financial modeling, review and audit services

economic and market models

WHAT WE DO

SERVICES WE OFFER

DCS offers expert economic and market models to our public and private sector clients across the cores sectors that we focus on, including infrastructure, energy & utilities, oil & gas, industrials and real estate sectors.  Economic and market modeling services are typically integral component our economic & market studies, project feasibility advisory and strategic planning services mandates.   Furthermore, economic and market models are often required for underlying due diligence elements of our transaction advisory, capital fundraising, tender management, M&A and privatization and valuation services mandates.   Our economic and market models are typically utilized by both DCS experts, in fulfilling our specific advisory mandates as well as by our clients for ongoing analytical and forecasting purposes.  In all cases, our economic and market models are custom-built from the bottom-up, and specifically tailored to our client's specific needs under a client mandate.  

An economic model is a model that develops specific macroeconomic and microeconomic forecasts and projections within local, national, regional or global economies or markets that may be relevant within our client's sector and market focus.  Our economic models develop forecasts of macroeconomic variables such as interest rates, inflation, currency exchange rates and commodity prices; and microeconomic variables such as consumer demand and price elasticities of demand, substitution, opportunity costs and related forecasts.  Related to economic models, we develop market models, which forecast over all consumer numbers (based on demographic models), demand, unit pricing and expenditures within the particular market and sector focus of our client.  Together, we use our economic and market models for the purpose of creating economic & market studies and project feasibility studies.

Within each of our core sectors, the following are provides a more detailed description of some of the specific types of economic and market models that we develop within our sectoral focus areas.

