Written by Thomas Mutsimba, an author, an Enterprise Risk Management Professional. Thomas is an author endowed with advanced actuarial analysis and advanced forensic analysis
Engineering finance has become a scapegoat for the failing economies of the world. Engineering has become the driving input factor for worldwide infrastructural projects. Economies pinned on massive growth of populations has induced a need to rethink engineering and what it brings to the Gross Domestic Products (GDP) of nations. Why is engineering so important in today’s economies? Engineering is important as it is a design tenet of various statuses or outlook of nations in the world. This article focuses on structuring of engineering finance models for use by project finance professionals and the world at large. A risk modelling view or approach is being used to posture how engineering finance models affect the outlook of nations let alone institutions engaged in funding of engineering projects. What is meant by structuring of engineering finance models? Engineering finance models structuring is the generation of engineering components needs analysis in a formation fashion to posture project finance as a generic input into the risk modelling input. But how does finance affect the engineering tenet? As no business or project thrives without an initial outlay. Engineering projects are modeled under finance structural adjustments. A methodology let alone methodologies are available to prop up the structural modeling exercise. Situational deverberation of the modus operandi of the tenets of structural engineering finance model is made using a situational approach. Why is this approach used? It is used because it aims at discounting theoretical approaches to solving problems but instead promote applied engineering models.
Scenario 1
Engineering finance models are structured using the following:
[1] Nut factory shaped finance population mechanism
[2] Finance needs requirements tenet
[3] General Factory component architecture
[4] Rolled-up reserving system
[5] Stress Asymmetry test-case model
[1] Nut factory shaped finance population mechanism
This is a nut factory shaped finance population mechanism. This scenario is used to demonstrate the finance population or degeneration mechanism. This factory is highly equipped with machines set up to manufacture edible nuts. In other words, the engineering mechanism used to set up the factories gives impetus to the need to know how to structure finance models either at inception or at a quest for ongoing engineering improvement. Why is it called a nut factory shaped? It is so because of the designing of the factory rather the arrangement of engineering components. We will posture the following as engineering components:
[1] Raw nuts receiving sensor.
[2] General calculative timer for the receiving bay.
[3] Peeling censorship motion detectors.
[4] Generic quality algorithm-based inspection modulator.
[5] Mixing or optimization of peeled nuts with a combined injector of flavoring portions
instrument.
[6] Rowing motor belts that propels production lines.
[7] Minute engineering components that fastens the machine set-up and design components.
How is the engineering finance model of the nut-shaped factory structured?We posture this solution. We postured this solution using risk modelling actuarial techniques.
Where F is financial
F = es + rb + ps + gq + on + pi + b + g
All the above components are cost input fundamentals in the model of the financing component. In order to populate the nut shaped factory mechanism, this is a process that calls for five generic housing fundamentals for the population of the engineering finance model.
Fundamental 1: Factory populative architecture degenerated in the efficient frontier of the Factory
The efficient frontier of the factory is a weighted average index of the populative architecture degeneration of a financing model. The efficient frontier of the nut factory may be measured by 5 bases. The five bases are as follows:
Base 1: General indexing cost fundamentals aligned to the world engineering standardization indexes
Base 2: Populative architectural data driven factory motion of costs
Base 3: Factory standard processing efficiencies
Base 4: Aluminium postured factory metals indexes
Base 5: The Genesis of Technology-The base here is alignment through alignment through benchmarking with technology powered factories.
We will cover illustrative computations of the five bases in my next article.
Fundamental 2: Efficiency dynamics using quantum risk modelling
Efficient dynamics are variations of efficiencies that are scenario based built in quantum-based risk modelling. How do they work? Risk models are used to calculate efficiency ratios at postured risk models. The test cases for each of the risk models will calculate the efficiency ratios.
Efficiency ratios take various forms from materials, machine efficiency comparison to product model optimization indexes, general material usage rate, general processing (in this case, the nut factory), efficiency rate. However, risk models here are actuarial based. Engineering technicians will be apprised of the actuarial model outputs required for the entity to achieve investment optimization through structuring of engineering finance models. This is advanced analysis using actuarial modelling techniques.
Fundamental 3: Cost utilization mix nullifier of abnormal loss index
What is this fundamental? This refers to the defined set of costs for instance in the nut factory. When costs are utilized it means the factory processes are consuming normal costs at a certain rate. But the utilization mix is a nullifier. What does it mean? A nullifier is a cost allocation in a factory process that amplifies the efficiency of product optimization mix therefore rendering the losses from a factory process null and void. In other words, there is a reduction in the abnormal losses , nullified or reduced to very minute levels or even eliminated.
