Example 1
FINANCE KPI | BASE | IMPROVEMENT | CHANGE |
---|---|---|---|
Construction | 142.46mUSD | 138.66mUSD | -3.8mUSD |
IDC | 3.8mUSD | 2.56mUSD | -1.24mUSD |
Total,CAPEX | 146.26mUSD | 141.22mUSD | -5.04mUSD |
IRR | 15.73% | 17.12% | 1.39% |
EXAMPLE:
60MW wind farm – MEM project team in contracting phase to improve project plan commercial contracting and payment milestones |
SUCCESS CRITERIA:
MEM team improved levered IRR to above 16% requirement |
DRIVES:
Optimised crane sequencing, negotiate EPC cash flows from front end to back end loading |
Example 2
FINANCE KPI | BASE | REGRESSION | CHANGE |
---|---|---|---|
1st year availability | 97% | 76% | -21% |
1st year revenues | USD 22.6m | USD 17.7m | USD -4.9m |
IRR | 14.39% | 12.78% | -1.61% |
EXAMPLE:
50MW wind farm affected by quality issues during first year of operations (engineering and construction defects in foundations). Investors did not have: callable securities (bonds from Chinese EPC contractor held by Chinese state owned bank). Experienced Owner’s Engineer during design review and on site during construction. |
RESULT:
USE 4.9m loss of revenue (reduction in IRP of 1.61%), not including cost of repairs which were paid by shareholders. |
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Note: above reflects loss of revenue and does not include cost of repairs, which were paid 100% by project investors. |
Example 3
FINANCE KPI | BASE | REGRESSION | CHANGE |
---|---|---|---|
1st year availability | 100% | 75% | 25% |
1st year revenues | USD 15.41m | USD 12.81m | USD 2.6m |
IRR | 13.28% | 13.16% | -0.12% |
EXAMPLE:
50MW phase one of a 220MW solar farm (totalling four construction phases over a two year period) affected by design defects (power quality issues due to low quality inverters). |
RESULT:
Three month delay grid interconnect while power quality issues were rectified. This resulted in a loss of USD 2.6m loss of revenue (reduction in IRR 2.23%), not including USD 550k cost to shareholder to correct the quality problem. |