• Infrastructure. Within the infrastructure sector, we develop economic and market models related to infrastructure demand in the following segments:
  • Roadways, Parking & Vehicle Ferries.  Trip generation demand models are used to forecast automobile, truck, bicycle and pedestrian trips on roads, tollways, bridges, tunnels, vehicle ferries, parking facilities and bicycle and pedestrian-ways.  Person trip generation demand models include the development of drivers including vehicle types and occupancy; trip types, distance, time time; opportunity cost of time; trip generation nodes and types (residential, employment, industrial, recreational, mixed-use, campus, etc.); land uses; economic and demographic development; modal and route alternatives (quality, cost, travel time, safety and convenience) and substitution; fuel prices; fuel and motoring taxes; and fuel, tax and toll price elasticities.  Roadway cargo and freight trip generation demand models include the development of drivers including vehicle freight/cargo volumes and types; freight capacities; competing roadway (and weight restrictions) availability and capacities; trip distance, time savings/routing; trip generation nodes and types (ports, warehousing, multimodal, production plants, etc.); land uses; economic development; modal and route alternatives (quality, cost, travel time, safety and convenience) and substitution; fuel prices; fuel and motoring taxes; and fuel, tax and toll price elasticities.  We typically use traffic demand forecasts as inputs into our revenue models for clients pursuing roadway, bridge, tunnel, parking and ferry projects and transactions involving toll/fee revenue, shadow tolls and other demand-based revenue regimes.  We also use traffic demand forecasts as inputs into our clients' infrastructure capital plans for roadways, parking, ferry, bicycle and pedestrian capacity development and phasing planning.
  • Railways, Buses & Passenger Ferries. Passenger railway (or tramway, subway, light rail, bus lines and passenger ferries/water taxies) trip demand models are used to forecast person trips (by passenger type/demographics) on rail/bus/ferry segments.  Cargo/freight railway demand models forecast container and bulk cargo/freight movements on rail segments.  Rail/Bus/Ferry person trip generation demand models include the development of drivers including trip types, distance, travel time; opportunity cost of travel time; trip generation nodes (mode change nodes; residential, employment, industrial, recreational, mixed-use, campus, etc.); land uses; economic and demographic development; modal and route alternatives (quality, cost, travel time, safety and convenience) and substitution; fare prices; and fare price elasticities.  Railway cargo and freight trip generation demand models include the development of drivers including freight/cargo volumes and types; freight capacities; competing modal availability and capacity; trip distance, time savings/routing; trip generation nodes; land uses; economic and demographic development; modal and route alternatives (quality, cost, travel time, safety and convenience) and substitution; fuel prices; fuel and motoring taxes; and fuel, tax and toll price elasticities.  We typically use traffic demand forecasts as inputs into our revenue models for clients pursuing roadway projects and transactions involving toll revenue, shadow tolls and other demand-based revenue regimes.  We also use rail passenger and freight demand forecasts as inputs into our clients' infrastructure capital plans for roadways, parking, ferry, bicycle and pedestrian capacity development and phasing planning.
  • Airports. Airport demand models are used to forecast passenger enplanements, air cargo movements, aircraft movements (landings and departures), passenger dwell times, landside consumer spending (retail, food & beverage and services), airport parking demand and duration at airport terminals.  Airport demand models include development of drivers including passenger enplanement volumes, classification (origination & destination or connecting) and types (business and leisure); airport O&D service area passenger and air cargo O&D trip generation drivers; propensity to fly and to arrive by automobile, taxi, other; competing airports (distance, capacities, type, landing and gate fees and connectivity); competing modes; airline operations (connecting passengers and cargo volumes); fare, landing and gate fees and fuel prices; taxes; and price and tax elasticities of demand.  We typically use airport demand forecasts as inputs into our revenue models for clients pursuing airport projects and transactions.  We also use airport demand forecasts as inputs into our clients' infrastructure capital plans for airports and associated facilities.
  • Ports, Terminals and Multimodal Facilities.  Port, terminal and multimodal freight/cargo demand models are used to forecast the movement of vessels through ports; vessel call times; and the global, regional and local movement of both containerized and bulk freight through seaports, inland ports, terminals and multi-modal facilities.  Maritime and inland waterway cargo and freight demand models include the development of drivers including freight/cargo volumes and types; port and terminal capacities (types of vessels and volume throughputs); adjacent and local warehousing and intermodal capacities; competing port/terminal/multimodal facilities; origin and destination markets; freight/commodity types; opportunity costs of freight handling and processing times; economic and demographic development in major trading markets; port fees and fuel prices; import tariffs, customs duties and taxes; and fuel, tariff, duties, tax and elasticities of demand.  We typically use port, terminal and multimodal demand forecasts as inputs into our revenue models for port, terminal and multimodal facility projects and transactions.  We also use port, terminal and multimodal demand forecasts as inputs into our clients' infrastructure capital plans for ports, terminals and multimodal facilities and associated facilities.
  • Pipelines. Gas, oil and water pipelines generally operate at full capacity and therefore, demand models relate to the markets served by access points to the pipelines.  Therefore, demand forecasting relates to the amalgamation of all of these served markets for gas, oil or water.  We cover gas and water demand forecasting within our energy & utilities focus below.  We cover oil demand forecasting within the oil & gas focus below.  We typically use pipeline commodity demand forecasts as inputs into our revenue models for clients pursuing pipeline projects or transactions.  We also use pipeline commodity demand forecasts as inputs into our clients' infrastructure capital plans for pipelines and associated facilities.
  • Transmission and Distribution Networks.  Electricity, gas, water and wastewater transmission, distribution and collection network demand models relate to markets served by grid connections.  Therefore demand forecasting relates to the amalgamation of all of these served markets for electricity, gas, water and wastewater.  We cover electricity, gas, water & wastewater demand forecasting within our energy & utilities focus below.  We typically use transmission and distribution network commodity demand forecasts as inputs into our revenue models for clients pursuing transmission and distribution projects and transactions.  We also use pipeline commodity demand forecasts as inputs into our clients' infrastructure capital plans for pipelines and associated facilities.
  • Solid Waste. Solid waste demand models are used both to forecast the volumes and types of solid waste collections as well as the demand for recycled, reused and repurposed products and materials, compost and other solid waste biproducts (such as biogas and power generated from waste products).  Solid waste demand models include the development of drivers including demographic and economic development projections; per capita consumption; per capita waste products (plastics, metals, glass, paper, non-recyclables, reusables, hazardous materials, etc.); propensities for waste reduction; raw materials pricing for manufactured products competing with recycled/re-used/repurposed products; prices for biogas and electricity; refuse collection, electricity and fuel prices; and price elasticities of demand.  We typically use solid waste demand forecasts as inputs into our revenue models for clients pursuing solid waste projects or transactions.  We also use solid waste demand forecasts as inputs into our clients' infrastructure capital plans for solid waste facilities and associated facilities.

• Energy & Utilities. Within the energy & utilities sector we develop economic and market models related to power, gas and water/wastewater demand in the following segments:
  • Energy Markets.  In the energy sector, we develop two types of models for our clients: energy demand models and energy market models:
    
