Construction funding
Draws, interest during construction, fees, equity.
By Surojit Chakraverti, founder of L3VLUP and an investor running a long-short healthcare and technology equities strategy.
On this subject: construction funding.Updated 30 September 2026
What it does
The construction phase has no revenue and heavy outflows. Capex is drawn against a programme; debt is drawn alongside it; interest during construction accrues on the drawn balance and, with the commitment fee on the undrawn balance and the arrangement fee, is capitalised into the project cost; equity funds whatever the debt does not. Sources equal uses in every period, and the check says so.
Where it lives
The same schedule in each model that carries it, with the rows to open. Open a model in the browser, go to the sheet, and click the lines.
- Assumptions, rows 6–9: Period number, Construction periods (half-years), Debt tenor from commercial operation (half-years), Operating periods (half-years)
- Assumptions, rows 12–15: Construction cost, excluding financing ($1.2m per MW), Draw profile, share of cost per construction period, Arrangement fee, % of debt, Commitment fee on undrawn debt, % a year
- Construction, rows 6–10: Construction period (1), Period number, Operating period (1), Operating period number…
- Construction, rows 13–20: Construction cost drawn, Debt drawn (pro rata to the draw profile), Debt drawn, cumulative, Interest during construction (on the opening drawn balance)…
- Construction, rows 23–25: Senior debt, Sponsor equity, Check: sources less uses
- Construction, row 28: Project cost capitalised to date (capex, interest and fees)
What a reviewer looks for
- Interest during construction on the closing balance.
- Equity drawn first in the model when the documents say pro rata, or the other way round.
- A contingency line missing or too small.
Learn it, then build it
Vocabulary: Interest During Construction (IDC), Sources and Uses.