project finance certification

project finance certification

The Importance and Benefits of Project Finance Certification

1. Introduction to Project Finance Certification

The Global Project Finance (GPF) board has established a formal certification for project finance, focusing on reliability, practice, and education for professionals in the field. It is important to have a certification, especially given the current negative developments in the industry. Banks are imposing higher costs, reducing the number of members, and loans are made on stringent terms and conditions. The demand for experts is increasing. Certifications differentiate candidates in the financial market and contribute to superior performance. Experienced individuals in the field may feel that certification is an unnecessary luxury, but it is often worth it.

Project finance has become widespread, with more complex deals being constructed every day. Anyone with experience in the field would want to understand the details and be concerned about their individual success. The complexity of the field can intimidate interested individuals. Can project finance certification solve this problem? Yes, it can. Certifications are beneficial for professionals, and a project finance certification can turn you into a professional in the field.

2. Key Concepts and Principles in Project Finance

I. Introducing the Subject: Project finance has historically been used to finance major long-term, greenfield projects, particularly in the mining, petroleum, and telecommunications sectors. This type of project finance is often referred to as “non-recourse” financing. The nature of non-recourse project finance is one of the key principles we will be discussing. However, project finance is increasingly being used to finance buy-outs, debt restructurings, refinancings, and even the purchase of ongoing businesses. These financings bear little resemblance to true non-recourse project financings, and the use of the “project finance” title for these and other transactions leads to considerable confusion in the industry and among financial institutions.

Project finance is generally confused with other forms of finance, resulting in the frequent misapplication of project finance principles. This also leads to misunderstandings about project finance as a legitimate banking function. My objective is to propose a set of principles that are intrinsic to project finance and apply them to alternative forms of project finance. Throughout this paper, “project finance” refers specifically to the financial services provided by banks and investment bankers to support project development by nonfinancial enterprises.

3. Types of Project Finance Certifications and Accreditation Bodies

The Project Finance, otherwise known as non-recourse financing, can be defined as the finance of long-term infrastructure, industrial projects, and public services based upon a non-recourse or limited recourse financial structure. Project debt and equity used to finance the project are paid back from the cash flow generated by the project. Because of the distinct characteristics of long duration (30-40 years) of the projects with a complex financial structure, additional industry-specific knowledge and expertise must and are legally and functionally required of professionals to deal with the project finance tasks and challenges in every phase of a project life cycle. This includes structuring, documentation, funding, drawdown conditions, project operations, monitoring, management, refinancing, and execution of conditions during the life of the project until the end of the concession period.

Certifications such as PMP or PRINCE2 offer comprehensive coverage of non-industry-specific project management knowledge, with an opportunity to specialize to some extent. Industry specialization can be acquired through PMI’s SP or, in particular, by APMG’s CP3P. This all makes the entire group of project finance certifications unique and specific to the Project Finance industry. Project finance professionals are able to build upon their PMI certifications required by the job or role-specific project finance certifications. Together, they provide a unique formula for the additional specialization of project finance that cannot be found in any other accreditation body.

4. Career Opportunities and Advancement with Project Finance Certification

It is this lack of investment made by professionals in specializing in project finance which has now created a void – a gap that is being increasingly recognized by the market. Today, across sectors – be it banking, investment banking, legal profession, accounting, external audit and consulting, rating agency, proposition valuations, project or corporate management, construction, manufacturing and trading, the focus is seeking experienced specialists in project finance. The most important role as a result is played by the project finance specialization certification which has begun to play a critical role in helping professionals familiarize themselves swiftly with project finance. The project finance certification is the passport into the world of project finance – and the key to help professionals advance careers. It makes professionals immediate contributors. A project finance certification says employers that professionals understand the dynamics of their work and can contribute immediately to their company’s success. Once in a job, professional quality leads to immediate promotions and career advancement. Not only does it help an individual making right career choices by exposing them to different industry sectors, but also the jobs range from research, credit or equity proposition fact file preparation to literacy, credit or proposition heads with specialized syndication front end of proposed appraisal, credit, monitoring, audit and interest rate or commodity dealing teams with commodity risking and experience in complying with financial and trading markets regulations.

Project finance professionals seldom have any formal training or education in the field of project finance. There are very few institutions around the world that offer a structured course specializing in this field, and hence a project finance course rarely features in the academic curriculum. As the project finance industry is not regulated and it involves transactions ranging from US$10 million to over a billion dollars that are too infrequent for new entrants to learn about the industry through gradual learning as traditionally happens in an investment bank. And so industry training is an issue for both new entrants and experienced industry professionals. This gives the perfect reason to pursue project finance certification in order to build a career of your choice.

5. Conclusion: The Future of Project Finance Certification

Institutions: By having its staff of financial professionals earning certification, the institutions will be able to address the investment community with demonstrated capabilities across a wide range of project finance services. Moreover, the certification will satisfy institutions that skill and performance evaluations and assessments have been conducted on the investment relationship they seek for the stability of decision-making processes in place.

Individuals: Certificants will develop and acquire the knowledge, skills, capabilities, and competencies, recognized and accepted by the industry, to effectively contribute to successful project finance transactions. This will encourage multicultural, multidisciplined teams to work together, broadening the range of professionals that contribute to the projects.

The Project Finance Institute will build upon this pioneering effort by increasing the numbers of certified professionals, providing ongoing certification services, including periodic re-certification, and expanding the offerings consistent with the diverse and expanding requirements that define this financial discipline around the world. In addition, project finance standards, accepted globally, will be developed to assess the readiness and stability of projects attracting capital, including political and economic stability issues that must be addressed to market these regions to the international investment community. By providing tangible skills and industry-accepted standards for the instruction, assessment, and certification of those skills, The Project Finance Institute will create value for each professional and institution that becomes involved with the issues associated with capital investment for development projects that involve limited or non-recourse financing techniques.