Building Integrity Checks in Project Finance Models (Manual & Template)

Description
It is common to hear people complaining about excel being prone to errors. Even if we take a very systematic and methodical approach to using excel modeling, we won’t eliminate errors . The benefits of using excel however, far outweigh the risks it potentially poses.

One way to help reduce errors is to include integrity checks in your models and dedicate a sheet within your model that collects all the individual checks throughout the model into one sheet. This allows the model builder to check that the model, or section of the model, works correctly. All the checks are then summed up and a master error check and alert indicator can be created and included in the freeze pane in each worksheet within the model.

This workbook and the manual are designed to help you build necessary checks in your project finance model.

You can use this template as a road map on the typical checks that needs to be included in any project finance model. This is mainly designed for project finance models but you can also use it in a corporate model and adjust it to your own project model.

I do not call these error checks because they might not necessarily be errors but are needed to alert the user of your model of any issues that may require their attention. For example, in down case scenarios, the cash available for debt service might not be enough to pay back the loan. Then a flag in the model should notify the user that this is the case.