With increasing complexity in the infrastructure finance sector, it is now common practice not only for the financial modeller and transaction executives but also for CEOs, CFOs, investment officers and board members to take more of a hands-on role in using financial models. However, a financial model should not only be built for internal purposes but should be able to satisfy a wide range of external model users as well, including auditors, equity investors or debt providers.
On this background, we at Infra Advisory Ltd believe that each model should be built according to a transparent and reproducible standard, providing confidence to all stakeholders. This is why all our models are built according to the TRUST methodology, with its main concepts presented below:
Transparent
• Simple and clear formulas • Consistent formula per row • No hard coded figures • Minimize embedded logic • Minimize range names • No circular references • Minimal usage of macros • No hidden cells
Reliable
• Reliable and documented inputs • Reasonable level of calculation detail • Usage of calculation and integrity checks • Testing of the model before handover • Tracking of changes in version
User-friendly
• Easy to use and understand • Provide user manual • Built in scenario manager • Built-in sensitivity manager • One–button optimization • Pre-format every page for printing • Allow for multiple languages
Structured
• Build calculations in blocks and use grouping to present hierarchy • Build flexible model with balanced approach between universality and simplicity • Implement dynamic timing • Line summaries • Clearly state units for each row • Minimize interlinking between sheets • No linkage to external sources / files
Tailored
• Tailor made output sheets for each stakeholder • Summarize main inputs and outputs • Use visual presentation of outputs • Bear in mind future stages of the project and prepare the model for changes or amendments • Allow for multiple levels of model optimization