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TOPIC: Why is project finance not financing a project?

Why is project finance not financing a project? 2 months 2 weeks ago #8307

  • Daniel Blossey
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In the video "L07.07 (added) - Advanced Concepts in Project Finance Principles" I did not understand why project finance is not financing a project?

Here is the sentence:

Project finance is not financing a project because project finance refers to [loan structures] that depend on cash flow generated by the project.

I think project finance is financing a project!!???

So what is the difference between project finance vs financing a project?

Thanks!

Why is project finance not financing a project? 2 months 2 weeks ago #8325

  • Cornelius Fichtner
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Daniel,

I have reached out to the resource who helped us develop this particular lesson and we'll be back with an answer.

In the meantime, allow me to make this (probably not very helpful) analogy: As a PM it is very obvious and intuitive to you that "project management" and "managing a project" are not the same thing. One is broad the other is narrow. One is a discipline/art while the other is applying the first to an actual project.

But I'm definitely not the financial expert, so let's see what answer we get from the experts and whether this analogy still stands after that... :dry:
Until Next Time,
Cornelius Fichtner, PMP, CSM
President, OSP International LLC
Last Edit: 2 months 2 weeks ago by Cornelius Fichtner.

Why is project finance not financing a project? 2 months 2 weeks ago #8327

  • Yazmine Darcy
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If you listen closely to other parts of the lesson L07.07 - Advanced Concepts in Project Finance Principles, it explains that depending on who you are, you might interpret "Project Finance" and its related principles in different ways.

In a more general sense, project finance relates to the management of revenues; the conduct or transaction of money matters” It could also mean providing funding/money/capital to a project. However, I think the point that was being made that "Project Finance"is a term that refers to a very specific specialized/complex "loan structure/arrangement" used for large infrastructure projects.
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