Objectives

Very often, a technically excellent project dies prior to being implemented. The reason for this is usually that the engineer who had proposed the project was not capable of explaining its financial benefits. How does a project (be it a manufacturing line, a power plant, the security protection of a shipping centre or whatever) come to life? Firstly, the technical side has to be developed - which is the engineer’s task. Once this is achieved, the project is ready to be implemented. The key decision makers in this final stage are almost always economists. If the engineer fails to explain why the project is economically advantageous it will not be approved.

Hence, a project developer also has to be able to demonstrate the financial feasibility of the engineering work, i.e. presenting key indicators like ROI, specific costs, IRR etc. as well as a financial risk evaluation.

The participants of this course will learn how to perform these calculations. The lecturer will use a step-by-step approach, not only covering the right methods and calculations but also overcoming one of biggest problems an engineer has - how, and from where, do I get the data required for carrying out the economic analysis? There are numerous hands-on exercises of real projects with a focus on energy, environment protection, safety and security. The course will also enable the participant to work out banking papers for the funding.

Target Audience

This training course is aimed at all those who want to demonstrate and prove that the implementation of a good technical project is also financially advantageous. Who should attend:

  • Engineers of all disciplines
  • Scientists, researchers
  • Developers of technical projects
  • Specialists for new technologies
  • Government and trans-national executives dedicated to implementing technical projects
  • Developers of technical projects
  • Technical executives and managers of industrial enterprises
  • Policy makers
  • Students
  • Professionals interested in economic viability of technical projects

Case Study

Read about this real-life experience that happened to Eric and Mark. Honestly, the experience was not very lovely at all.

Eric Ross, an engineer, and Mark Sanchez, a chemist, had been working in a manufacturing plant for pharmaceutical products. As in most cases, the process lines did not only release the final products to be sold but also unwanted and useless waste materials. In the case of Eric’s and Mark’s plant, these wastes were gaseous chemical compounds of hydrocarbon and chlorine, which - as being toxic - must not be emitted. The destruction of these gases was very costly. It was also technically inadequate, because of the fact that the entire production line had to be shut down for cleaning every day for several hours.

Hence, Eric and Mark had the idea to develop a new system to get rid of these toxic gases. They worked for two years on this project and found a two-step solution. First, high-temperature combustion of the waste gases generating hydrochloride and second, a conversion of the hydrochloride into high-purity concentrated hydrochloric acid. This could be sold for a good price.

After having worked out this fantastic technical solution, the day arrived of taking the decision to realize the project. In the meeting not only the CEO of the company was present but, surprisingly, also two new faces Eric and Mark haven’t seen before. One was the company’s consultant of finance, the other one a member of a bank foreseen to provide the financial means for the investment.

Eric and Mark presented the existing unsatisfactory situation with the toxic gases released from the process lines. Then, they enthusiastically explained in detail the fantastic technology of the new two-step system. Eric also clarified that in future the pharma production must not be interrupted any more. Additionally, Mark outlined the value of the resulting hydrochloric acid produced, due to its unique high purity.

In the discussion, Mark got the impression that the two new faces were not really interested in this technology. Eric even thought by himself that they had not understood it at all, as they always asked for other issues like profitability and financial evaluation indicators, what neither Eric nor Mark did understand. They could not answer the questions the two new faces had and explaining to them the excellent technology in even more detail did not help.

Like this, the meeting went back and forth. After a one hour of discussion, the consultant and the banker decided to not go ahead with the project and they left the meeting.

This was the sad end of a superb project developed of two highly engaged professionals in two years of intense work. You can imagine how frustrating this was for Eric and Mark.

A negative experience like this is, unfortunately, not unique. It happens very often that a technical specialist, an engineer, a physicist, a chemist, or a similar professional cannot explain the financial and economic side of a well-developed technical project. If so, the banker might / will wipe the project off the table.

Therefore: attend this course! It will bring you into the position to know, to understand and to calculate all these indicators a banker wants, resp. needs to know. At the end of the course, you will not only be capable of discussing the financial side of a technical project with an economist at eye level, but you can also work out the banking papers for the financing.

Course Programme

The training course consists of two main components: (a) lectures on the various topics with illustrative, exemplary calculations and (b) the respective associated and matching hands-on exercises for the participants. All documents required for performing economic calculations (spread sheets, list of formulas, working tables, etc.) will be provided. The following topics are covered:

Day 1

  • Basics of economic calculations: Financing of projects, different types of loans, impact of bank interest rate, role of inflation in project financing. Approximation to simplify the calculation.
  • Cost side of a project. How a financial calculation is carried out, cost items of a project, consider-ing the cost side of a project, year by year cost items, each year over full service life. The three cost components of a project. How to facilitate the calculation.
  • Cost comparison calculation: Total annual costs, how to compare projects under cost aspects. Cost annuity. Determination of specific costs, comparing different projects using this indicator.
  • Investment costs: What is part of investment cost, what is not? Wear and tear, depreciation, approximation. Service life of a project, technical and economic life time, liquidation yield.

