Book reviews

Chapter 5 explains what the authors see as the ultimate goal of BPR effecting a breakpoint. Within this chapter the authors identify the areas within a business where breakpoints can occur and how these may be discovered.

In order to raise the importance of adopting a process orientation the authors suggest within Chapter 6 that businesses should view the people, products, process knowledge and capabilities, brand strength and the content of their information data- base, as the new assets of the business.

The authors propose that rather than accountants simply valuing the business in terms of the ‘old assets’ i.e. land, buildings, plant and machinery, the way the business performs its processes should also be valued. They suggest that only by valuing these ‘new assets’ will organisations place more importance on the need to manage them. The authors suggest that ‘If the new assets are properly managed, and core business processes successfully re- engineered, the new assets will manage the old assets, creating corporate wealth and health’.

The chapter probably of most interest to project managers is the penultimate chapter, entitled ‘Organising and managing for success’. For it is only at this late stage in the book that the authors set out to tackle the question of how to manage a BPR project. Whilst the authors recognise that there is a need to apply the principles of change management in the re-design and implementation of a re-engineered process, they also acknowledge that much has been written on the subject of change manage- ment. The book therefore quite wisely, in my. opinion, steers clear of being too prescriptive about how to manage change and concentrates more on how to manage the transition from being functionally based to adopting a process orientation and how the organisation will operate within this new process environment.

Whilst this chapter recognises that the transition from a functionally-based organis- ation to a process-orientated business is probably the hardest stage within BPR there are no case studies or examples to demonstrate how organisations have man- aged to cope with such a transition.

It would also be useful to have had examples of organisational structures after transforming from functional to process orientation. Such examples would, I am sure, have helped to answer the many burning questions which surround such issues as: do any functional departments remain; if so what is the relationship of these functions in support of the core processes; how do the processes relate to

any form of hierarchy; where does the overall vision and strategy emanate from within a totally process-orientated structure and how are the career path and personal development of individuals handled.

The final chapter provides a good sum- ming up of the contents and presents the challenge to business leaders to have the faith to re-engineer their business radically. The question this left in my mind is should BPR be a total leap of faith surely there should be a clear commercial justification and business case for undertaking such an exercise. If so how does one calculate the anticipated benefits in order to sell the idea to the shareholders.

Generally, I found the book extremely easy to read and the authors’ use of case studies helps to demonstrate the points made clearly. These examples are logically built up in a manner which makes them easy to follow. The book provides the reader with a good introductory view into what is an extremely interesting subject.

I only hope some of my questions are answered in the sequel Beyond Business Process Re-engineering, which has been written by two of the four authors of this book. I hope to review this latest book in the next edition of the journal.

Graham Clarkson Consultant Managing BPR Projects

GDG Management Ltd Little Haseley

Oxon UK

Project Finance in Europe Haydn Shaughnessy (Ed.) John Wiley & Sons 1995 I92 pp f125.001 $200.00 Pbk ISBN 0 471 94381 9

Project Finance in Europe is a compilation of various articles very broadly to do with financing projects in a European setting, particularly eastern Europe. Having said that, some of the contributions, particularly a description of the municipal revenue bond market in the USA, leave it to the reader’s imagination to work out what application this form of funding might have in the countries of the European Union.

The book is aimed at project finance professionals and at companies and investors currently developing projects. Its purpose is stated to give readers a point of refer- ence if they have particular queries or problems in designing projects that are attractive to the financial community.

Some of the articles are well worth read-

ing and will provide food for thought and development. Others are not so worth- while. It would be surprising if project professionals were not already aware of the issues and facts talked about in some, but in others there is an irritating lack of detail. The book is in danger of satisfying no one in the field at which it is aimed.

The first chapter by Helen Mingay, a freelance financial journalist, describes activity in the European project finance market. The article also talks about the different roles played by banks, some concentrating on advisory work, others, particularly the commercial banks, con- centrating on underwriting and lending to projects. The problem with an article of this kind is that it rapidly becomes out of date, and although it discusses many projects cannot be comprehensive.

Chapter 2, by the Editor, describes the various funding mechanisms of the Euro- pean Union and its infrastructure policy, which covers telecommunications, energy, rail, road, water-borne and air transport.

Jason Garwood, in Chapter 3, discusses joint-venture projects between the public and private sectors. The article argues that these partnerships involve much greater collaboration in the promotion and financing of projects than has traditionally been the case. The chapter goes on to discuss the risks arising out of competitive tendering in the UK and EU as a whole. There is also a description of the European Investment Fund.

Chapter 4, by Thomas Connel, discusses the possible assignment of credit ratings to project bond issues, which it is hoped would open up access directly to capital markets for limited-resource borrowers. The article describes the rating criteria used by his company, Standard and Poors, and provides an analysis of the risks involved. This to an extent overlaps with Chapter 10, which discusses financial risk distribution in ‘Build-own-operate-transfer’ projects, written by Helen Payne.

Anthony Churchill, in Chapter 5, looks at how the infrastructure requirements of the 1990s can be met, in the light of the very high demands for finance in the private sector. It is argued that the finance required will depend on the countries of eastern and central Europe developing efficient capital markets of their own.

There then follows a chapter by Jane Eddy describing the municipal revenue bond market in the USA. There is some overlap in the article with Chapter 4, since it talks of rating criteria and risk. This is not surprising since both authors work for the same company. No attempt is made in the article to suggest means by which such

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Book reviews

funding could be raised in Europe. Chapter 7, by Piers Bull, goes into the

use of capital leasing in project finance at some length. It is a useful description of the issues involved and discusses the ten- sions that arise between bank lending and the introduction of leasing. This form of funding brings with it considerable com- plications for the project sponsor. The benefit is the ability of the lessor to utilise tax depreciation on project assets faster than the project can itself.

The next chapter, no 8, by Adam McDonaugh is about the European Invest-

ment Bank and its current lending policy. There is some overlap between this and Chapters 2 and 3.

Geoff Haley discusses environmental liability in Chapter 9 and Chapter 10 dis- cusses the risks arising in a ‘build-own- operate-transfer’ project and ways in which governments could mitigate private sector risk in order to overcome some of the prob- lems associated with this type of financing.

In a sector which is crying out for new written material and case histories, this should be a welcome addition. It is a little disappointing that in many ways this col-

lection of articles does not quite fulfil its promise. At f125.00 it is also an expensive investment for material which could be gathered from other sources, albeit with some difficulty. The layout of the book, printed in a column down the right hand side of the page with occasional quotes or comments on the left, is irritating.

Patrick J Hodgson Project Finance Adviser

Templeton College Oxford

UK

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