project Management Economics

Project management professionals and project oriented organizations are faced with the imperative need to manage, invest and implement projects at an increasing rate and with growing complexity and innovation. With this reality, several major challenges come along:

How to ensure that the organization is optimizing its overall investment in the most valuable projects?
- And how to make those decisions auditable?
How to take into account the various aspects of a project’s economic attractiveness as well as the non-economic impacts?
How to make sure that the estimated investment based on which projects are selected for investment is accurate and predictable?
- And how to prevent unpredictable and adverse changes to the cash-flow and funding requirements?
How to duly account for the ever-present uncertainty and risk in the project estimates and expected return on investment?
How to properly account or the time-value of money, taxes and depreciation, in evaluating projects and the alternatives to manage the life-cycle of the strategic assets?
Once a project enters execution, how to ensure that changes and project performance variations are proactively monitored and managed in order to update expectations of the return on investment and to maximize it where possible?

Project Economics and capital budgeting is the process by which organizations make strategic and long-term investment decisions on projects. Selecting and investing in the “right projects” amongst various mutually exclusive or synergistic alternatives is therefore a key priority for project-based organizations.

Making these business-critical decisions should follow a process that ensures efficiency, predictability and auditability of the investment, and therefore based on best practices and supported by appropriate tools and techniques.

This includes, at the very onset of the project, the use of economic indices of project performance, accurate and properly structured estimates of cost, time, benefits realization, risk analysis and contingency, and the resulting project cash-flow based on which the investment attractiveness is evaluated.

While this upfront process is aimed at setting a stable project investment scenario, once the decision is made and the project enters execution, changes and performance variations will inevitably occur, ranging from adversities that need to be mitigated to emerging opportunities that ought to be captured; the real-life story of the project will seldom unfold as initially envisaged.

Salvo Global’s masterclass will be providing the latest best practices, supporting tools and techniques on project economics. Delegates will be updated with the latest developments constitutes a key requirement for all project management professionals involved in managing, operating or influencing management and business decisions involving capital projects.

Top Learning Objectives

Understand the process of project capital budgeting, its context and importance for project-based organizations
Distinguish and know how to apply in practice the key concepts of financial mathematics as the basis to evaluate capital project investment scenarios
Implement in practice the main project evaluation and selection methods, including economic indices, scoring models and portfolio optimization
Develop models to analyze and evaluate project scenarios for asset replacement versus asset improvement investments, using all the concepts and methods of capital budgeting, including the annuity
Learn how to use in practice the estimating recommended practices from the AACE International of cost and schedule classification (18R-97 and 27R-03) based on the level of maturity of project definition
Apply the Project Definition Rating Index (PDRI) from the Construction Industry institute (CII) (RR113-11) to measure the level of project definition
Implement a comprehensive and integrated cost and schedule estimating process, including the risk contingency reserves, to ensure the required accuracy and predictability of capital budgeting and return on investment expectations
Put in practice the main cost and schedule estimating techniques including range analysis, Monte Carlo simulation and parametric modelling
Learn how to incorporate in the project budget the contingency reserve based on the risk register and risk quantification
Master how to integrate the project scope definition, cost, schedule and risk contingencies into a consolidated project performance baseline (PMB) from where the project investment cash-flow and funding requirements can be derived with accuracy
Understand the importance of updating the project capital budgeting analysis based on the project performance measures and project changes during project execution
Recognize the different types of project changes and how to incorporate these into the project baseline, update the investment and benefits realization cash-flows, review the capital budgeting model of project evaluation, and monitor the variation of the expected Return on Investment (ROI)

Who Should Attend?

This course is intended particularly for all the professionals who are or will be responsible for controlling or supporting programs and large or complex projects, services and systems, including the following:

Project Controls Manager
Project Controllers
Project Financial Controllers
Earned Value Specialists
Investment Risk Analysis
Programme Directors/Managers
Project Planners & Schedulers
Risk Management Offices Staff
Project Management Office Staff

Project Team Members
Cost Managers
Cost Controllers & Engineers
Project Sponsors
Project Consultants
Project Specialists
Project Engineers
Top Management

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