Audit of Third Party Models
A typical model provided by a third party might contain up to a hundred thousand formulae and sometimes more. It is normally impractical and excessively time-consuming to check each one. In order to ensure accuracy and save time, we adopt the following review procedure.
Firstly, we review all the base documentation and insert the relevant figures into Promoter. Reviewing the base documentation and extracting the relevant data is a time consuming but very important step. It sometimes reveals faults in the draft contracts. We then compare the results of the two models until we reach a good measure of agreement for the base case. Finally, we compare the sensitivity results with different key input data. It is normally helpful to have at least one review meeting during the audit.
The above procedure is very effective since Promoter is a single model which has been used on a large number of projects. There is no need to build a new model, only the need to obtain and insert the data into Promoter. The data extraction is done in a systematic manner using a questionnaire / audit sheet as a checklist. We would normally proceed in the following order:
capital cost (Construction Contract)
construction schedule (Construction Contract)
market survey (Power Purchase / Marketing Agreement and any independent survey with projections of the product demand and price)
operating costs (Construction, Feed/Fuel Supply and Operation & Maintenance Contracts)
working capital basis
funding (Loan Agreements)
In summary, using Promoter reduces the time taken to audit other models and increases the confidence that all parties can place in its results