How to make decisions about launching investment projects. What is an investment project Investment project for
Content
In the classical sense, business implies not only making a profit, but also creating the very conditions for increasing income. Often this requires the creation of a new (or increase in existing) production, updating the product range, expanding the scope of services offered. An investment project will help to see a clear financial perspective and attract new funds - a set of measures for an object, covering all stages of the implementation of a certain business idea, from the initial concept to the first dividends.
What is an investment project
It is important to understand the general nature of the term investment project. This is not only a separate document or collection of documents for an investor, it is also a set of practical actions to achieve the intended result. For example, if it comes about opening a new store, then one marketing research about purchasing power the population of the microdistrict will not be enough. You will need an architectural plan of the building, a construction estimate, identification of equipment suppliers, preliminary agreements with a contractor, and much more.
The importance of the business plan and its implementation
The most important part of an investment project is a business plan, because it considers the efficiency of the capital investments made, the level of stability, the timing of profit. This is the first place where an investor will look in search of an answer to the question, what is the profitability of the proposed idea. At the same time, the rule of good form will be to show in the business plan not only the estimated profitability of the project, but also the return of funds in a critical case.
The economic rationale is of no less importance for the initiator himself, showing in which direction it is necessary to move in order to achieve high performance in the future. The structuredness of a business plan implies not only the presence of separate sections (marketing strategy, forecasts, necessary acquisitions, risk assessments, etc.), but also a description of the step-by-step implementation of the idea in practice. And in this case, it will be much easier for an entrepreneur to evaluate his own activities, because he will have a ready-made forecast of the development of the situation.
Investment project objectives
Although we have an impressive document in front of us, the main goal of an investment project can be expressed in one sentence - to show what the expected result will be and what needs to be done to achieve it. This simple formulation hides behind itself the economic feasibility of capital investments, therefore it can contain dozens of pages of many documents, but getting acquainted with this data, the investor must clearly see the benefits in order to invest their funds.
Investment project structure
In order to be an effective tool for making a profit, a compiled investment project must have a clear structure. This implies the presence of several levels, where the amount of costs, the cost of pieces of equipment, characteristics and evaluation criteria, and many other indicators that are important for the organization of the process are necessarily reflected.
Traditionally, a business plan consists of two sections - this is the introduction (a short summary, giving the necessary information in a concise form) and the main part. A well-structured second block should include:
- detailed description business ideas, goals, stages of implementation;
- financial plan;
- implementation plan;
- risk assessment.
As necessary and available information, the business plan can be supplemented with alternative sections. In many cases, market analysis will be a positive factor. finished products... The degree of investor's interest will be much higher when he sees not only the professionalism of the compiler, his competence in the stated topic, but also a serious attitude towards receiving capital investments.
Types of investment projects by implementation time
One of the important characteristics that immediately draws attention to when evaluating investment projects is the implementation period. Chronologically, this value consists of two periods - investment of funds and receipt of income, which can follow each other or go in parallel for some time. With regard to the timing of implementation, they are:
- short-term (up to 3 years);
- medium-term (from 3 to 5 years);
- long-term (more than 5 years).
This information is very important for those who will invest money, because it will allow to determine after what time the company will begin to generate income, recouping the investment. At the same time, it cannot be said that one type of documents has an advantage over others. It all depends on the specific situation, which is why, when deciding on the need for capital investments, the investor will evaluate the package of documents for a variety of indicators.
Investment plan for the volume of financial investments
Depending on how much funds are planned to be attracted to work, investment plans can be very different from each other. Economists distinguish between:
- Mega-projects, investments in which are measured in hundreds of billions of rubles. This category includes the construction of large industrial facilities, mainly the metallurgical industry and resource processing.
- Large ones have investments of tens of billions of rubles - these can be both independent medium-sized objects and the reconstruction of the capacities of existing enterprises.
