Project Investment and Financing, a Study on Business Case Development and Financing Models

^{Authors: 1}Amina Sammo, | ²David Ackah, PhD.

¹PhD Candidate, School of Finance and Financial Management

²PhD. Supervisor, School of Finance and Financial Management

^1,2Business University of Costa Rica, Ghana Campus

Email: minasammo@gmail.com | drackah@ipmp.edu.gh

Abstract

The importance of the front-end decision-making phase in projects is increasingly being recognized. Project front-end phase management is believed to be the genesis of any given project as it plays a crucial role in determining the success or otherwise of the entire project. In spite of this, only few studies focus on this area; many themes in project front-end phase are discussed extensively. The dissertation has two aims: the first aim is to integrate the current studies in project front-end phase, link and organize the different themes altogether in a systematically approach and present the output as a whole in the form of business case. Business case, which is a process that orderly covers most themes in project front-end study, is integrated and presented to guide the project sponsors for their decision making process on whether to finance a project or not. The second aim is to look at the next immediate step after business case which is project financing. Project financing is a special financing method which is seen as a well-establish tool that helps project sponsors initiate a project and deliberate on ways to fund the project. I am going to dive into these two areas, identify the challenges and provide suggestions to solve them. I use literature review as the method to study the business case. Extensive suggestions are given based on previous studies and theoretical works in different disciplines where existing literature and case studies are used in discussing project financing. The solution to the problems in business case is to establish a dynamic business case development process to response to the ever changing environment. This process could therefore, reflect the changes and uncertainties in the project financing. A general conclusion is that project financing is more suitable to projects with low future uncertainty. When deciding to use project financing, the project sponsors must be very discrete about the nature of the project and its potential profitability.

Keywords: project front-end phase, business case development, project financing, viability

Download