Calculation of Interest during the construction period
Originally published: 08/08/2018 08:30
Last version published: 09/08/2018 08:47
Publication number: ELQ-67005-2
View all versions & Certificate

Calculation of Interest during the construction period

The tool calculates Interest during construction period by applying five different methods of equity injection and debt.

The tool applies different method of fund requirement during the construction period. The debt is drawn periodically based on fund requirement. The interest is calculated on the debt drawn, for the duration between draw date and end of construction period. The interest is compounded. The interest is then capatilised and added to the project cost.

The project comprises of various activities with start and end dates. The fund requirement during the construction period is based on the activity cost and its start and end dates. The unit of construction period is "months". The entire construction period is divided into number of months. The tool checks on the activity duration and allocates fund within that many number of months, under different methods. Within the different fund requirement flows, the equity injection and debt drawn is based on different methods such as - all equity injected before debt, in equity/debt proportion, equity injected randomly etc. The tool applies random numbers to generate fund requirement in some methods.

In this tool, the IDC is finally, propotioned on debt/equity ratio on the last month and added to equity and debt part. It is assumed that the equity part of IDC will be put in by the investor on the last month.

The tool compares the Interest During Construction (IDC) based on different methods, along with mean, standard deviation and coefficient of variation.

Please send your review at

This Best Practice includes
One Excel spread sheet with multiple tabs.

Sumit Barua, CFA (ICFAI), PMP offers you this Best Practice for free!

download for free

Add to bookmarks


Further information

To help project finance professionals to arrive at IDC by applying different methods and select most approprate one.

In all project feasibility stuides, infrastructure finance models

4.4 / 5 (17 votes)

please wait...