Project Risk is Interrelated

Matera uses our proprietary Risk Wheel to manage complex and interwoven risks for Project Owners.

A diagram of the eight major risks that are associated with an asset.

SPONSOR RISK:

Track record, experience, and point-of-view of investor team impacts the project

  • An experienced financier may be an expert in market intricacies or product value but may not understand engineering, construction, operations, and logistics.
  • Proven track record and experience of investor team supporting project is more rare as teams often are assembled through pre-existing relationships.

OFFTAKE RISK:

Ability to provide consistent product to market through long-term contracts support financing and returns

  • “Bankable” contracts are hard to come by and often involve payment guarantees, Letters of Credit, and other methods to satisfy market exposure that decrease margin.

FEEDSTOCK SUPPLY RISK:

Adequacy and consistency of long-term feedstock(s) required to support output and returns

  • This risk is often the least understood risk and is assumed to be contracted off even though it often represents the largest portion of your Cost of Goods.

MARKET RISK:

Competitive and defensible market position and value proposition in near term

  • Merchant exposure or commodity fluctuations may add sensitive scenarios that complicate pro forma. Can the risk be hedged or contracted off?

MANAGEMENT RISK:

Track record and experience of management team delivering and operating project attracts investment

  • Track record and experience of management team often appears supported by the org. charts. But, true performance cannot be measured until management team is in action.
  • An experienced financier may be an expert in market intricacies or product value but may not understand engineering, construction, operations, and logistics.

OPERATIONS RISK:

Competitive and defensible market position and value proposition in near term

  • Developed O&M plan for project with Maintenance Reserve from Commissioning through Operations has to be run by professionals to see success.
  • Germane, transferable experience of Operations staff is critical to the outcome of the Project;
  • Once operating, the complexities around technology or core money-making activities must be orchestrated and managed; and
  • Operations and Maintenance philosophies directly influence project costs and operating margins.

TECHNOLOGY RISK:

Performance history and reliability of safe and competitive value production

  • Performance history and deployment approach can strongly influence the reliability of startup and ultimately operations.

CONSTRUCTION RISK:

Likelihood and mechanisms to achieve required and timely project output in support of business plan

  • Most investors want to transfer all risk but do not like the cost of doing so. This leads to an iterative process to evaluate optimum structures

MATERA LLC can assist with a comprehensive risk evaluation including interrelations and modeling