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How to Prepare and Present Proposals: a twelve session trainers’ workshop “Improving our capacity to prepare complete and balanced proposals shortens the path from good ideas to implementation.”. Session 1 Overview. Why are we here? What are we expected to accomplish?
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How to Prepare and Present Proposals: a twelve session trainers’ workshop“Improving our capacity to prepare complete and balanced proposals shortens the path from good ideas to implementation.”
Session 1Overview • Why are we here? • What are we expected to accomplish? • What information and techniques will we share? • What are the different examples and problems we will work on? • How will we critique our work? Information Technique Cases Teaching Options Feedback Improvements
Proposal Samples • Mozambique Sugar to Ethanol • Egypt Waste to Electricity • Kenya Bagasse to Electricity • China Waste Water Treatment • Senegal Solar Milling
Typical Proposal Problems • Incomplete or Imbalanced • Misdirected • Non-responsive • Terminology Gap
Schedule and Approach • Day 1-preparatory work • Day 2-building a proposals • Day 3-presenting a proposal and training others • Lectures + Exercises + Feedback • Primary Exercises-Working as teams, sharing five proposal examples. • Authors will help teams understand the proposal; teams will assist authors in suggesting improvements • Feedback will concentrate on the strengths and weaknesses of each session • Wiki, Memory Sticks and all-in-one
Preparing and Presenting ProposalsA Guidebook on Preparing Technology Transfer Projects for Financing • Chapter 1…Summary • Chapter 2…Before Preparing a Proposal • Chapter 3…Preparing a Proposal • Chapter 4…Presenting a Proposal • Chapter 5…Customizing a Proposal • Information Boxes and Lessons Learned • Templates and Other Annexes
Basic Concepts • Proposal • Champion and Enabler • Money, time and other resources • Idea + Request P r o p o s a l Champion Enabler
Session 1 Exercise • You are preparing a budget. How is this a proposal? • You are asked to approve a trip. How is this a proposal? • A school needs books. You decide to raise money for the school. Who is the Champion and how is your decision a proposal? Who are the enablers? • Is it still a proposal if you simply buy the books yourself and send the books to the school?
Feedback and Break • Too long, too short? • Too simple, too much? • Lecture and Exercise Critique • Questions and Discussions helped, distracted?
Session 2Method: Seven Questions • Information-the seven key questions • Technique-building block approach • Information-content for two of the five proposals • Exercise-as a group we will conduct a preliminary inventory of two proposals, identify the seven key pieces of content (or not) and address a core issue: “Is it clear what is being requested?”
Method What If? Base Case To Whom? Proposal
Preparing and Presenting Proposals: Building Blocks Proposal • What? Product, service, technology, client • Where? Location, market, operating and regulatory conditions • Who? Champion, owners, sponsors, team, approval bodies, stakeholders • Why? Financial, social, environmental, market, growth • How? Status, milestones, schedule, costs, revenues, grants, loans, investment • What if? Schedule changes, output and cost variances, kep person events • To Whom? Grant-makers, Lenders, Investors, Specialized Programs, Others What If? To Whom? Base Case What? Where? Who? Why? How?
Guidebook Checklist • Read Egypt and Kenya • See Page 16 of Guidebook • Conduct a “preliminary” inventory of proposals • Identify included and missing parts • Is it clear what is being requested?
Session 3 - Numbers: accounting, finance and scheduling concepts • Information: key terms used in the quantitative portions of proposals • Technique: debt service, net present value, internal rate of return …income statement, balance sheet … planning, construction and operations • Exercise: simple payback Ellen and Niki Buy a Coffeepot)… compound interest calculations…see Guidebook Page 39
Planning Construction Pre-operation Operation Capital Cost Capital Grants Loans, Debt Equity Revenue Operating Costs Operating Grants Net Operating Revenue Debt Service Cash Flow Dividends Basic ConceptsTime Periods and Money
Planning Construction Pre-operation Operation Capital Cost Capital Grants Loans, Debt Equity Revenue Operating Costs Operating Grants Net Revenue Debt Service Cash Flow Dividends Time Periods and Money CAPITAL
Planning Construction Pre-operation Operation Capital Cost Capital Grants Loans, Debt Equity Revenue Operating Costs Operating Grants Net Revenue Debt Service Cash Flow Dividends Time Periods and Money OPERATING
Planning includes • Technical analysis • Site selection • Environmental and social assessments • Feasibility analysis • Obtaining all permits and approvals • Finding, negotiating and “closing” the necessary funding to make a proposal reality • During the planning period, the Champion must track and record time spent on activities. Sometimes called “sweat equity”, this information becomes extremely helpful in later discussions, especially with new potential investor-owners.
