Why Chose this Teaching Material?

Corporate financial management skills are consistently demanded of building and civil engineering students, and consistently omitted in relevant courses. Students are provided with an introduction to the conventions of accountancy and finance, as used in the boardroom, to the extent that they become familiar with the language used and the basic operations. Key features are research into the markets and language of development, and financial reporting through the relevant technical press and statutory reporting media.

Description:

This is an individual project that is designed to familiarise students with corporate financial issues relating to major investments for capital development projects. It is divided into four broad sections:

(1.) Students are required to advise an investor/developer organisation on the feasibility of proceeding with three development projects. These projects may vary from year to year, but are either commercial building developments or moderately sized PFI projects in the education or healthcare sectors. Basic physical data concerning the projects (size and type of construction) is provided, but empirical data related to revenues and building costs are the subject of research by each student.

(2.) By extracting data from the feasibility study in (1), students are required to produce a graphically represented cash flow forecast for each project and for the portfolio of three projects. These cash flow forecasts should be suitable for use in later Earned Value Analyses and for extracting data for inserting in forecast financial accounts in (3) below.

(3.) From a set of consolidated financial accounts provided, students are required to trace the forecast effect of the investment required over the development period, first in terms of changes in short term assets and liabilities and later in terms of changes in fixed assets, long term loans and shareholder's funds. Forecast profit and loss accounts similarly should show changes in revenue as investments come on stream. The projected effect of the investments are shown in accepted accounting ratios including return on capital, return on turnover, current ratio, capital and current gearing ratios. The usual time period involved is about 7 years of projected accounts.

(4.) As a prelude to projecting the accounts in (3) above, students are required to consider methods of financing the three developments on both a long and short-term basis. This is with particular reference to changes in capital gearing ratios in the context of competitor companies in similar industry sectors.

Project Briefing

1

Comprehensive course notes.

Explanatory workshops

3

Comprehensive course notes and guided reading list.

Assessment

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Assessment criteria sheet

NB. This project is designed to be used with a formal unit covering Corporate and Project Finance

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Marketing/Market Research

Market data for development projects, construction and fees cost data through technical publications. Retrieval and use of financial reports and use of comparative analysis.

Corporate Risk, Including Financial Risk

Construction of financial accounts and the dynamics of investment as reflected in the accounts.

Cash Flow Forecasting

Estimating patterns of expenditure, including finance. Purpose and use of Earned Value Analysis.

Evaluating Financial Statements

Interpreting company reports and financial statements, including projecting the effects of investment on accepted measures of performance.

Commercial Assessment & Advice

Choosing between debt and equity finance based on increase in shareholder value as balanced with risk. Advantages and disadvantages of types of debt/equity finance.

Managing & Developing Self

Organising work schedule – continuing skill development

Applying Numeracy

Formal calculation skills are required throughout the project and assessed in formal project marking.

Problem Solving

Skills are required throughout the project, and assessed in formal project marking.

• This resource forms part of the requirements for the Corporate and Project Finance Unit on Masters courses in surveying, construction and project management at LSBU;
• A comprehensive course guide is available at a marginal cost;
• The author would be willing to provide advise on the use of the project, or to provide teaching and assessment at an agreed rate to cover costs.
  

Andrew R Atkinson

020 7815 7253

andy.atkinson@lsbu.ac.uk