Project assurance solution for financiers

Key challenges faced by project lenders and associated service offerings

Key challenges faced by lenders

Inaccurate MIS reporting resulting in inefficient decision making and schedule overruns
Inability to identify risk at the planning stage which may result in margin erosion

An inefficient project review process – project information and performance data not secured through an integrated system before performing a qualitative review

Project budgets are not adhered to or monitored effectively, leading to budget overruns
The completion cost is higher than the original budgeted cost
Inadequate visibility on the possible siphoning/ diversion of funds by project owners
An increase in the volume of claims due baseline time, cost and scope variances
Different methods utilized for revenue recognition creating a mismatch in the revenue recognized and the cash collected

An inadequate final reconciliation process for commercial closures
Inadequate administration of the project/asset guarantees, defect liabilities, etc.
Contractors’ inability to timely obtain billing/invoice approvals from clients

A project health check is typically conducted prior to project execution/funding/high value disbursement and is a proactive consideration of key project processes across an organization.
Our methodology supports ongoing project monitoring as it is designed to examine and monitor the underlying project management categories and sub-categories utilized by owners, consultants and contractors.
Our team provides ongoing transaction review services. These include the review of contractor invoices, contractual terms and conditions, inventories, the work performed and various other project documents.

The bank required an independent review of payments, receivable balances of the client timeliness of project completions and reasons for delay, project governance and claims management process. The exercise needed to be conducted on behalf of prospective lenders and investors to the client.
As part of this engagement, KPMG provided an independent, qualified summary case study report for 26 contracts along with providing a summary of the key parameters/conditions of the contract.
KPMG developed an unbiased opinion on recoverability and the amounts of recoverability of each of the balances of the receivables related to the 26 contracts in-scope. The opinion was provided under three scenarios (base case, pessimistic case and optimistic case) that reflected the contractual entitlement, negotiable amounts and certified amounts.
KPMG’s assessment also provided insight on the time needed for recoverability and whether the balances of the receivables are tenable from a technical, financial and/or contractual standpoint.
Based on our review and entitlement analysis, we provided the project lenders with gaps and improvement opportunities in the receivables stated by contractors vis-à-vis the actual entitlement in addition to the potential recovery options.

Partner, Head of Governance, Risk and Compliance Services (GRCS)

KPMG Lower Gulf

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