- Medium investment projects with financing of several billion rubles - this includes the construction or modernization of medium-sized enterprises.
- Small ones (for example, a separate retail outlet) have a volume of tens of millions to a billion rubles.
Classification of investment projects by areas of activity
The largest category is industrial plans for the development and release of new types of products. Smaller, but not important, are economic and research programs that affect the development of the financial market or scientific research. Apart from others, there are not very common social and organizational projects, which include reforms of management systems, health care or environmental protection.
Types of investment projects by form of implementation
The implementation of any investment project involves the impact on the markets for goods and services. As a rule, we are talking about a different scale of impact on internal financial markets, social and ecological situation. According to the form of implementation, projects can be:
- Global - affecting the overall economic, technological or social situation on the planet on a macroeconomic scale.
- National economic - the implementation of which takes place on the scale of the economy of the entire country, therefore, affecting many participants.
- Regional and local - not so large-scale, designed to serve a particular region (area).
- Single - reconstruction, modernization or construction of individual enterprises.
Investment project life cycle
Regardless of the volume of investments and the form of implementation, any investment project has two clearly defined periods: the beginning and the end of the activity. The beginning is understood as the time of the appearance of an idea, which is further developed, and completion implies the termination of all work in this direction. The interval of time, concluded between the stages of the appearance of an idea and its full implementation, is called the life cycle.
Phases of the project cycle
Economists distinguish between the following main stages of an investment project:
- The pre-investment stage includes a series of preparatory work, consisting in choosing the optimal implementation option, conducting a marketing research, drawing up a business fee and other necessary documentation. Contributions at this stage are insignificant.
- The next stage covers the period from the beginning of design and survey work to the transition of the enterprise to the design capacity mode. At the beginning of this stage, not even a building permit was received, at the end - the plant is working at full speed. Investments at this stage can be up to 90% of the total.
- The operational stage, depending on the chosen direction, can last from several years to several decades. This is the period of production and sale of products, and one of the first places is continuous monitoring of work efficiency and overall economic situation on the market.
- The liquidation stage implies the curtailment of production, because it has exhausted opportunities and costs begin to exceed revenues. At the same time, the object is not necessarily subject to liquidation - after reconstruction and new investments, activity can be resumed here.
Evaluation of the effectiveness of an investment project
Regardless of the stage at which the investment project is, an economic assessment is required for productive activity. In the initial stages, in the absence of actual indicators, the estimate will be predictive in nature with some assumptions. In the future, these data must be corrected, taking into account the specific situation.
Investment costs for the project
The analysis of investment projects provides for mathematical modeling of cash flows, which must include absolutely all receipts during the life cycle. At the same time, from the very beginning of work on the preparation of the necessary documentation, it is necessary to clearly be guided by the principle of positiveness. In simple terms, it means looking at the processes through the eyes of an investor striving for the most effective result while minimizing costs.
Analysis and evaluation of cash flows
Cash flows in an investment project are two elements: direct receipts Money and costs, which in general terms can be called inflows and outflows. At the same time, the assessment of the tax component is very important, because in many cases it is it that determines whether the project will take place or not. Should be considered. that even in simple cases, not to mention innovative projects, tax law can be complex and open to different interpretations
Payback period of the investment project
This is one of the most important indicators, because it demonstrates the need for investment in the business. A significant advantage is clarity: in order to give the investor information for further reflection, you can inform him without further ado that, in accordance with the business plan, the investment will pay off in three years. The payback period is the ratio the total invested funds to the average annual income - for example, 6 million spent on the project with an income of 2 million per year will easily give three years of payback.
Profitability indicators
To assess profitability, several indicators are used at once:
- profitability index;
- internal norm profitability;
- modified internal rate of return;
- discount rate.
For clarity, the list may contain additional characteristics of cash flows - inflow and outflow. All these indicators are calculated according to special formulas, where a lot of factors are taken into account, so only economists can do this correctly. The finished data is provided to the investor and will serve as a good description of the investments made from an economic perspective.