    • Electricity, Gas & Heat/Cooling Demand Models.  Energy demand models are used to forecast the demand for electricity, gas, heat or cooling within specific countries, regions or other service areas.  Energy markets demand models include the development of drivers including demographic and economic development projections; per capita and household energy consumption rates (correlation with GDP); industrial energy consumption intensity per GDP; availability, applicability and cost of substituting energies and fuels (electricity, gas, fuel oil, coal, biomass, etc.); energy substitution factors; energy tariffs and substitution fuels prices; electricity and fuels price elasticity of demand.  Energy demand forecasts are used as inputs into our clients' energy market models and energy sector infrastructure capital plans.  Furthermore, energy demand models are used to support feasibility studies of expansionary capital projects in the energy sector. 
    • Electricity, Gas & Heat/Cooling Market Models.  Energy market models are used to forecast the energy tariffs in either a regulated or deregulated market environment.  Under a regulated market environment, energy demand models are developed from the "bottom-up" in accordance with the applicable regulatory regime (such as a Regulated Asset Base or "RAB" based regime).  Also, in a regulated market case, the energy market model utilizes demand forecasts to derive market theoretical energy "spot prices", which are used as a benchmark to determine regulated tariff affordability of the model-derived "end-user" energy tariff prices.  Under a deregulated energy market environment, the energy demand projections are used to determine the forecasted electricity "spot prices" which become inputs into the market model (as the "end-user" tariffs).  The deregulated market model builds up the tariff elements within the domestic generation, import/export, transmission, distribution, sales & supply and trading segments, and can also be used to determine the feasibility of capital projects (including return of and return on invested capital) within these market segments.  Whether a regulated or deregulated energy market, any generation elements that are subject to long-term offtake agreements (such as power/gas/heat/cooling purchase agreements, contracts for differences "CfDs", or similar structures) or subsidy arrangements (such as emission and tax credits, "green" certificates, carbon pricing and other similar structures) also need to be taken into account in the market models.  In the case of a deregulated market environment, energy market models are used to provide forecasted inputs into our revenue models for clients pursuing energy sector projects or transactions.  In the case of a regulated market environment, where revenue models from proposed energy sector capital projects serve as inputs into the market model, the "end user" tariff price projections are used to determine feasibility.
  • Water & Wastewater Markets.  In the water & wastewater sector, we develop water & wastewater demand models.  Water & wastewater demand models are used to forecast water and wastewater demand within a specific market area.  Water and wastewater demand models include the development of drivers including demographic and economic development; land use; long-term weather and climate change; water supply availability and cost (aquifer, pipeline/aqueduct, desalination, etc.); water consumption per capita and per household; industrial and agricultural development; industrial and agricultural water & wastewater demand; energy input prices; water & wastewater tariffs, fees & taxes; energy prices; water tariff, fee and tax elasticity of demand.  We typically use water and wastewater demand forecasts as inputs into our revenue models for clients pursuing water and wastewater capital projects and transactions.  We also use water & wastewater demand forecasts as inputs into our clients' infrastructure capital plans for water & wastewater capacity development and phasing planning.

• Oil & Gas.  Within the oil & gas sector we develop economic and market models related to oil & gas demand in the following segments:
  • Oil Markets.  Oil is a inherently global commodity and is therefore oil is subject to global supply and demand characteristics.  We produce oil demand models for our clients based on global supply and demand of oil.  Global oil demand is influenced by many factors.  Historically, oil demand has been linked to economic growth (GDP growth), which suggests that highly industrialized countries consume high levels of oil per capita and industrializing/"developing" countries and regions will tend to show increasing per capita oil demand, in correlation to GDP growth.  However, in global oil demand in the future is likely to depart from its historical correlation to economic growth.  There are a variety of reasons for this.  Firstly, global oil supplies are finite and many of the world's proven oil resources (which can be profitably extracted) are in production decline and it unlikely that sufficient new discoveries of economically recoverable oil resources will replace depleted resources.  This is likely to result increasing global oil price volatility (which further complicates investment in new production).  Secondly, as oil prices become increasingly volatile, in many consumer market segments in industrialized economies, there will likely be a sustained reduction in oil demand per capita.  Reduced oil demand per capita is due mainly to energy efficiency, modification of consumer behavior and substitution of other energies for oil, such as electricity derived from non-oil fuels will increasingly be substituted for oil-based liquid fuels.  Our global oil demand models integrate both the regional oil demand characteristics (consumption of oil by consumers and by oil-dependent industries) and the impact of global oil prices on regional oil demand elasticities.  We use oil demand models for our revenue models related to oil & gas sector client in the upstream, midstream and downstream projects and transactions.  Oil price forecasts are also utilized in many of our other sectors, such as transportation.
    
