Promoter produces models in a large variety of industries. Some industries provide a service, others produce one or more products. Some industries can be readily expanded to meet increasing demand. Others have a fixed capacity which can only be expanded in size by installing a new plant in parallel with the existing one. Some need regular annual maintenance, others need major maintenance at longer intervals.
In all industries, Promoter produces a parametric capital cost estimate for use in the early planning phases of a project. During the later planning phases the user should replace this cost estimate by a more accurate one produced by themselves or third parties.
In the following pages, we outline a) the features of the industry, b) how Promoter produces a model in this industry (particularly the parametric cost estimate) and c) typical cash flows for the industry
The man purpose of a financial model is to determine the base case cash flows and key results and to carry out “what-if” analyses. In theory, any rigorous model should handle changes to all key parameters which could affect the cash flows such as price, demand, capital cost, construction schedule, country macro-economic data, etc.
In practice this does happen effectively for many projects in industries where the modelling is relatively simple. But for projects in other industries the modelling is more complicated. The technical formulae are complex and a spreadsheet is not always the ideal tool. In such cases the modeler often ignores how these key parameters affect the cash flows and the result is not always satisfactory.
See, for instance, toll roads, railways, airports and telecom cables where Promoter carries out analyses for every period during the operating life to determine whether an expansion is necessary. If it is necessary it adds the expansion.
See also wind power where Promoter includes a sensitivity analysis on the wind speed.