Module 1 - Project Analysis: Tools & Techniques for Managing Risk & Uncertainty

Day 1

Fundamentals of Decision Analysis

• What is Project Management Decision Analysis?
• The Purpose of the Project Business Case
• The need for systematic Risk Management for Decision-Making
• Risk and Uncertainty on projects
• Option analysis
• Identifying key decision-making factors
• Measures of Project Profitability
• Fundamental tools of engineering economics
• Time Value of Money
• Appraisal Methods - Discounted Cash Flow Projections
• Time Equivalence

Day 2

Cash-Flow Modelling and Project Decision Analysis

• Financial Modelling and Project Evaluation
• Rate of Return Computations (IRR)
• Determining the Internal Rate of Return (IRR)
• The Risk of not understanding IRR
• Analysing Project Specifics
• Understanding the Project Context to assist in decision-making
• Determine stakeholders and their level of influence
• Capture Requirements
• Determine Scope of work

Day 3

The Cost of Capital

• Capital & Operating Expenditures (CAPEX/OPEX)
• Estimating the Cost of Capital for a Project
• Benefit-Cost Ratio (BCR)
• Dis-benefits
• Risk Modelling in Practice
• Identify Risks
• Forecasting Risk Impacts & Probabilities
• Opportunity Costs, Sunk Costs & Salvage Value of a Project
• Determining the Risk Priorities
• The need for Company Cash Flow

Day 4

Decision Analysis: Expected Value Concept

• Basic Probability Concepts
• Fundamental Probability Concepts
• Mutually& Non-Mutually Exclusive, Independent Events
• Quantitative Project Risk Analysis
• Semi-Quantitative Bow-Tie Process
• Detailed Risk Quantification and Prioritisation
• Expected Monetary Value
• Scenario Planning
• Sensitivity Analysis Tools
• Simulation Process
• Tornado Diagram
• Defining the Variables - PERT

Day 5

Decision Trees, EMV, Risk Responses and ROI

• Decision Tree Analysis
• Developing Decision Trees
• Solving Decision Trees
• Risk Responses
• Developing Risk Responses
• Evaluating Response Relevance
• ROI Analysis
• Understanding ROI
• Identifying ROI
• Evaluating and Presenting your Project options

Module II: Advanced Oil & Gas Project Economics, Risk & Decision Analysis

DAY 6

Development Economics

• A Brief History of Energy Usage
• Principles of Development Economics
• Understanding of Economic terms
• Inflation and its Impact on Nominal & Real CashFlows
• Project Financing

DAY 7

Uncertainty in Investments

• Handling Uncertainty in Capital Projects
• Understanding Probability Concepts
• The Expected Value Concept: Features and Pitfalls
• Expected Monetary Value (EMV)
• Expected Profitability Index (EPI)
• Expected Opportunity Loss (EOL)

DAY 8

Risks and Uncertainties

• Risk & Uncertainty
• Risk Eversion and Risk Premium
• Exploration Project Threats and Opportunities
• Economic Decision Criteria
• Decision Tree Analysis
• Probability Distribution
• Case Study: Monte Carlo Simulation

DAY 9

Setting-up Spreadsheet Calculations Using Excel

• Spreadsheet Calculations
• CashFlow Analysis
• Sensitivity Analysis Calculations
• Tornado Diagrams
• Introduction to Monte Carlo Simulations using @Risk
• Class Exercises: Setting-up an Oil Field Project

DAY 10

Practical Use of the @Risk add-on: Oil Field Development Model

• Developing an Integrated Economic Model of an Oil Field Development
• Developing and using an @Risk Model Analysis
• Project Sensitivity Analysis utilizing data from @Risk Model
• Training Seminar Final Review and Close