CM19
Course Contents
Module 1 - Effective Contract Risk Management Masterclass
Module 1 - Overview of Risk Management
Key Topics
- The Need for Contractual Relationships
- Defining Risk
- The development of Risk Management
- Gaining a Competitive Advantage Through Risk Management
- Categories of Risk for Both Sides of a Contract
- Risk Assessment Process
- Managing Risk
- Qualifying Suppliers
- Defining Internal Control
- Proportionality of Control
Module 2 - Risk Mitigation and Management
Key Topics
- How to establish contracts with well-balanced risks between customer and contractor?
- Transferring Risk through Contract Types
- Firm Fixed Price or Lump Sum Contracts
- Cost Reimbursable Contracts
- Incentive Contracts
- Award-Fee Pricing Arrangements
- Using Risk Management post contract to reduce conflict
- Using Risk Management with the Parties to Improve the Contract during Tendering
- Indemnities
Module 3 - Risks Associated Clauses
Key Topics
- External Events
- Force Majeure
- Strikes and Other Labor Disputes
- Risk and Title
- Assignment and Novation
- Other Clauses that Need Managing Risks between Parties
- Other Clauses that Need to Flow Down to Sub-Contractors
- Risks Associated with Sub-Contractors
Module 4 - Management of Financial Risks
Key Topics
- Controlling Risk Associated with Payments
- Currency Risk
- Economic Risk
- Fraud and Corruption
- Limiting or Excluding Liability
- Distinctions between Liability in Contract, and the General Law
- Gross Negligence
- A Review of Some Sample Clauses from Standard Contracts, and other Real Documents
Module 5 - Contingency Measures
Key Topics
- Mistakes and Misrepresentations
- Impracticability of Performance
- Remedies Generally
- Types of Remedies
- Liquated Damages
- Warranties
- Cover
- Discussion of Real Examples(delegates are encouraged to bring real or made up examples for discussion)
- Review of Course, Questions and Answer Session
Module 2 - Professional Project Analysis: Managing Risk & Uncertainty
Module 6 - Fundamentals of Decision Analysis & Engineering Economics
Key Topics
- What is Project Management Decision Analysis?
- Risk and Uncertainty on projects
- Identifying all possible outcomes
- Identifying key decision-making factors
- Fundamental tools of engineering economics
- Time Value of Money
- Simple and Compound Interest
- Future value of a present sum
- Present value of a future sum
- Appraisal Methods Discounted Cash Flow Projections
- Net Present Value Analysis (NPV)
- Comparing Projects with Equal and Unequal Lives
Module 7 - Rate of Return (IRR), Cost of Capital and Cost-Benefit Analysis
Key Topics
- Determining the Internal Rate of Return (IRR)
- IRR for a Single O&G Project
- Incremental Analysis
- Estimating the Cost of Capital for a Project
- The Cost of Debt Capital
- The Cost of Equity Capital
- Weighted Average Cost of Capital (WACC)
- Financial Gearing (Structuring)
- Estimating the Benefit-Cost Ratio for a Single Project
- Comparing Mutually Exclusive Projects Using Incremental Benefit-Cost Ratios
Module 8 - Financial Project Risk Analysis
Key Topics
- Overview of the Risk Management Process
- Detailed Risk Quantification and Prioritization
- Risk Quantification and Expected Monetary Value
- Scenario Planning
- Best case scenario
- Base case scenario
- Worst case scenario
- Developing Risk Mitigation Strategies
- Implementing Mitigation Strategies
- Decisions Under Conditions of Uncertainty
- Multiple Option Decisions
- Combining Risk and Cash Flow Analyses
- Minimizing Probability
- Minimizing Impact and Consequences
- Calculating the Expected Monetary Gain or Loss
Module 9 - Risk Scenario Planning Case Study & Application
Key Topics
- Cash flow projections – Tunnel Case Study
- Base Case Scenario
- Best Case Scenario
- Worst Case Scenario
- Risk Profile EMV Calculation before Mitigation
- Identification of Risk Triggers & Probability
- Plotting the Event Probability
- Identification of Risk Receptors & Impact
- Plotting the Financial Impact
- Combined EMV Risk Profile before Mitigation
- Developing Probability Mitigation Strategies
- Developing Impact Mitigation Strategies
- Replotting the Projected Risk Profile after Mitigation
- Examining the J-Curve to Derive the Most Economic Mitigation Point
- Final Risk EMV and Project Feasibility Calculations after Mitigation
Module 10 - Cash-Flow Modelling and Project Decision Analysis
Key Topics
- Preparing Cash Flow Projections
- Incremental Costs and Benefits
- Working Capital Requirements and Operating Costs
- Forecasting Cash Flows
- How to Deal with Inflation
- How to Deal with Uncertainty and Risk
- Risk Premiums
- Pessimistic and Optimistic Forecasts
- Opportunity Costs and Sunk Costs
- Determining the Economic Life of a Project
- Quantifying the Effects of Inflation
- Effects of Inflation on Working Capital
- Effects of Inflation on Taxation
- Effects of Inflation of Cost of Capital
- Variable Inflation Rates Over the Life of the Project
- Relevant Cash Flows over Differing Time Horizons
- Depreciation
- Straight-Line Method
- Declining Balance Method
- Interest, Insurance and Tax Costs
- Corporation Tax Rates & Taxable Profits
- Capital Allowances
- Incorporating Tax in Cash Flow Models
