Aims:

The aim of this module is to introduce the basics of statistical methods as a foundation on which to explore the world of finance. By the end of the module, you can expect to be aware of the main forms of finance used by the various types of businesses in the construction industry.

Objectives: 

To understand the principles of statistical thinking. A range of concepts, theories and statistical analysis methods will be covered, including:

Arithmetic mean, mode and median
	Variance and standard deviation
	Normal distribution and central limit theorem
	Probability
	Estimation, confidence and hypotheses
	Correlation and regression
To understand the principles of financial appraisal of potential investments, financial planning and management in on-going business contexts. Consider the role of finance in adding commercial value to construction activity from both contractor and developer perspectives. A range of concepts, theories and financial analysis methods will be covered, including:

time value of money
	financial statements and ratios
	valuation of stocks and bonds
	cost of capital (debt and equity)
	portfolio diversification
	stock classification (value vs growth)
	capital structure
	investment valuation
	the role of trade credit in financing contractor business models
Learning Outcomes: 

This module is designed to give you knowledge to understand:

Basic statistical concepts from observed data
	The concept of probability
	The concept of correlation and regression
	Discounted cash flow techniques for project investment decisions
	Net Present Value and internal rate of return (IRR)
	Payback, cost of capital and the capital asset pricing model (CAPM)
	Discount rate and hurdle rate
	Risk and return through exploration of historical data
	Estimating and forecasting cash flows
	Capital structure and weighted average cost of capital (WACC)
	Portfolio diversification, risk and investor expectations
	Financial statements: balance sheet, cash flow and profit & loss
Content:

This first term of this module provides an introduction to statistics, to develop appreciation for the concepts of variance and statistical correlation required to tackle core financial theories. Recent data from the financial statements of contractors across the UK construction industry will be used to communicate statistical concepts.

The second term will then explore deeper financial concepts required to understand firm financing. The various methods and products firms use to appraise potential investments in their business will be explored, within particular consideration of the contrasting nature of contractor and developer business models. Material will also consider corporate and project finance methods as alternative ways to raising financial capital for firm and asset investments.

Essential Reading 

Brearly, Myers and Allen, (2008) Principles of Corporate Finance, 9th Edition, McGraw Hill.

Parker, R. H., (1999) Understanding Company Financial Statements, 5th Edition, Penguin Business.

Hillebrandt, P.M. (2000) Economic Theory and the Construction Industry, 3d Edition, MacMillan.

Gruneberg, S. and Ive, G. (2000) The Economics of the Modern Construction Firm, MacMillan.

Ive, G., and Gruneberg, S. (2000) The Economics of the Modern Construction Sector, MacMillan.

Ive, G., and Murray, A. (2013) Trade credit in the UK Construction Industry - BIS research paper 118.

Rowntree, D., (2018) Statistics without Tears: An Introduction for Non-Mathematicians, 1st edition, Penguin.