It's not complete, it doesn't have any cash flow.
Cash flow lending is all about what project finance is.
You don't have any cash flow and you have a project that has breached
a third tenant of project financing which is principal risk.
The project is likely to cause a principal loss to investors and finances.
So, completion risk is the biggest risk.
How do we manage completion risk?
And well what is completion risk and how do you manage it?
Well first of all: completion risk is the risk that is not finished but
that is composed of two components.
It is composed of an economic component and a physical component.
First of all whatever is being built, needs to be physically complete, but
it also needs to be economically complete, and that is measured by cash flow.
So, a good completion, a completion agreement, and a completion test,
is going to be that it meets both the physical and the economic components here.
But what are the issues in completion risk?
First of all, you need a site.
Do you have the site?
Do you have the permits to operate on that site?
There are cases of projects that have reached physical completion, but
don't ever receive the permits to be actually be able to operate and
they set there idle with no cash flow.
Is the contractor who's building the project capable of building the project?