Day 2

  • Incomes and returns: Types of income items, side incomes, avoided costs, subsidies. Definition of returns, static payback period, Return on Investment (ROI), evaluating the result of the calcu¬lated payback period and ROI.
  • Database for financial calculation of a project: How to collect data, formation of a database, what if data is missing or hard to obtain. Net profit of a project. Comprehensive case study.
  • Dynamic methods: Difference between static and dynamic methods, discounting, significance of discounting factor. Static and dynamic payback period. Practicality of dynamic calculations.
  • Net Present Value (NPV): Net value and Net Present Value. Definition of NPV, approximation of calculation, Present Value factor, recovery factor, Annuity. Evaluating the NPV of a project.

Day 3

  • Comparison of projects under financial aspects: Steps to develop projects, how to compare and evaluate the financial side of different projects solving the same problem. Examples.
  • Internal Rate of Return (IRR): Definition, significance of IRR, approximation to calculate IRR. Why IRR is an excellent indicator. Evaluating the calculated IRR of a project.
  • Financial risk assessment of a project: Types of risk, sensitivity analysis, how to proceed, defini-tion of critical values, what if risk is assessed as very high, measures to reduce a risk. Banking papers, practicality of financial risk assessment.
  • Summary and discussion: Technical and economic side of a project, how to develop the very best project. Real case problems, joint discussion. Suggestions for day to day work.

Course Presenter

Prof Helmut Koerber, Dipl-Physiker (MSc), Dr (PhD) of Engineering is a Senior Consultant and CEO of APC Angewandte Physik Consulting AG, Allschwil, Switzerland, and a lecturing professor at University of Furtwangen (HFU), Black Forest, Germany, previously also at HTW University of Berlin. He has been advising companies, governmental authorities and NGOs in matters of energy efficiency, risk and safety, prevention of industrial accidents as well as environment protection - in all cases financial feasibility analyses included. His main research focuses on biomass to energy technologies, Critical Infrastructures (Crit-Is) with an emphasis on security of electricity supply, and core melting in light water reactors providing fundamental insight into the Fukushima accident long before it occurred.

In his many years of working all around the globe (North and Latin America, Europe, Mid-East, South and Southeast Asia, Pacific, Africa), Helmut was able to gain comprehensive professional experience through a wide variety of projects (power plants, chemical, textile and agro industry, waste incineration, refineries, mining) as well as through training of postgraduates. He is a highly successful lecturer for both engineers and non-technical professionals. As such he has provided more than 100 courses.

Prof Koerber is a licensed expert of “Environment Protection and Safety Technology” corresponding to §29a BImSchG (Bundes-Immissions-Schutz-Gesetz, = German Federal Act for Emission Protection). He is author of several books and of teaching materials for lecturers. He has published widely in journals, conference proceedings, as well as government and industry reports.

Location

new forestThe New Forest is one of the UK's most popular tourist destinations and offers many attractions all year round, including picturesque forest villages as well as beautiful scenery. It is located in Southern England, spreading over 150 square miles of Hampshire. The New Forest was established as a royal hunting ground by King William I, and by the 14th century, the land was being used to produce timber for the shipbuilding industry on the south coast. Today, after nearly 1000 years, the forest is still Crown property and is administered by the Forestry Commission. Since the reign of King William I commoners have been given the right to graze their livestock, normally ponies, cattle and pigs, on Forest land where they wander freely. In the New Forest, the well-being of the animals and the special needs of the countryside are a priority. The Forest is unarguably recognised as one of the most unique and important wilderness areas in Western Europe and, because of this, it is now a National Park.

Venue and Accommodation

The course will take place at the Wessex Institute at Ashurst Lodge located in the New Forest, an outstanding National Park that borders the South Coast. Ashurst Lodge is an ideal venue for conferences, courses and seminars.  The participants can benefit from an excellent standard of accommodation, either on Campus or in various hotels or bed and breakfasts in the area.  The surroundings are equally appealing to those who enjoy walking, horse riding, cycling, sailing and fine landscapes.

For more information on how to find Ashurst Lodge and to arrange accommodation during the courses please use the information provided on the Contact Us page.

Ashurst Lodge panorama