Bigen Africa guards against the risk of ‘unbankable’ projects with @RISKBigen Africa (
www.bigenafrica.com) is using @RISK from Palisade (
www.palisade.com) to bring basic services to local communities in South Africa. The risk analysis software enables the ‘development activist’ organisation to make informed decisions about implementing a programme and provide the detail required to secure commercial finance.
Government resources cannot meet the scale of the need for services such as housing, water and electricity, so commercial finance programmes play a key role. However, poor planning without enough information makes it difficult to recoup the costs of a project, thereby making it unattractive to potential commercial financers – in other words, ‘unbankable’. Bigen Africa recognised @RISK as a tool that would enable it to identify, manage and mitigate the risk associated with each project and ensure it attracts funding and is successful.
The @RISK model developed by Bigen Africa helps it to understand and demonstrate that it is the number and type of houses that drives the demand for services, where this demand is, what it will be in the future and who will use the services. It forms the basis of engineering / planning, the financial model, the revenue model and strategy, affordability analysis and the integration between the services (housing, roads, solid waste, water, sanitation, electricity, etc).
In doing this, the @RISK model provides the level of detail that banks require before making a decision on whether to finance a project. At the same time, it benefits from simplicity, as it can be developed rapidly and is easily understood by a wider audience who may not be familiar with the concept of demand risk, but identify with the methodology of categorising demand by the number and type of housing.
“@RISK is a seamless part of Excel, offering a wide array of functions,” explains Tian Claassens, managing principal of development finance and advisory services at Bigen Africa. “This changes the whole approach to risk analysis. Rather than building very complex models in the hope that a finding emerges, @RISK facilitates a simpler model, but one which enables uncertainties and their impact to be easily identified. This is far more valuable, not least because it quickly allows decisions on costing to be made. Like crossing the Rubicon, once people use @RISK, they don’t go back to their previous methods of risk analysis.”
