Monte Carlo Simulation for Risk Analysis and Project Finance - The Institute for Public-Private Partnerships® a Tetra Tech Company


Monte Carlo Simulation for Risk Analysis and Project Finance

CEUs: 6.0

Course Description

The diversity, complexity and particularity of mega-infrastructure projects—including PPPs—require increasingly greater knowledge in risk analysis and project finance. This course aims to strengthen the capability of the financial analyst to accurately carry out a risk analysis and project finance evaluation. The specialized literature illustrates how the Monte Carlo method can effectively evaluate the investment risk of PPP projects, and help investors make better decisions.

The objective of this course is to provide participants with a knowledge of key issues involved in the Monte Carlo (MC) simulation for risk analysis and project finance. Participants will learn to carry-out multiple tests and define potential investment results, calculate risk in the varying stages of infrastructure projects, and quantify the value for money. The allocation of probability distributions to the assumption variables allows predicting and understanding risk exposures and how to mitigate them, while preparing participants to tackle risk according to the policy of each country.

Currently, public financial authorities in charge of carrying out risk analysis and/or monitoring fiscal risks use Monte Carlo simulation when dealing with retained risk in PPPs, or when forming a contingency plan

Learning Outcomes

Through successful completion of this course, participants will be able to:

  • Create simulation models in Microsoft Excel® and perform simulations with Oracle Crystal Ball®
  • Improve the management of uncertainty with a view to increasing competitiveness, reducing costs and increasing efficiency and profitability
  • Make forecast projections based on historical records
  • Incorporate the use of prediction and optimization models with the Predictor and OptQuest modules of Oracle Crystal Ball®
  • Export results and data to other applications, with a view to preparing reports or presentations for management.
  • Generate statistical reports, scenarios, sensitivity, eventual or random events
  • Perform statistical analysis of risks and business finances
  • Employ practical applications of Oracle Crystal Ball® in project management

Who Will Benefit

  • Government officials and other professionals involved in risk analysis and project financing
  • National, regional and local government officials (officials from ministries of energy, public works, infrastructure, water, education, health, economy, and finance, and/or PPP/privatization units of such ministries)

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