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Copyright © 2018 by John E. Triantis. All rights reserved.
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Library of Congress Cataloging‐in‐Publication Data:
Names: Triantis, John E., 1944– author.
Title: Project finance for business development / John E. Triantis.
Description: Hoboken : Wiley, 2018. | Series: Wiley and sas business series | Includes bibliographical references and index. |
Identifiers: LCCN 2018001354 (print) | LCCN 2018002821 (ebook) | ISBN 9781119486138 (pdf) | ISBN 9781119486091 (epub) | ISBN 9781119486114 (oBook) | ISBN 9781119486084 (hardback) | ISBN 9781119486138 (ePDF)
Subjects: LCSH: Project management—Finance. | Decision making. | BISAC: BUSINESS & ECONOMICS / Finance.
Classification: LCC HD69.P75 (ebook) | LCC HD69.P75 T75 2018 (print) | DDC 658.4/04—dc23
LC record available at https://lccn.loc.gov/2018001354
Cover Design: Wiley
Cover Image: © Toria/Shutterstock
To my soul mate, my wife Connie
The record of infrastructure project financings provides ample evidence of shortcomings in skills and competencies, adequate project development preparation, and failures in project management. The idiosyncrasies and complexities of large infrastructure projects and the large number of participants account for some of the project failures. However, a number of project failures have their origin in the fragmentation of approach to project finance. That is, sometimes project finance is treated as a financial engineering problem, other times as an interweaving of contracts arrangement and at different times is considered mostly a project management issue. Each of these approaches focuses on subsets of specific issues of the broader discipline of new business development which incorporates elements of strategic planning, portfolio management, and financial and business planning intended to achieve competitive advantage.
Having learned from strategic planning, new business development projects, and project financing experiences, we recognized the need to treat project financing from a broader perspective than prevailing common practices. Why? Because Business Development groups view project financing a responsibility of Project Finance Organizations (PFOs) and PFOs had little knowledge of and interaction with Strategic Planning or Business Development functions. Discussions with project participants and results of a benchmarking study confirmed our assessment. Hence, our focus on integrating the knowledge, processes, and skills and competencies from the two disciplines to deliver significantly improved project financing solutions and make progress towards competitive advantage.
Besides the fragmented approach to infrastructure project finance in the current paradigm and the nonstellar record of project success, other reasons for undertaking the task of writing this book are:
Some typical misconceptions and wrong impressions the author has encountered are exemplified in the following actual statements by various project financing participants:
The problematic segmentation of approach to project finance raised the question: Is there another, possibly better way of treating infrastructure project finance in a more holistic approach? Our research showed that there was nothing to guide a broader treatment of project financing. Yet, we believed that a practical, balanced, broader, and integrative perspective is needed which is more effective. Hence, our treatment of the subject is from a new business development approach which also incorporates the key elements of strategic and business planning with financial engineering, contractual agreement interweaving, and process and project management. However, this book does not claim to be a treatise on infrastructure project financing; it is an eclectic and holistic treatment of its important elements to make it more effective.
In addition to the fragmentation of the approach to project finance, raising funding becomes more complicated and difficult to manage when unharmonized participant interests enter the picture along with underdeveloped host country and credit impaired customer considerations. To simplify the presentation and make it easier to grasp the essence of project finance, the topic is treated from a sponsor or developer perspective doing projects in countries able to deliver on obligations to the project. On some occasions, when warranted, we deviate from this approach and incorporate other considerations and various participants' viewpoints.
Addressing infrastructure project finance from a new business development, strategic planning, portfolio management, and strategic forecasting elements approach combined with traditional project finance elements is a unique method. The reasons this approach is unique and of benefit to the readers is that it:
The expectation is that readers will appreciate how the new business development approach is applied in any project to screen and evaluate opportunities and develop projects more effectively. That is, to bring projects from the prefeasibility study to financing closing quicker, address project stakeholder issues and harmonize interests, deliver winning financing proposals, and create profitable projects for all stakeholders. These are key elements in striving for and maintaining competitive advantage.
The idea of formalizing a comprehensive presentation of project finance for new business development has its origins with experiences in projects I did as a business consulting economist. The quest for sound processes, critical analyses, objective evaluations, innovations and continuous productivity improvements have been an integral part of my professional life. I have learned a lot from projects and interactions with financing advisors and colleagues, but it is difficult to ascertain what I have learned from whom or what specific project experiences I benefited from the most.
I took my first steps in project finance under the support and guidance of a most intelligent and capable CFO, Mary Baughman, who placed her trust on my ability to create and manage a professional project finance organization for AT&T Submarine Systems. I owe her gratitude for that which got me into the field of project finance. My skills have been augmented by discussions and work with financing advisors and consultants, financiers, and relationships with official and private funding source managers who shared freely valuable knowledge. I also learned from experiences of other project finance organizations and benefited from interviews of different types of project finance participants and insights from an extensive benchmarking study.
In preparing this book I have had the privilege of benefitting from constructive reviews and seasoned experience inputs and knowledge of Jeffrey Morrison, John Costas, Robert Rieffel, and Julie Hill. I am thankful for their useful comments and suggestions on an earlier draft of the manuscript. The help and guidance of the SAS and Wiley editorial staff are also acknowledged, but all errors and omissions are my own responsibility.
The encouragement and support of my wife during the research and preparation of the manuscript has been invaluable for it enabled me to focus on completing this task. In addition to Mary Baughman, I would like to thank my friend and former advisor Dr. Elizabeth C. Bogan for her guidance and help which shaped my professional life. Once again, I am thankful for and acknowledge the support of the late James Sotirhos; without it none of this would have been possible.
John E. Triantis is a retired business consulting economist, business strategist, and former project financing director with a track record of introducing effective processes and practices to develop value creating projects. He is an experienced new business development project leader and a trusted advisor in large investment, international infrastructure financing, and organizational restructuring projects. His passion is to help clients minimize decision uncertainty and project risk by integrating sound processes, analytics, and evaluations with strategic planning and business development principles to maximize project value. He uses unique methods and techniques to create world‐class organizations, apply best practices to successful project development and financing, and create sound project value realization measures.
His broad experience encompasses effective analysis for strategic decisions, investment evaluations, project risk management and financing, and productivity enhancements. He has developed practical methods, assessment tools, and early warning systems and uses cost‐benefit approaches to minimize time to decision, address risk mitigation effectively, and maximize chances of project success. He delivers knowledge and hands‐on coaching to clients on strategic planning and new business development, investment opportunity assessments, project financing, business cases, and business planning. His quest for efficient decision making has produced a proprietary system of quantifying project success at the idea stage before major investment decisions are made.
To address needs and fill gaps in client understanding, he authored numerous position papers and published the books Creating Successful Acquisition and Joint Venture Projects: A Process and Team Approach and Navigating Strategic Decisions: The Power of Sound Analysis and Forecasting as well as articles in professional domestic and international journals and books. He is the author of this book and currently working on a manuscript for the book Assessing Project Success at the Idea Stage. John holds a PhD in macroeconomics and international economics and a master's degree in statistics and econometrics from the University of New Hampshire. His bachelor's degree is in economics and mathematics from Fairleigh Dickinson University. He also served in the U.S. Army during the Vietnam conflict.