This cost utilization mix is based on indexing factors such as employed raw materials, materials or inputs that are divided using a utilization mix designed or recommended by Industrial Engineers, Chemical Engineers or Food processing engineers in a particular format. Generally speaking, this is a huge area of factory operations management or operations techniques. Cost utilization mix will be expounded more on the use of actuarial techniques to nullify abnormal loss indexes.
Fundamental 4: General Technology powered division of roll-over efficiency losses
What are roll-over efficiency losses? In a nut factory, each production or processing process has compartments of efficiency depending on the stage of the process. What inspires compartment efficiency? Compartments efficiencies are inspired by trigger input effects as new additives or modifier injection processes alter the form of the product from one level to another . Therefore, from an engineering perspective one notes that efficiency compartments are necessary, and they give a realistic view of efficiency motion. Therefore, efficiency losses are index indicators of the level of investment required in each compartment. Actuarially at each compartment we can generate fundamental cost pricing input to determine the model fundamentals. A large number of start-ups or small to medium engineering or production firms are not aware that production line efficiencies can be compartmentalized using actuarial techniques.
Fundamental 5: General seismic bound ablution of losses conjoining with cost perspiration in the factory set-up and design
General seismic bound ablution of losses conjoining with a cost perspiration in factory set-up and design. What is this? This refers to the elimination or rejection losses using a systematic motion method where costs are incurred in tandem with factory set-up and design. Therefore, this general seismic bound is needed in the nut-factory. It is not just a process of injecting costs or investing without structuring the engineering finance models in a systematic way. Seismic as a word represents a gigantic treatment of abnormal losses in the factory using factory design and set-up rearrangement techniques. This is a technique that certainly works but requires operations research methodology entangled in factory operations management.
These are the five fundamentals, but we will expound more in a later issue.
[2] Finance needs requirements tenet
Drawing up finance needs simplistically is not difficult. In this case we are dealing with a nut factory. Finance needs requirements needs understanding of the set-up and design of the factory. Factories are different, factory designs are different therefore needs requirements must focus on the technicalities of engineering components of the factories that feature or are relevant to the production process. Investment cost risk engineers here, have a lot of work to do. Needs requirements is populously hidden in the architecture of the factory setting. These needs may be imputed in an actuarially built model that will power cost-build up which can also in turn be improved over time through cost motion fundamental rearrangements and reorganizations.
[3] General Factory Component architecture
General factory component architecture is the build-up or set-up of the factory and also by design. Why is it critical to the structure of engineering finance models? Because the architecture is the dissipator of critical factory efficiency frontiers driven by the set-up, by design.
Factory component architectures by those who do engineering drawings will give a full picture of all components and how they interweave and intertwine. Factory component architecture has two or more component architecture presentation. These are as follows:
- Engineering drawing architectural design;
- Engineering drawing efficiency frontiers design;
The above mentioned two components are very important. Efficiency frontiers are crucial as they give the Factory investor of where decompartmentalization of efficiency frontiers connect costs-build up at different stages of production
[4] Rolled-up reserving system
The Rolled-up reserving system is mentioned here because it is important to ensure reserves; in fact, sufficient reserves are available. Reserves in the form of retained earnings to fund continual or perpetual working capital needs. Roll-up reserving system is synonymous with capital preservation techniques that seek to channel doses of resources at intermittent intervals depending on the nature of the production line. However, a rolled-up reserving system is all billed up against return on investment. Modelling of a reserving system for engineering structuring of finance takes employment of actuarial techniques in various ways. Because the running of engineering factory components may be done on a basic platform or basis. Many are oblivious of the benefits of being stringent with maintaining reserves that foster traction of momentum of the production line. My next issue will demonstrate the rolled-up reserving system of engineering structuring of finance models.
[5] Stress Asymmetry Test case model
Structuring Engineering finance models from a risk modelling view also involves or explains stress asymmetry for each of the factory engineering scenario.
But how useful is Stress asymmetry? Stress asymmetry under engineering finance models ensures that tensions recognized in production bottlenecks ranging from financial to non-financial are withstood by shock process. Since an actuarial model would have been used, structuring the engineering finance model becomes a tenacity tenet issue. How does it become one? Product optimization mixes are the bench marking fundamental input into the Stress asymmetry. Organizations today should promote the use of actuarial techniques.
Disclaimer: All views expressed in this article are my own and do not represent the opinion of an entity whatsoever, with which I have been, am now, or will be affiliated with.
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