FINANCIAL MODELLING

Experts in Project Controls, Commercial Management and Financial Analysis

​Deep Dive Consulting

Tariff Rates Model


​Built A Tariffs Rate Model For A Tier 1 Nuclear Company


Situation- The Tier 1 client has a cost reimbursable contract for the defuelling & decommissioning of a nuclear site and for funding it has to inform the client what it intends to do and how much it would cost. The site has a portfolio of circa 32 live projects with a target annual funding of circa £60m. It has 3 cost elements namely Internal Labour Cost, Sub-contractors Cost and Risk & Contingency. 


TasksOur remit is to build a Tariff Rate model so that it could be used to cost the Internal Labour component of all the projects.


Actions- First step to understand what constitutes Internal Labour cost, that is employees cost plus Agency Supplied Workers (ASWs). Second get a copy of the payroll- who and their annual cost from Human Resources. Get a copy of the rates applied for each ASW from Commercial. Review all the employees and the ASWs as to whether they are in the appropriate Cost Centres. Get some other hidden costs such Employers NI, Pension and expected inflation rate. Build the Tariff Rate model with all these in a Microsoft Excel file with all the necessary formulas, VLookup and so forth.


Results- The Tariff Rate model then spits out the Tariff Rate to be applied for each labour which could be used when building the Life Time Plan for the site. The first page of the Microsoft Excel file of course depicts the main assumptions so that the reader could understand the results of the model better.

Voluntary Redundancy Scheme Model- Scenarios


​Built A Voluntary Redundancy Scheme Model For An International Airport


Situation- The client's business was highly profitable international airport and the airport was going through both commercialisation and infrastructural transformation process where customer service was top of the agenda. The airport company was going through transition process and wanted to be managed as a private organisation.


TasksOur remit was to build a Voluntary Redundancy Scheme model with financial justification that it would bring value to the organisation using NPV as the appraisal tool. The airport company had around 500 permanent full time employees.


Actions- First step was to calculate the PV for each employee as if they would retire at the official retirement age. Hence had to understand the actual payroll position for each employee. Then trying to understand their remaining years of service. Afterwards trying to ascertain their increments to be received from now on until they would retire plus the employers pensions contributions up to retirement plus incremental pensions up to the age of 85. Then use NPV to calculate the PV for each employee. Second step was to calculate the PV for each employee using three Scenarios- One Month, Two Months and Three Months for each year of service as compensation. This exercise demanded building a fully detailed Scenario Buildings and compared the PV of First Step against the PV of Second Steps for each scenario in view to ascertaining whether it would bring financial benefits to the client.


Results- The Voluntary Redundancy Scheme Model spitted out whether it would result to financial benefits. The Scheme was proposed to the Board of Directors and was approved for implementation.

Cash Flow Forecast Model


​Built A Cash Flow Forecast Model For A Global Aviation Company


Situation- The client's business was highly seasonal with 90% of its sales made during winter in the northern hemisphere and it had two overseas start ups- one in USA & the other one in China. All its employees were full time. The client's business operations was highly complex and mainly in Europe and USA. It has a multi-currency banking facilities (GBP, EURO & US$). It finances its tight cash flow situation by having recourse to invoice discounting & stock financing banking facilities. 


TasksOur remit is to build a Cash Flow forecast model so that the tight cash flow position could be easily monitored with highest level of accuracy and that the client remains within its approved banking lending facilities


Actions- First step to understand its actual position- cash, debtors, stocks & its available banking facilities. Second step to understand how it would operate until the end of the financial year and beyond as this is a rolling 12 months cash flow forecast.That exercise demands building a fully Integrated Graphical Cash Flow Forecast model with both the P&L as well as with the Balance Sheet. 


Results- The Integrated Cash Flow Forecast was graphical and with the blink of eye it would clearly show periods of tight cash flow positions. That graphical tool was used by senior management to understand the liquidity position of the organisation.