Behind every major resource allocation decision lies a calculation of what that move is worth. Whether the decision is to launch a new product, enter a strategic partnership, invest in R&D, or build a facility, how a company models the decision is a critical determinant of how it allocates resources.
Below are some critical questions decision-makers should ask:
Key Questions
- For each variable of the model (e.g., costs, rates, demands), ask yourself:
- How sure am I of this value?
- Will it vary?
- Is this a best estimate or a known fact?
- How likely are we to meet the target estimate?
- What is our exposure for cost overruns? How much contingency do we need on this project?
- Where is the risk in the project? Which cost elements cause the most need for the contingency?
- How reliable is my model? Am I willing to accept the fallout of a poor model?
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How we can help
Leadenhall is able to help you with:
- Financial Modelling
- Evaluation of Strategies
- Cost Benefit Analysis
- Capital Expenditure Analysis
- Performance Evaluations
- Costing and Pricing
More importantly, regardless of the purpose or type of analysis, effort should be made to quantify the effect of risk on the project and on the implementation of measures to manage and mitigate the results of these risks. Leadenhall is well positioned to assist you with a rigorous and systematic Risk Analysis of your project.
Our support can range from performing a full and rigorous analysis through to an independent review your models. [back to top]
Our track record
Leadenhall has worked with a wide range of organisations, including the Australian Taxation Office, Santos Limited, SA Water and Laubman & Pank. Below is a small sample of our experience in financial consultancy:
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Financial Modelling
- R&D Portfolio Management/Decision Support - Development of portfolio management and valuation decision support models for R&D organisation.
- Replication of an investment model to develop Stage II of the Ord River Scheme for the Waters and Rivers Commission in Western Australia.
- Financial modelling of wastewater proposals for a Government utility.
- Design and construction of a model to evaluate the sensitivity and behaviour of insurance premiums, claims
and expenses.
- Development of a financial model for use by local Governments to assist with debt servicing issues.
- Construction of a generic model to assist capital budgeting processes in Commonwealth Research Centres.
- Audit the financial model prepared by financiers of the SAMAG magnesium smelter project and provide financial advice to the State Government Committee of Review.
- Advice on the integrity and methodology of financial models relating to the SAMAG magnesium project.
- Project management and integration of financial models for a new gas pipeline and power generator in South Australia for the Department of Industry and Trade.
- Development of a model for a port authority to enable complex decisions regarding tariffs and charges to be made quickly and easily.
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Evaluation of Strategies - Evaluate engineering alternatives for the upgrade of a wastewater treatment plant.
- Assessing the production strategy of a company, evaluating potential acquisitions and negotiating an exclusive marketing arrangement to secure additional product lines.
- Advice to a government commission on the selection process and evaluation criteria to be used in a 5 year $100 million outsourcing tender
- Review and examination of alternative capital structures and accounting policies of a major Government utility prior to restructuring and outsourcing.
- Analysis of engineering options to address safety issues relating to an urban dam.
- Advice on appropriate tender pricing for re-financing the junior debt of a major infrastructure company.
- Ranking engineering options to overcome congestion in a rural reticulation system.
- Evaluation of the financial viability of joint ventures and determination of appropriate structures for conducting developments.
- Evaluation of the borrowings and debt structures of clients and negotiation of improved terms and borrowing costs.
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Cost Benefit Analysis - Evaluate and advise on financial models relating to water consumption behaviour and analyse the cost effectiveness of various water saving devices for SA Water Corporation.
- Review of costs and benefits of decentralising the Accounts Payable function of the Department of Technical and Further Education.
- Cost benefit analysis of various infrastructure projects.
- Financial modelling of the capital and operating costs of laying electric cables underground compared with overhead systems.
- Evaluation of the estimated costs versus benefits in the event of minor and major bush fires.
- Cost benefit analysis for the potential introduction of water flow meters.
- Cost benefit analysis of technology to improve water quality.
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Capital Expenditure Analysis
- Report on alternative capex evaluation methodologies for the Board of a Government Business Enterprise.
- Construction of a generic model to assist capital budgeting and investment decision making in Co-operative Research Centres ["CRCs"].
- Development of investment models for a proposed major development project in Western Australia.
- Ranking of engineering options for capital expenditure on the Hope Valley Dam for SA Water.
- Analysis of the feasibility of a new gas pipeline.
- Review of capital expenditure processes.
- Development of capital expenditure guidelines.
- Analysis of the feasibility of a power co-generation plant.
- Preparation of investment policy guidelines for SunWater (formerly State Water Projects), Queensland.
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Performance Evaluations
- Calculations of Community Service Obligations for commercial property transactions undertaken by a Government agency.
- Evaluation of the financial performance of the commercial operations of a Federal Government Department and recommendations for retention or disposal.
- Budget preparation and performance analysis. Design and implementation of management information and reporting systems for a large diversified farm in Papua New Guinea.
- Review of corporate financial plans.
- Provision of consulting services in relation to corporate direction, management systems, organisation structure and financing.
- System upgrade guidance to comply with the requirements of the Institute of Medical and Veterinary Science.
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Costing and Pricing - Evaluation of pricing strategies under the National Competition Policy.
- Development of financial models to evaluate the inherent subsidy provided by Government funding of Private Sector companies.
- Costing advice to a Government agency providing services in South Australia.
- Review of models used for cost allocation and pricing for a group of companies sharing common services.
- Baseline costing to facilitate contracting out.
- Development of conceptual and policy issues on pricing for new customers.
- Infrastructure projects for the water industry in South Australia and Queensland.
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For your interest
"Up to 90% of spreadsheets have been found to contain significant errors" Panko, Raymond, "What we know about Spreadsheet Errors", Journal of End User Computing, Volume 10, No 2. Spring 1998, pp. 15 - 21.
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