Resourcing Process

Elements of funds are specified among multiple options through the correct recognition of the environment surrounding a project and an accurate understanding of restrictive elements. The basic concept and work flow for this are shown in the figure below.

Figure 4-2-6: Basic Concept of Resourcing and Work Flow

Basic selection in resourcing is made concerning (1) fund amount, (2) fund provider, and (3) how to provide funds. Each fund element has its own condition and cost, which are greatly different from others and are not necessarily unified. Loan amount and condition are dependent on the risk held by a project and how to control it. How to set options and combine them determines the structure of fund procurement. In general, intrinsic conditions that are material for a project serve as elements that determines how to procure funds.

Elements for decision from the standpoint of fund providers are (1) the amount that can provided, (2) advantage in conditions (amount of finance cost as life cycle cost recognized from the viewpoint of project) (3) length of the loan period, (4) level of strictness in security restriction condition, and (5) length of the period and level of requirements for necessary procedures and examination.

Therefore, the resourcing process can be summarized as follows.

(1) Select efficient combinations from the options in the market by taking into account the cost of funds injected into the project and restrictions / conditions fund providers can demand.

(2) Verify the cost and benefit concerning the funding for the selected combination. If the cost is high, financial viability will deteriorate. If restrictive elements are strict, possibility and feasibility of the structure become problematic. Verify whether individual funds are an optimum element for the project.

(3) In the above process, cost and restrictive elements / conditions should be considered in parallel. Restrictive conditions, rather than cost, may become an obstruction. Cost should be taken into consideration, if necessary, as a life cycle cost that is adjusted to the present value.

(4) Specify elements as basic selection, and then use the process to ensure their possibility and feasibility.

(5) When resourcing is composed of multiple fund providers, a structure of cooperation and sharing among fund providers as creditors becomes necessary (security and rights / obligations expected by creditors become different among according to different creditors.)

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