Construction and pre-operation include: • Site acquisition • Preparation of land • Building of structures • Installation of infrastructure • Acquisition and installation of equipment • Setting up offices and distribution points • Acquisition of operating equipment (vehicles, office, maintenance) • Fees to be paid to experts • Fees to be paid or credited as shares of ownership to Champions
An operating budget and plan includes: • Revenue estimates that show both the number of units expected to be produced and the value of each unit • Labour costs (separated between labour to produce the product or service and labour to run the company or the programme) • Raw materials to produce the product or service (e.g., fuel to produce electricity or untreated bed-nets and the special coating to be applied) • Transport: fuel, maintenance • Communications: phone, fax, e-mail, postage • Utilities: heat, cooling, water, electricity • Packaging • Office supplies • Equipment rental • Insurance • Accounting and auditing services
Basic ConceptsFinancial Analysis • Cash Flow • Interest • Debt Service • Net Present Value • Internal Rate of Return • Debt Service Coverage Ratios • Project “Rate of Return
Interest Year 0 (when the money is borrowed) = 1,000 …Add 12% for year 1 = 120 Balance at end of year = 1,120.00 …Add 12% for year 2 = 134.40 Balance at end of year 2 = 1,254.40 …Add 12 % for year 3 = 150.53 Balance at end of year 3 = 1,404.93 …Add 12% for year 4 = 168.59 Balance at end of year 4 = 1,573.52 …Add 12% for year 5 = 188.82 Balance at end of year 5 = 1,762.34 FV = P(1 + R) N 1762.34=1000(1+.12)5
Interest On a calculator or spreadsheet, getting this answer would be a function of entering the present value (PV) of 1,000, interest rate (i or R) of 12%, the number of periods (n or nper) of 5 and then solve for future value (FV). In an algebraic presentation, this calculation is as follows: FV = P(1 + R) N Where: FV = future value P = principal (initial amount) R = annual rate of interest (also abbreviated as lower case i) N = number of years FV = 1000(1+.12)5 1.12 * 1.12 * 1.12 * 1.12 * 1.12 = 1.7623 (* = “multiplied by”) 1000 * 1.7623 = 1762.34
Compounding • FV = P(1 + R)n • Where: • FV = future value • P = principal (initial amount) • R = annual rate of interest (also abbreviated as lower case i) • n = number of years • FV = 1000(1+.12)5 • * = “multiplied by” • 1.12 * 1.12 * 1.12 * 1.12 * 1.12 = 1.7623 • 1000 * 1.7623 = 1762.34
Compounding: a calculation showing 1,000 at 12 per cent interest compounded yearly for five years follows: • Year 0 (when the money is borrowed) = 1,000 • Add 12% for year 1 = 120 • Balance at end of year = 1,120.00 • Add 12% for year 2 = 134.40 • Balance at end of year 2 = 1,254.40 • Add 12 % for year 3 = 150.53 • Balance at end of year 3 = 1,404.93 • Add 12% for year 4 = 168.59 • Balance at end of year 4 = 1,573.52 • Add 12% for year 5 = 188.82 • Balance at end of year 5 = 1,762.34
Debt ServiceRepay 1,000 over five years at 12 per cent – three methods
Five-year net present value at 12 per cent discount rate See Annex 5, Page 191 for formula and factors
Debt Service and DSCRs Year 1 2 3 4 5 1-5 Funds Available 400 420 440 460 480 2,200
Interest Principal Debt Service Net Present Value Internal Rate of Return Debt Service Coverage Ratios i P or p P+I NPV IRR DSCR Financial Concepts
Session 4 – Process: fact-finding to base case to finished proposal • Information Content: taking the seven questions and using these to complete a proposal • Technique Content: template – paper or Excel-based – proposal building • Exercise: by team, conduct an inventory of the five sample proposals
Preparing and Presenting Proposals: Building Blocks Proposal • What? Product, service, technology, client • Where? Location, market, operating and regulatory conditions • Who? Champion, owners, sponsors, team, approval bodies, stakeholders • Why? Financial, social, environmental, market, growth • How? Status, milestones, schedule, costs, revenues, grants, loans, investment • What if? Schedule changes, output and cost variances, kep person events • To Whom? Grant-makers, Lenders, Investors, Specialized Programs, Others What If? To Whom? Base Case What? Where? Who? Why? How?
From Initial Questions to Base Case Base Case
From Initial Questions to Base Case Planning Costs and Schedule Construction Costs and Schedule Planning and Capital Grants Debt and Equity Operations Commencement and Roll-out Revenues Operating Grants Operating Expenses Net Revenue from Operations Depreciation, Taxes, Debt Service Cash Flow Base Case
Session 5What? And Where? • Information Content: the different dimensions of defining product, service, technology, clients, market and setting • Technique Content: us of templates • Exercise: by teams, investigate the “What?” and the “Where?” of one sample proposal, record “Notes and Comments” to be shared with other teams and proposal authors
Session 6Who? and How? • Information Content: the variety of human and institutional skills and motivations to be considered in creating an implementation teams and a plan • Technique content: use of templates to build such an inventory • Exercise: teams switch proposals and prepare an assessment of the team and the plan, creating a series of questions and notes to be shared with other teams and the proposal author