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Aims

To enable students to understand the financial management of construction and/or infrastructure project delivery which goes beyond the single project/programme view to embrace both the portfolio view and corporate financial strategy

Objectives

To enable understanding of:

• The financial risk-reward environment of organisations delivering construction and infrastructure projects
• Optimal capital structures for different categories of project-based enterprises
• Project-programme-portfolio and corporate financial interfaces
• Corporate Budgeting at Risk, Project Selection and Bidding Strategies for Delivery Organisations
• Strategic investment in capabilities
• Inter-relationship of construction project management issues with whole life value for money
• Systems of Internal and External Control in the Project Coalition
• Developing competency and maturity in project financial management through project- and enterprise-based learning

Learning Outcomes

After taking this module, students should be able to:-

• Understand strategic financial risks and decision-making viewpoints of organisations delivering construction and infrastructure projects
• Critically evaluate the wider viability of apparently profitable individual projects or programmes including their delivery components
• Critically evaluate systems of project/programme financial control
• Make basic recommendations for optimal project/corporate financial structures
• Develop procedures for continual improvement in project/programme financial management

Learning Events

1. The business environment of construction and infrastructure project-based organisations including the built asset value chain, the performance objectives of built asset delivery firms and associated risks

2. The business portfolio and optimal capital structure including the key finance decisions on i) capital employed, ii) debt-equity ratio and iii) earnings retention policy. Optimising company value in terms of a) project selection, bidding strategy, risk adjustment of margins b) minimizing risk and tax-adjusted cost of capital. Understanding appropriate strategies for different types of Supply Chain firms.
3. The interrelationship of construction project and corporate financial risk including i) the importance of strategic procurement and relationships and ii) strategic capacity investments in whole life value creation through better project management processes and iii) risk-bearing implications of individual projects in JV contracting, bargaining games in a fragmented project coalition and SPV life cycle risks.
4. Systems of project/programme financial control including corporate and project governance, due diligence processes, financial control in fragmented project coalitions, life cycle controls, systems of internal control, the use of new ICT capabilities and problems of multi-location controls.
5. Developing maturity in project financial management through the understanding of project management maturity models, models of dynamic capabilities, locus of control, professional silo constraints and project-based learning