MSc Construction Project Management

Project Finance will provide students with a good understanding of the different ways of financing infrastructure projects (airports, roads, bridges, power plants, schools etc). 

This unit involves the
• study of topics and applications which broaden and enhance the degree/PDP unit in which students are likely to hold an

The programme unit aims to:

1. Introduce the field of project finance and the typical types of projects for which project finance is used.
2. Identify how to structure a project finance project, how to raise finance and the typical financial instruments

Explain and critically evaluate the following discipline-related concepts: project structure, costs, revenues, and cash flow.

Evaluate the construction, operation, financial, and political risks of infrastructure projects.

Apply project finance concepts to infrastructure projects.

Demonstrate an ability to effectively manage time, research and use the web, library, and related sources of literature, work collaboratively, and use MS Office (or equivalent) software.

The course runs over 12 taught weeks. Each week there will be a lecture to introduce key topics. The topics will be illustrated with case studies from actual project finance projects to show how the theory can be applied in real situations. Topics studied are listed below:

1. Introduction to Project Finance – What project finance is, how it is different to corporate finance and the typical types of project on which project finance is used.
2. The contractual structure of a typical project finance project – the different ways of structuring a project finance deal, who the main parties are and their respective roles in the project, how the structure is used to manage risks in the project
3. Financial instruments, markets and institutions used in project finance – Understanding the costs and revenues in a project finance project and the preparation of a project cash-flow. Appreciation of the different types of financial instrument and when to use each one. The role of financial institutions and markets in project finance
4. Evaluating a project finance project – The steps involved in raising finance for a project finance deal and closing the deal.
5. Risk management and financial engineering as a tool of risk management - how to identify, assess and mitigate the risks in project finance projects – four different risk types (construction, operation, financial and political).
6. Insurance and Bonding in project finance – the role of insurance and guarantees in project finance, the different types of insurance and guarantees.
7. Restructuring projects – the different forms of project restructuring and when to use them.
8. Build Operate and Transfer (BOT) and the Private Finance Initiative(PFI) – How these forms of project finance work, their advantages and disadvantages and examples of their use.
9. Project Finance in Developing countries – the specific challenges facing project finance in developing countries and how these may be overcome

Students will also analyse six real world case studies of project finance projects throughout the semester.  Each case study will be followed by a Blackboard Quiz.  The first case study quiz will be formative and will not be graded; the subsequent 5 case study quizzes will be graded.  The 5 graded quizzes, in total, are worth 20% of the unit marks. 

Instantaneously via Blackboard Grade Centre

Esty, Benjamin C. Modern Project Finance: A Casebook. New York; Wiley, 2004.

Fight, Andrew, and Andrew Fight.Introduction to Project Finance. Oxford; Elsevier/Butterworth-Heinemann, 2006.

Gatti, Stefano. Project Finance in Theory and Practice: Designing, Structuring, and Financing Private and Public Projects. Fourth edition. London; Academic Press is an imprint of Elsevier, 2024.

Grimsey, Darrin, and Mervyn Lewis. Public Private Partnerships: The Worldwide Revolution in Infrastructure Provision and Project Finance. Cheltenham; Edward Elgar, 2004.

Flyvbjerg, Bent, Nils Bruzelius, and Werner Rothengatter. Megaprojects and Risk: An Anatomy of Ambition. Cambridge; Cambridge University Press, 2003.

Nunzia Carbonara, Nicola Costantino, Roberta Pellegrino, Concession period for PPPs: A win–win model for a fair risk sharing, International Journal of Project Management,Volume 32, Issue 7. 2014.

Flyvbjerg, B., Holm, M. S., & Buhl, S. Underestimating Costs in Public Works Projects: Error or Lie?. Journal of the American Planning Association, 68(3), 279–295, 2002.

Christian Henjewele, Ming Sun, Peter Fewings, Comparative performance of healthcare and transport PFI projects: Empirical study on the influence of key factors, International Journal of Project Management, Volume 32, Issue 1, 2014.

Won-Suk Jang, Dong-Eun Lee, Jae-ho Choi, Identifying the strengths, weaknesses, opportunities and threats to TOT and divestiture business models in China's water market, International Journal of Project Management, Volume 32, Issue 2, 2014.

M. Loosemore, E. Cheung, Implementing systems thinking to manage risk in public private partnership projects, International Journal of Project Management, Volume 33, Issue 6, 2015.

Graham M. Winch, Escalation in major projects: Lessons from the Channel Fixed Link, International Journal of Project Management, Volume 31, Issue 5, 2013.

Shuibo Zhang, Ying Gao, Zhuo Feng, Weizhuo Sun, PPP application in infrastructure development in China: Institutional analysis and implications, International Journal of Project Management, Volume 33, Issue 3, 2015.

Burke, Rory. Project Management : Planning and Control Techniques. 4th ed. Chichester; Wiley, 2003.

Dyson, J. R. (John R.), and Ellie Franklin. Accounting for Non-Accounting Students. Tenth edition. Harlow ; Pearson, 2020.

Esty, Benjamin C., Carla Chavich, and Aldo Sesia. "An Overview of Project Finance and Infrastructure Finance—2014 Update." Harvard Business School Background Note 214-083, June 2014. (Revised July 2014.)

HM Treasury. PFI- Meeting the Investment Challenge, Norwich: HMSO, 2003.

HM Treasury. Infrastructure Procurement: Delivering Long Term Value, London: HM Treasury, 2008.

Levy, Sidney M. (Sidney Morton). Build, operate, transfer: paving the way for tomorrow's infrastructure, Wiley, 1996.

Merna, Tony, and N. J Smith. Guide to the Preparation and Evaluation of Build-Own-Operate-Transfer (BOOT) Project Tenders. 2nd ed. Hong Kong: Asia Law & Practice, 1996.

Merna, Tony, and Faisal F Al-Thani. Financing Infrastructure Projects: A Practical Guide. Second edition. London; ICE Publishing, 2018.

Merna, A. Understanding the private finance initiative: the new dynamics of project finance, Asia Law & Practice, 1998.

National Audit Office. PFI: Construction Performance: Report by the Comptroller and Auditor General, London: HMSO, 2003.