| 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
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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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