Infrastructure strategic operating models.

For rail, port services, electricity & gas distribution, water services and other utilities.

Post-acquisition models to access debt, nurture shareholder relationships and negotiate with the regulator.

The issues

Infrastructure enterprises often lack the technology to combine management accounting actuals to the short-term budget forecast. Accessing debt and investment requires adding the long-term strategic forecast to these first two, and this adds further complications.

There is often no common vocabulary between the enterprise and their lenders and shareholders, meaning that operational and financial arrangements remain misunderstood between the parties.

This results in expectations on debt service and shareholder distributions that are difficult to quantify and meet.  Central to these expectations is the lack of an agreed valuation for the enterprise.

The solution

Our infrastructure strategic operating models enable enterprises to access debt, nurture shareholder relationships and negotiate with the regulator.

The results

Our strategic operating models combine the three key elements of business financial life: management accounting actuals, agreed budget short-term forecast and the strategic long-term forecast.

The model create a common language, through what are often complex operational and financial arrangements. Expectations are set by describing the parameters and timing of debt service, distributions to shareholders and changes in operational investments.

Crucially, the model calculates enterprise valuation to the agreed method.

The approach    

Our clients define and then manage a successful model.  We see ourselves as the purveyors of an essential decision tool that allows our clients to see where the value is and shows them the way forward.  To this end we make sure our clients gain ownership of the models, through simple, effective design and appropriate training.

Our models are written in the FAST standard which means they are flexible, appropriate, structured and transparent.

Our development approach is based around a belief that ‘asking the right question’ is key to defining and building the right model for your needs. Using our experience, we will guide you to find the correct questions, which must be focused yet detailed, allowing the model to work efficiently without trying to do too much.

We will only develop models that we know will work and remain as simple as possible to use.

The process

Developing a strategic operating model for your needs starts with defining the questions you want to answer.  We will interview you in order to define the questions you want to answer with the model and so define the correct path that is required to achieve the business objectives.

Developing a strategic operating model normally takes around 3 to 4 weeks, depending on the complexity of the operations, the financing, and the legal structure.  The process starts by signing a confidentiality agreement and understanding your needs.  The first step for us is to build up a picture of the dimensions of the model with which we will offer you a quote.

Case studies

Here are links to case studies for this type of modelling carried out by Lazuli Solutions.

• Caruna Oy, regulated electricity distribution in the EU

• High Speed 1, regulated high speed rail in the UK

• Scotia Gas Networks, regulated gas distribution in the UK

• Noatum Ports, regulated port operations in the EU

• Electricity North West, regulated electricity distribution in the UK

Guarantee

Lazuli Solutions has been building strategic operating models for infrastructure for over 25 years and all our modellers and project managers are highly experienced.

On delivery of the model, we promise a no-quibble attitude in making sure the model works for our clients.

Long term, we are available for questions on the model, because we want the model to work successfully for our clients.

Finally, included in the price of the model are two ongoing free maintenance sessions* within the first year after delivery.

*We will carry out a reduced integrity review and a high-level commercial review, repair any errors we find, and report back to you.

Pricing

We don’t charge for the first meeting and subsequent conversations that allow us to understand the scope of work and produce a quote.

The quote will be based on two levels of work, a higher-level for specification, management and delivery, and a lower rate for modelling, with estimated time for each.

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