Use Case: Project Financing Phase
During the project financing phase, it becomes critical to determine the project's economic viability and optimal financial structure. Depending on the company, this analysis may be carried out by the internal finance team or outsourced to a financial advisory firm
What are the key points related to financial modeling during the project financing phase?
Before launching requests for proposals for bank or bond financing, the financial model is used to develop marketing documents related to the asset to be financed. These documents typically outline its general characteristics, projected economic performance, and the proposed financial structure.
Once the RFP is launched and commercial offers are received, they are reflected in various financing scenarios. This makes it easy to compare the financial impact of each offer and rank them based on their financial performance.
The financial model serves as a compass during negotiations with the various stakeholders.
During the financial closing phase, the very structure of the model and the associated assumptions are put to the test. The goal is to validate the accuracy of the approximations used for the assumptions, the credibility of those supported by studies or contractual documents, and the overall robustness of the assumptions used to reassure liquidity providers.
This is a multi-stakeholder effort, where the model continues to evolve—both in its structure and in the assumptions entered. The completion of financial closing is marked by the approval of investment and financing decision-making committees, often contingent upon sensitivity analyses applied to the scenario.
Modifying a model’s structure requires making changes to the assumption, calculation, and output summary sheets. These tasks can be time-consuming and expose the process to operational risks in a context where execution must be both precise and swift.
In a traditional spreadsheet-based model, the file is exchanged in numerous versions, either by email or through an online file-sharing platform. Changes between versions are difficult to track and are sometimes explained by one of the file maintainers in the body of an email.
Peerception models stand out from traditional spreadsheets thanks to their modular design. The various components of a financial model are visually represented as flexible blocks, both in their creation and editing. This allows modelers to add financial debt in just a few clicks and configure its sizing criteria. It becomes easy to adapt a model and compare the different impacts of each scenario.
How does the Peerception application address these challenges ?
Scenario and sensitivity management allows users to quickly create sets of assumptions tailored to the requirements of different decision-makers. Editing assumptions within a sensitivity is highly flexible: you can access all assumptions and adjust them in a simple, intuitive way. A comparison table showing the key indicators of a scenario alongside its related sensitivities is also available in the Dashboard.
An audit module allows users to run a series of tests to ensure the consistency and integrity of calculated data. For example, on the balance sheet, the total assets are compared to total liabilities for each period to ensure that both values are equal. These tests help guarantee that there are no inconsistencies in the calculations. Our models can also undergo third-party audits as part of a financial transaction.
The application offers model-sharing features directly with other Peerception users, as well as in Excel format. The level of access granted can be defined individually for each user. Any changes made by these users are also recorded in the history available within the Peerception model.
It is possible to export certain information into Word documents. For example, you can download an assumptions booklet that outlines all the assumptions used in the financial model. This feature can also be used to generate commercial proposals, providing details on the parameters that were used to build the offer.
What are the benefits ?
In summary, the application enables you to carry out a wide range of essential actions to successfully perform financial modeling:
Manage scenarios
Handle sensitivities and compare them to the base scenario
Easily build and adjust your financial model’s structure
Edit each assumption
Collaborate with multiple users on the same model and track changes made
Share information via Excel or Word
Generate charts and tables based on calculated data
Review key financial indicators (IRR, NPV, DSCR, LLCR, PLCR, etc.)
Once the decision is made and the model is finalized, it can be used to monitor performance during construction and operations. Simply share it with the operations monitoring teams via the application. They will then be able to input actual data, compare variances, and update the asset’s valuation.
With the application, you gain:
Simplicity, with a limited number of steps to calculate your key indicators and generate the desired sensitivities.
Flexibility to quickly adapt your model’s structure, thanks to the modular design of Peerception models.
Reliability, through the audit module. The generated model can also be audited by a third party as part of a financial transaction.
The ability to generate files linked to your model in just one click.
