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Vol. XI Issue VIII - August 2009
Project Management eJournal
SECOND EDITION
Project Financing and Risk Management: a new challenge for program management in the space industry of the third millennium
By Sergio Gerosa,
Commercial Telecommunication Program Manager and
Federico Nasini
Thales Alenia Space Italia - Italy
Editor's note: Second Editions are papers that were previously published, either in the distant past or in a language other than English, which have continued relevance today and deserve additional visibility. The paper below was originally presented at the PMI Global Congress – EMEA 2001 in London, UK in June, 2001. This paper is included here with the permission of the author, who is copyright holder.
Abstract
Space is a risky environment. Satellite ventures are consequently risky businesses. Commercial applications of space is becoming the primary focus of most space enterprises and their demand for better, faster and cheaper project management, imposes a radical change in the awareness of the overall organisation with respect to risks.
When applying project financing schemes, a risk conscious attitude by the performing organisations is seen by financiers as a pre-requisite for a successful venture. Risk and opportunity management methodology is consequently gaining the attention of the space industries.
Risk in Project Financing
The term Project Financing refers to a wide range of financing structures where the provision of funds is not primarily dependent upon the credit support of the sponsors or the value of the project's physical assets but on project's capacity to serve the debt and provide an equity return to the sponsors through its cash flows. Project finance involves the setting up of an “ad hoc” project company (called Special Purpose Vehicle - SPV) to carry out the venture. The SPV is capitalised through equity and debt funding which is used to cover project capital expenditures and pre-operational costs; once the project is completed, the SPV can start its commercial activities thus generating the necessary cash flows to repay the financing.
To read entire paper (click here)
About the Author
Sergio Gerosa
Author
Sergio GEROSA is an Aeronautical Engineer working since more than fifteen years in Thales Alenia Space, the largest European aerospace industry. Head of Commercial Telecommunication Programs (in Italy) between 2002 and 2006, he has then been appointed as Director Product Competitiveness. He has a large experience in the implementation of state of the art project management techniques, in particular of EVM and Risk Management methodologies. He is a member of Project Management Institute (PMI) since 1998, and Associate Member of the Board of the PMI Rome Italy Chapter. He is member of the Editorial Board of the International Journal of Engineering Management & Economics (Inderscience Publishers). Sergio teaches Project Management in three Masters of Science organized by Italian Universities (University of Rome “La Sapienza” and University of Rome “Tor Vergata”), as well as at the Thales University for the Passport to Program Management and Introduction to Contract Management courses. He is author of the several papers on project management ("The Project of a Lifetime ", IPMA World Congress 2008; "The Tower of Babel: When Communicating Becomes a Nightmare ", PMI EMEA 2008; "A Design to Cost Methodology to Manage Complex Product Development in the Space Industry", PMI EMEA 2007; "Using Knowledge Elicitation Techniques in the Risk Assessment of Space Projects", PMI EMEA 2006; "Project Financing and Risk Management: a new challenge for program management in the space industry of the third millennium", PMI Europe 2001 and published as Cover Story on “Project & Profits”; "Earned Value Management: How to avoid the 90% complete syndrome" IPMA 2002; "Methods and applications of Risk Management in space programs" & "Earned Value Management techniques for engineering and prototype production activities", PMI 1999 Annual Symposium). Sergio can be contacted at Sergio.Gerosa@thalesaleniaspace.com. |
Federico Nasini
Co-Author
Federico Nasini joined Thales Alenia Space Italia in 1998 coming from Finmeccanica S.p.A. - the main Italian industrial group operating globally in the aerospace, defence and security sectors - were he worked as Senior Analyst at the Strategic Finance Dpt. He was appointed Head of Finance and Insurance Dpt. of Thales Alenia Space Italia in 2003, prior to that position he was responsible for International Finance focusing on export and project finance transactions. He graduated in Political Science at University “La Sapienza”, Rome, he then got a degree in Finance at the London School of Economics and attended the Credit Risk Evaluation School at I.R.I. Management and Mediocredito Centrale S.p.A. He has a large experience in trade, export and project finance techniques both in the domestic and International domain. He holds seminars at University of Chieti-Pescara, G. D'Annunzio, Department of Quantitative Methods and Economic Theory, and is author of the following papers: Project Financing and Risk Management: a new challenge for program management in the space industry of the third millennium", PMI Europe 2001, London, June 2001, Feasibility Analysis and Financing Strategy in Multimedia Ka-band Satellite Projects, 7th Ka Band Utilisation Conference, Genoa (IT) September 2001, Adopting a Public-Private Partnership Scheme for Galileo, 8th Ka Band Utilisation Conference, Baveno (IT) September 2002. Federico can be contacted at Federico.Nasini@thalesaleniaspace.com. |
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