The Project Financing is an approach to realise projects, based on the reliability of the project itself and of the involved subjetcs (sponsors, designers, constructors and operation companies).

The main characteristic of a Project Financing is to consider the cash flow capacity of the Project as the prioritary source to repay third parties funds and to remmunerate the equity.

The Project Financing techniques were developed first to realize private project and then were worldwide adopted to realize public works.

In Italy the Project Financing way to finance the public works realization in ruled by the law n°109/94.

- The Sponsor The main drive of any Project Financing initiation in the Sponsor, that conceives the first idea, defines preliminarly the project, starts the gathering of the technical and financial resources necessary to the project (research of the partners included) and finances the first phase dedicated to the preliminary assessments. On the basis of the first phase analysis, made by the Sponsor, the other phases follows:

- feasibility study – technical economical feasibility study that includes the budget and realization and start up scheduling, the profitability analysis, the financial analysis, the estimation of the cash flow and the sensitivity analysis in the period of loan repaiment. The feasibility study includes the assumption relevant to the organization and to the structure for the project control / project management.

- Company structure The Organization Structure of the Company that will manage the design, procurement, construction and operation of the project is defined, including the clear sharing out of the roles and responsibilities.

- Financial structure The financial structure is defined though the agreement with the lenders (generally a pool of banks) for the issue of the loan.

- Risk analysis The analysis of the risks related to the project is finalized to evaluate their potential effects and to their proper allocation and coverage, with the aim of a better control (risk management).

 

 

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