10 July 2006

Helping the Buyer buy the project

A colleague has pointed out that 80% of all project proposals fail, often after lengthy negotiations. He suggests that if more Sellers included project financial architects during the sales process that they would enjoy a higher hit rate - at least until their competitors cotton on!

Contract negotiators tend not to use financing as a commercial tool in the project negotiation. A Project Finance Architect supports the Seller by showing the Buyer the project finance options which exist in the Buyer's own country. That extra service to the Buyer could very easily tip the balance when the Buyer has to choose between competing proposals.

Project Finance Architects deliver other benefits, too:
  • they help to weed out bad apples very early in the commercial process, so that the Seller wastes less sales time on projects which cannot be financed in the Buyer's country at attractive terms
  • a focus on financing options early in the process avoids surprises during the closing phase
Project Finance Architects are still relatively rare. They tend to be generalists who don't focus too strongly on what they have learnt about their own own banking industry. Their primary skills are in applying a commercial analyst's eye to the project from the Buyer's perspective and developing a series of options which the Buyer can consider in financing the project. If he is right, the sales strategy of firms hoping to build their revenues on large projects will depend on identifying and developing suitable candidates.

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