  • Gas Markets.  Natural gas is predominantly subject an interregional market, where gas production regions are interconnected with gas consumer markets via pipeline.  However, there are two major nuances with respect to the gas market: 1) gas production is linked to oil production (natural gas is often derived from oil production areas) and therefore the supply of gas is linked to the price of oil; and, 2) there is an increasing global trade element of gas associated with the international transport of gas via liquified and compressed natural gas (LNG/CNG) facilities.  Therefore, while gas markets are based upon the supply and demand within an interregional market area, gas prices are influenced by global demand and supply elements.  In our gas demand models, we take into account local, regional and interregional demand factors as well as the price elasticity of gas demand influenced by global gas price elements.   Our global gas demand models, which take into consideration the global gas supply and demand and related price projections serves as an input to regional gas demand models (used by regional gas utilities and stakeholders) as set forth above.  The aggregation of the gas demand profiles of the regional gas markets served by a gas pipeline's access points serves as an input into a pipeline gas demand model or as an input into a gas producer's or LNG/CNG terminal's gas demand (in both cases, where a gas production field or a LNG/CNG terminal are connected to consumer markets via a gas pipeline and grid.​
    

We individually custom-build each and every one of our economic and market models using standard Microsoft® Excel® software in a the most user-friendly manner possible.  We provide a user manual and in-model user instructions for most of our client models.  Our objective is to create a model that can, in many cases, be handed over to the client and operated by the client's own staff (in some cases for many years).  After our model is in our client's hands we can provide ongoing services such as model training & capacity building workshops for client staff, model maintenance and update services and support and specific modeling analysis utilizing the client's model, as may be requested by the client.

In addition to developing, updating and maintaining our own economic and market models for our client advisory mandates, we also provide model review and audit services of financial models produced by our clients or by another third-party model developer on behalf of our client.  Model review and auditing services are often required by our clients (as an independent review or audit) in other transactions that DCS is not a party to.

DCS advisors are able to provide economic and market modeling services on a stand-alone basis on behalf of public and private sector clients who have mandated us to provide economic & market studies, project feasibility advisory or strategic planning services.  In most cases, as economic and market modeling services will be only one element of a larger project delivery program, DCS will also be providing other complementary analytical services in relation to other transaction elements.  Our preference is always to provide such comprehensive advisory services and coordinate all elements of the transaction, including economic and market modeling services on behalf of our clients.

Under any economic and market modeling services mandate, DCS will draw from our vast global network of veteran industry expert advisor affiliates and our relationship consultants in order to assemble the most appropriate team to match the specific needs of the transaction at hand.  This will always include leadership of DCS affiliate experts who possess decades of global transactional experience related to the specific sector and transaction type.  In any economic and market modeling services mandate, our preferred role is always to serve as the lead project/program manager.  Within this role we are also able to assist in the selection and procurement (or subcontracting) and management of other advisors, including local and international technical, economics and other specialized advisors or other specialized advisors, as the specific transaction may require.  To the extent that other third-party advisors are required, there are many value added advantages of allowing DCS to assist in the procurement of these advisors.  First, DCS expert affiliates themselves possess many of required technical, economics and managerial skill sets and we are best positioned to determine which additional outside third-party skill sets are required and which firms or individuals should be hired in these roles.  Secondly, financial modeling is a very complex undertaking, requiring the management and coordination of many simultaneous workstreams.  DCS advisors are experts inproject and program management services and are ideally suited to manage and coordinate a multi-dimensional advisory team most efficiently and effectively.

Complementing our economic and market modeling services, DCS advisors offer the following complementary advisory services that may be applicable, dependent on the specific needs of our client.

• Comprehensive Financial Models
• Sponsor and Lender Case Models
• Bid Evaluation Models
• Business & Asset Valuation Models
• Training & Capacity Building Models
• Transaction Advisory
• Capital Fundraising Services
• Tender Management: RFEI/RFQ/RFP
• Mergers & Acquisitions Advisory
• Project/Program Management
• Contract Drafting & Negotiation
• Strategic Planning
• Feasibility Studies
• Business and Asset Valuation
• Workouts and Restructuring
• Corporate Governance
• Training and Capacity Building Workshops

DCS experts provide comprehensive economic and market modeling services in the following sectors that we specialize in.  Please click on the below links to learn more about the sectors that we cover:

• Infrastructure
  • Transportation
  • Water & Wastewater
  • ​​​Solid Waste
  • Social Infrastructure
  • Telecommunications

• Energy & Utilities
  • Generation
  • Sales & Supply and Trading​

• Industrials
  • Engineering & Construction
  • Technology
  • Logistics, Cargo & Freight
  • Heavy Industries

• Oil & Gas
  • Upstream
  • Downstream
  • Midstream

• Real Estate
  • Warehousing and Logistical
  • Commercial & Mixed-Use

DCS experts provide comprehensive economic and market modeling services to the following categories of clients:

• Developers/Sponsors/Concessionaires
• Investors
• Corporations
• Governments/Governmental Entities
• Contractors/Vendors
• Lenders
• Utilities
• Regulators
• Investment Banks
• International Financing Institutions
• International Agencies