LFU:online

During the course, students will acquire theoretical and conceptual knowledge on the nature and particularities of large scale- infrastructure investments. Students will also become acquainted with the market for infrastructure projects, in particular in developing countries. After completing the class, students will have a systematic understanding of risk management techniques in large megaprojects, and will be able to analyze and implement a variety of interdisciplinary risk management strategies in international infrastructure investment. Finally, students will be familiar with a number of successful and unsuccessful cases of infrastructure projects.

The global market for infrastructure finance is one of the biggest markets in the world with exponential growth rates. The G 20 estimate global demand for infrastructure finance until 2038 at 94 trillion USD, the majority of which will be invested in emerging economies with, sometimes, high risks and weak institutional structures. The course addresses the challenges emerging in large-scale infrastructure investments in high risk countries. The complexity of megaprojects like the Hamaca oil field (Venezuela), the Chad-Cameroon pipeline or the construction of Hong-Kong Disney Land results in managerial and financial problems that are more pronounced than in traditional corporate investment. Projects are exposed to extensive political, financial and commercial risks. For foreign investors, risk management becomes a key consideration. In the course, possible strategies for diversifying, transferring and mitigating risk are discussed based on case studies and empirical academic studies. Such strategies include financial strategies (project finance), contractual strategies (hedging, insurance, guarantees and non-financial contracts) as well as classical strategic and managerial considerations (alliances, co-investment, joint-ventures, management fallacies in megaprojects).

The course is a mixture of lectures, presentation, and student activities. Students are required to complete all learning components, including preparation of mandatory reading materials, attendance at class sessions, completion of online assignments and learning extensions, participation in group activities, and the final exam.

40% group projects

25% take-home assignments

20% final exam

15% class participation (half of which is based on peer rating)

Total scores between 60% and 70% receive a grade 4, scores between 70% and 80% receive a grade 3, scores between 80% and 90% receive a grade 2, and scores above 90% receive a grade 1

Esty, B., Chavich, C., & Sesia, A. 2014. An Overview of Project Finance and Infrastructure Finance— 2014 Update, Working Paper. Boston: Harvard Business School.

Müllner (2016) - From uncertainty to risk — A risk management framework for market entry; Journal of World Business, 51(5): 800-14.

Dorobantu and Müllner (2017) Debt-side governance and the geography of project finance syndicates. Journal of Corporate Finance

Müllner, J. & Puck, J. 2018. Towards a holistic framework of MNE–state bargaining: A formal model and case-based analysis. Journal of World Business, 53(1): 15-26

Bell, J., Dinh-Tan, C., Purnama, P., & Spar, D. L. 1997. Busang: River of Gold (A).In School, Harvard Business, (Ed.), HBS teaching case. Bostn, Cambridge.

participation requirements see curricula