University of Technology Sydney

16258 Financing Construction Projects

Warning: The information on this page is indicative. The subject outline for a particular session, location and mode of offering is the authoritative source of all information about the subject for that offering. Required texts, recommended texts and references in particular are likely to change. Students will be provided with a subject outline once they enrol in the subject.

Subject handbook information prior to 2020 is available in the Archives.

UTS: Design, Architecture and Building: School of the Built Environment
Credit points: 6 cp

Subject level:

Undergraduate

Result type: Grade and marks

Requisite(s): 16125 Built Environment Economics OR 16466 Built Environment Economics

Description

This subject examines in detail the various financing options for building and construction projects including joint ventures, private finance infrastructure initiatives, international collaborations and project finance options involving government guarantees, off-take agreements and producer payments. The subject gives students a deeper knowledge of project finance methods found in the property and construction industries, so graduates are better suited to industry practice, consistent with intended graduate attributes. The issues covered apply to the project finance techniques, requirements and processes found in construction finance and used for property developments.

Subject learning objectives (SLOs)

On successful completion of this subject, students should be able to:

1. understand the origins and development of modern project finance
2. understand the characteristics of project finance and the roles of participants
3. understand the financial, technical, legal and environmental aspects of financing complex projects, including the use of project agreements
4. develop a project financial model with associated sponsor support and derivates
5. identify appropriate risk mitigation and management processes and techniques
6. be aware of significant financial, legal and regulatory trends in project finance
7. understand what makes a project ‘bankable’.

Teaching and learning strategies

Modes of offering
Weekly on campus: 2 hr lecture and 1hr tutorial supplemented by online learning
Learning activities – within and outside formal class contact
The learning activities in this subject involve a variety of face-to-face lectures, tutorials and online teaching strategies. Lectures involve face-to-face content delivery employing the use of media and electronic resources to enhance the theoretical delivery of the subject. Regular guest lectures from industry practitioners will be utilised to demonstrate current practical applications of subject content. The tutorial program utilises case studies, student group work, student presentations and experiential exercises to link theory and application. This will be complemented by independent student reading. Students are further supported through the use of UTS Online offering subject material and information and moderation with the subject coordinator.

Content (topics)

The content of this subject covers the following topics:

  1. Overview of Project Financing Methods
  2. Origins of project finance
  3. Organisations and projects
  4. Corporate finance
  5. Project finance agreements
  6. Loan agreements
  7. Due diligence
  8. Public Private Partnership (PPP) projects
  9. Asset securitisation
  10. Contemporary Issues in Project Financing

Assessment

Assessment task 1: Tutorial Exercises (Individual)

Weight: 30%

Assessment task 2: Mid-Semester Examination

Weight: 20%

Assessment task 3: Final Examination

Weight: 50%
Length:

1,500 to 2,000 words

Minimum requirements

Students must achieve a minimum aggregate mark of 50% to pass this subject.

Required texts

Pretorius, F., Lejot, P., McInnis, A., Arner, D. and Hsu, B.F-C. 2008. Project Finance for Construction and Infrastructure: Principles and case studies, Oxford, Blackwell Publishing.

Recommended texts

Layton, A.; Robinson, T. and Tucker, I.B. 2009 Economics for Today (3rd Edition). Cengage Learning, Melbourne.

References

  1. Best, R. and de Valence, G. (Eds.), 2002. Design and Construction: Building in Value, Ch. 10., Butterworth-Heinemann, London
  2. Caselli, S. and Gatti, S. (Eds.). 2005. Structured Finance: Techniques, Products and Markets, New York, NY, Springer.
  3. Davis, H. 2003. Project Finance: Practical case studies, London, Euromoney Publications.
  4. Esty, B. C. 2004. Modern Project Finance: A casebook, Chpts. 1, 2 and 3, plus case studies as appropriate.
  5. Kahn, F. and Parra, R. 2003. Financing Large Projects: Using Project Finance Techniques and Practices, Singapore, Prentice Hall
  6. Hanley, N. & Spash, C.L. (1993), Cost benefit analysis and the environment, Edward Elgar, Hants.
  7. Hobbs, B. F. (2000), Energy decision and the environment: A guide to the use of multicriteria methods, Kluwer Academic Publishers, Boston.
  8. Layard,R. (1999), Cost Benefit Analysis, Cambridge University Press.
  9. Lowton, R.M. (1997), Construction and the natural environment, Butterworth Heinemann, Oxford.
  10. Lumby, S. (1994), Investment Appraisal and Financial Decisions, Chapman & Hall.
  11. Perkins, F. (1994), Practical cost benefit analysis: Basic concepts and application, MacMillan, South Melbourne