During the operational phase, our key task is to forecast the cash flows, and these are the cash flows that are generated by the operational project and also the cash flows being used to service the financing. We can think of the first element of that as essentially the free cash flow calculation. We start with revenue. We deduct all of the operational costs and the maintenance costs, including insurance, and that will give us EBITDA. Now, that's assuming that we have not embedded depreciation or amortization in those line items, so there are pretty much on a cash basis. Then we deduct taxes, working capital and maintenance CapEx, assuming that all that initial CapEx has already been spent. That gives us unlevered free cash flow, and that is what can be used to both service debt and also paid dividends to shareholders.

But keep in mind two things. You could also build a full income statement, a balance sheet, and a cashflow statement, rather than doing the simple free cash flow. But in essence, this is the free cash flow that is available to service the financing. The second issue is that equity holders may also get their return from being able to sell the project. In some cases, projects just run down, but in other cases, such as a bridge or a road, they can operate for many years to come, in which case they can be sold after, let's say 10 to 20 years. Equity holders may, in those cases, get their returns partly from the dividends and partly from a capital amount when the project is sold.

So unlevered free cash flow can be used to pay interest to repay debt. There will be some required headroom by the lenders, and that could be a debt service coverage ratio calculation, and the rest can be paid out as dividends to sponsors.

In terms of the overall model that is built, we would see a lot of sheets in a project finance model. You would start with the sources and uses as the main control panel for the model. These are the main financing and spending assumptions. Then you will have a financing tab, and that's where all the individual debt trenches will be modeled out. Interest is calculated here. Commitment fees are calculated and you will likely also put your returns by equity holders on this sheet. Then there will be a revenue and cost detail, and in a lot of project finance transactions, this can be very, very detailed with many line items, breaking down Revenues costs. You will also put in your sensitivities here if you don't know exactly what's gonna happen to revenues during the operational forecast. You may also have a scenario based on CapEx spending in case it's more expensive than expected, or in case it is delayed. You'll probably have a section with other calculations and they could include detail on your property plans and equipment, your intangible assets and things like working capital. And finally, your depreciation schedules can be very detailed because you'll probably want to depreciate each individual year separately, both from the construction phase and the operational phase.

And then you have the three financial statements, the income statement, the balance sheet, and the cashflow statement. And those are the main sheets that you would see in most project finance models.