Project Finance Case Interview Drill

Reviewed by Fallon Han· Updated 2026-05-22 18:50:07.914

This conversation was generated using Cook'd AI's career assistant and reviewed by Fallon Han from our editorial team for accuracy.

I am a fresh MBA student from civil engineering, now targeting infrastructure project finance at a development bank in Dubai. I need a live case interview where the first task is to judge whether a toll road or power project can support the proposed debt stack. Please make it realistic and evaluate me like an interviewer.

Absolutely. Here is a live case. You are evaluating a 20-year toll road project in the GCC. Total project cost is USD 500 million. The sponsor proposes USD 350 million of senior debt and USD 150 million of equity. Debt tenor is 12 years, sculpted to a 1.30x minimum DSCR. Construction is complete at financial close, so this is a pure operating asset. Base case assumptions: - Year 1 traffic revenue: USD 62 million - Operating costs: USD 14 million - Annual maintenance capex: USD 3 million - Revenue growth: 3 percent per year - Operating cost growth: 2 percent per year - Traffic sensitivity case: minus 10 percent revenue from Year 1 onward Your first task: decide whether the project can support the proposed debt stack. Walk me through the logic, the cash available for debt service, and whether the leverage looks aggressive or conservative. I will interrupt you like a real interviewer and then give feedback.

My first step would be to estimate the project cash flow available for debt service. In Year 1, EBITDA would be revenue of 62 minus operating cost of 14, so 48 million. After maintenance capex of 3 million, cash available before debt service is about 45 million. If the debt service is sculpted to a 1.30x DSCR, then the maximum annual debt service in Year 1 would be about 45 divided by 1.3, which is roughly 34.6 million. Over 12 years, that suggests the project can probably support debt around the proposed 350 million, but I would want to confirm with the amortization profile and the later-year cash flows. I would say the leverage seems somewhat aggressive, because a toll road has demand risk and a 10 percent revenue downside could reduce the buffer.

Good start. You identified the right cash flow bridge. Interviewer feedback: - You correctly calculated Year 1 EBITDA as 48 million and cash available for debt service as 45 million. - You used the DSCR formula correctly. - Your conclusion is directionally reasonable, but you need to be more explicit about what the sculpting means and whether the debt balance can really be repaid within 12 years. Now the next layer: - In the downside case, Year 1 revenue falls by 10 percent to 55.8 million. - Operating costs stay at 14 million in Year 1, and maintenance capex stays at 3 million. - Assume the same 1.30x target DSCR. Question 2: Recalculate the downside cash available for debt service, then tell me whether the same debt amount still looks supportable. Also tell me what risk metric you would highlight to a credit committee in Dubai for a development bank.

In the downside case, Year 1 EBITDA would be 55.8 minus 14, which is 41.8 million. After maintenance capex of 3 million, cash available for debt service would be 38.8 million. At 1.30x DSCR, maximum debt service becomes 38.8 divided by 1.3, which is about 29.8 million. Compared with the base case debt service capacity of 34.6 million, the project loses around 4.8 million of annual debt service capacity in Year 1. That means the same 350 million debt could still be possible if the amortization is back-ended and there is strong tail cash flow, but the margin of safety is thin. For a credit committee, I would highlight the downside DSCR and probably the debt service reserve coverage and breakeven revenue decline, because toll road demand risk can be volatile and traffic ramp-up assumptions are critical.

Better. Your downside math is correct. One correction: for a development bank, I would not say Debt Service Reserve Coverage. The more standard items are: - minimum and average DSCR - loan life coverage ratio, if used - break-even traffic or break-even revenue decline - sensitivity on tariff, volume, and delay in ramp-up Final question in the case: The sponsor asks whether debt could be increased from 350 million to 380 million while keeping the same 1.30x sculpting target. Give me your recommendation in one minute. I want a clear yes or no, with two or three reasons and one mitigation if you do not approve the increase.

My recommendation would be no, not at this stage. First, the existing structure already uses a fairly high debt amount relative to the Year 1 cash flow. At 350 million, the project is already close to the edge once you factor in downside traffic risk. Second, increasing debt to 380 million would lower the equity cushion and make the deal more sensitive to revenue shortfalls, especially in a toll road where demand and ramp-up risk matter. Third, the project is only clearly comfortable in the base case, but the 10 percent downside already cuts annual debt service capacity meaningfully. If the sponsor wants more leverage, I would require mitigation such as a stronger DSRA, lower leverage, or a more conservative sculpting profile with a higher equity contribution. I would also ask for tariff support or traffic covenant protections if available.

Strong answer. Evaluation report: - Commercial judgment: good. You correctly resisted the leverage increase. - Quantitative accuracy: solid on EBITDA, cash available for debt service, and downside reasoning. - Structuring awareness: good. You linked leverage to sculpting, reserve strength, and downside protections. - Development bank mindset: strong. You focused on resilience rather than maximizing debt. What to improve for the real interview: - State explicitly that the approval decision depends on the full debt amortization schedule, not just Year 1 DSCR. - Mention LLCR if the interviewer wants a more project finance-specific coverage metric. - Be sharper on final wording: say that 380 million would likely require either longer tenor, lower target DSCR, or stronger sponsor support, otherwise it is not bankable. Overall score: 8.5 out of 10. You read like an MBA candidate who already thinks like a project finance analyst, which is exactly what a development bank in Dubai would want.