 Now I have a framework which I kind of coined. I call it the 3S's modeling framework. So the 3S, I'll just jump into it, the 3S modeling framework is something that I've used for probably 20 years and probably didn't coin it as 3S modeling framework. But it tells you, when you see a model or say any engagement that you probably need to build a model for, if you follow those 3S's, it'll give you a good understanding of what's going on. So the first S is story. The first S is story, right? You need to understand the story behind this thing you're trying to build. What is the story? So every single thing you're trying to do, try to break it down into a story. So what's that story, right? It was this model I built for the World Bank and I needed to understand the story. And for me, when I'm building a model, I need to, I kind of in my mind, I need to build it in my head first, right? So I'll get all the facts, get everything from everywhere, get all the facts, and then build the entire model in my head. And that could take me weeks. So some models taking me up to a month. Yeah, I have all the data. I'm getting the data, but I'm trying to build it in my head. And if I can't build it in my head, then I won't bother wasting my time going into Excel. So don't jump into Excel. Understand the story first. That's the story. Now in understanding the story, you need to think about risk. You need to think about risk and uncertainty, right? Because every single thing about life in general is risks and uncertainty and who can manage the risk best? Because if you're going through life, everybody there's risk involved every single step of the way. You may not like to call it risk, but there is uncertainty and there is risk. Now, if you want to be very successful, it is you kind of scheduling or kind of passing on the risk to somebody else that can bear it better, right? And as a financial model is the same thing. So you're looking at this story and say, okay, what are all the risk items here? Let's identify the risks and these key risks, these big uncertain risks and things we probably need to build scenarios out of or build certain things out of. So we're coming to that, but that's the first S. The first S is story. Be able to tell that story. Part of the story must be to define and allocate a risk within the model across multiple scenarios. So that's number one, storytelling. Understand the story. So I'll go further into risk because we're talking about credit defaults, right? So there's a credit default risk. How do you manage that credit default risk? This is kind of a schematic of a risk landscape for infrastructure projects. So when we say project finance, what are we talking about? We're talking about a project that you're financing, right? It's just simple. A project you're financing is different from corporate finance, which is generally all the projects added together in a corporation is like corporate finance, right? But project finance is a specific project and throughout the world, trillions of dollars are spent every single year on infrastructure-like projects. And these infrastructure-like projects are kind of move the country forward, right? So as a modeler, when you're doing a project and it's a project finance project, you're thinking, okay, where are all the risks? You need to draw diagrams, right? You draw diagrams, understand the story. Once you understand the story, you're halfway there to building your model. So while many people love the technical side of modeling, and I'm going to go deep into it for sure, but that story telling to me is the most important, right? Look at this visual. I think this visual is by the World Economic Forum, BCG did that in the World Economic Forum. I can't remember when, where they kind of broke down the risk landscape for infrastructure projects, right? You have your planning, design, and construction phases. This is, you remember, an infrastructure project or a project finance deal. You start off with zero. Why is it called project finance? Project finance means the entity doesn't exist. The entity was just created for this project, and usually it's like an SPV. You create an SPV, a special purpose vehicle, that kind of runs this project. So when that special purpose vehicle is built or started, or the legal guys bring it together, it has no assets, it has no cash flow, no history of cash flow, nothing. It's empty. But you're going to give this project or this SPV billions of dollars, worth of a toll road, or an airport, or a hospital. And the cash flows that are going to be generated after construction is what you're saying, those cash flows discounted today, and everybody who has the piece of that, and is you the modeler that needs to determine that and show a model that shows, hey, this thing is profitable. Let's run with it. But there can be defaults. And who are the ones that finance this kind of project? Because obviously money must come somewhere, right? So you have the promoters, obviously they'll bring some form of equity, right? But the majority of this is financed by debt. And you know debt, the whole idea of making an SPV is to ring fence, just to ring fence the promoters, right? Because you have this special proposed vehicle called Mr... I don't know, Mr. Toll Road Limited or something, right? And this Mr. Toll Road Limited, you can't... The owner or the people that are promoting it are shielded, in case, let's say Mr. Toll Road Limited goes bust and owes like a billion dollars. You can't get to the owners because it's ring fence. This is... That's the whole idea of ring fencing that risk, right? Yeah, so you need to understand, okay, planning, design and construction phase, there are risks involved, there's site risk, there's design risk, construction risk, financing risk, right? And then the people affected and stuff, the political and regulatory decisions, there's a risk attached to that, affecting special specific projects or affecting the entire economy, right? So environmental or other permit risks, did you have a permit for doing that construction or that design, was it approved? What about when new government comes in to change their mind? Of course, we know certain projects in Nigeria like that, right? Mines get changed and, I mean, money is lost. So then you have operating phase, the operational phase, commercial risk, operating cost risk, performance risk, re-financing risk, and then the termination phase itself when everything winds down, if that is a closed loop kind of project. So it's important you identify risk, that's part of the story. So the next S in the 3S modeling framework is structure. So while you understand the story, then you need to understand, okay, what structure am I going to use to build this model? What's the structure I'm going to use, right? And structure, I'll just rush through this one. This is a kind of typical project finance model structure. You start off with inputs, operating drivers and the contracts and you have S curves and interest rates and stuff like that, all sorts of things. But the key thing there is you do not have historical financials. In a typical model that you're building, you have historical financials. And I know some people here are probably going to write the financial modeling institute exams. And those financial modeling institute exams are coming up soon. In building a corporate model, you would need historical financials. So you need the audited accounts. You get maybe three years of historicals and you're gonna use those historicals to generate assumptions or drivers. Yeah, so that's key. So you use that, right? But in a project finance model, there are no historical financials. So you're just jumping into drivers straight away. And most of the drivers are gonna come from the legal team. Why the legal team? Because the legal team are having all the agreements or the governance or all the stakeholders who guess what you see the legal team. So as a modeler, you also need to know law, right? So you need to know a little bit of law. You need to know a little bit of engineering when you're talking about the construction phase of that. You need to know a little bit of everything, which is why I really like modeling because it's not just the technical bit. And I'll give you one piece of advice, everybody here. Don't just learn the technical bit. Everything I'm saying here is extremely important. If you just learn the technical bit, you'll be a desk modeler. You'll be such an excellent modeler, building all sorts of stuff, but you will not get those juicy jobs. You'll not be able to do, I mean, be in those projects and understand the bigger picture. It's really important to do, right? So all these inputs go into your calculations, depreciation calculations, working capital calculations. And those working capital calculations lead to all these metrics. You know, a bit of pre-cash flow, IRR, right? And then they also lead to outputs, the typical outputs, P&L, balance sheet, cash flow statement, right? And one important thing in the cash flow, especially for project finance projects, is that you need to understand how cash comes in. Who has the cash? Who is going to be paid this cash? And one of the most important people, the very first people that should get paid, we're going to see it in the cash flow waterfall. How does this cash flow? How does this cash keep? What's that cash flow waterfall? You have sources and uses of funds, right? And all the sources and uses of funds leads to your debt. You have to calculate your debt service coverage ratio. You need to calculate if you have a reserve account, debt service reserve account, because your debtors need protection, right? And that's how you protect them from default. They say that when you have money in this project, when this project is making money, please keep aside some money in case something bad happens, like corona, right? Corona happens, you can draw from that reserve, right? So those are things you do and the modular needs to model all that. Fix assets, interest, capitalized fees and others, those are part of it. Then, of course, you have your sources and uses of funds, but as modellers know, there's usually, because of how cash comes in and out in a certain way, there's going to be secular reference. You have some secular references there. Again, you have another secular reference from your outputs when you're trying to say, okay, cash on interest and all that kind of stuff, more secular reference. So modellers in the house know these things and kind of drives people nuts sometimes if you don't manage it properly, right? So at the end of the day, you have your balance sheet and yeah, you have all that and that's basically how you build a project finance model. That's structure number two. The last S is scenario. So in the three S modeling framework that I use is story structure scenario, story structure scenario. And any model you're building, just understand, you understand the story, you know the structure and then we're building out all the different scenarios that could happen here. How do we manage risk with all those scenarios? So we're going to follow this structure when we're building our demo model.