Investment project risks
By their characteristics, project risks are a very significant category that includes a variety of factors. This includes marketing issues, missed schedules, over-budgeting, and general economic risks. Even a layman understands that not all of these indicators can be under control (for example, it is difficult to influence the exchange rate), but the task of professional drafters for investment projects is to minimize these risks. In this case, the project will look much more attractive in the eyes of the investor.
Monitoring the implementation of investment projects
For the effective functioning of the project and rapid assessment, it is necessary to constantly compare how much current situation corresponds to the planned one. In addition to systematic observation of ongoing processes (monitoring), it is necessary to identify deviations and take corrective measures, taking corrective measures. All this helps to create a clear and well-functioning control mechanism for the correct development of investments.
Video
Found a mistake in the text? Select it, press Ctrl + Enter and we'll fix it!- Who is responsible for the development of the investment project?
- What documents need to be developed to To CEO was it easier to analyze investment projects?
- What documents should the authors of the project submit?
- In what five areas do you need to analyze the effectiveness of the project?
Also you will read
- Who in Mir is involved in the development of a project related to the opening of a new store
- Why, according to the CEO of S&G Partners, most investment projects end in failure
The development strategy of a large and medium-sized enterprise is usually formed from the totality of its investment projects. The task of the General Director is to be able to assess their effectiveness without going into the details of financial and marketing analysis. You will be able to do this quickly and objectively if you build a system for the development of investment projects at the enterprise and appoint those responsible for this process. Then, to analyze the effectiveness of a new project, it will be enough for you to ask the subordinates responsible for its development a few questions (see. ).
Who should be entrusted with the development of an investment project
As a rule, three people are responsible for the development of an investment project:
- The head of the relevant direction or department. He is obliged to formulate the strategic goals of the project, form a project team. Sometimes this is done personally by the General Director.
- Project manager. Responsible for the development process. This person needs to be given sufficient authority so that he can independently resolve issues of interaction between departments and require other employees to take into account the needs of the project.
- Project economist. His tasks are to analyze the financial, marketing, production aspects of the project, to study the prepared documents. An employee of the company (for example, a specialist in the financial or planning and economic department) and a third-party consultant can be appointed as a project economist.
- the head (manager) of the project, he will be responsible for the implementation of this investment project, if accepted;
- representatives of the financial and economic service; they will correctly calculate all costs and the profitability threshold, within which the project is of interest to the company;
- marketing specialists who will conduct market analysis and plan a strategy for bringing a new product and service to the market.
Practitioner tells
Dmitry Kalaev
The development of an investment project can be carried out by several specialists:
The manager must decide what kind of specialists he needs to fully prepare the project. At the same time, it is better to approve the composition of the team at the level of the General Director - this is necessary to legalize the work of employees on the preparation of an investment project.
Naumen is a Russian developer of software solutions for business and government. Created in 2001. Provides services for the development, implementation and maintenance of software projects based on their own solutions. Today, Naumen's clients include telecom operators, banks, financial groups, heavy industry companies, trade and production holdings, state enterprises... The staff is 230 people.
Practitioner tells
Vitaly Konotop
In our company, all interested subdivisions take part in the development of any project. So, the development department finds a suitable object for the store, after which it transfers all the data on it to the relevant departments. Further, the marketing and sales department makes a forecast of the store's turnover, the project implementation department estimates the cost part of the project. On the basis of the collected information, a feasibility study of the project is developed. Based on the feasibility study, the General Director makes the final decision.
Mir company - commercial network household appliances and electronics stores - established in 1993. It currently has 65 stores: 18 of them are located in Moscow, 47 - in large cities Russia. The assortment includes more than 10 thousand items of goods from such world manufacturers as Ariston, Bosch, Braun, DeLonghi, Electrolux, Hewlett-Packard, Indesit, LG, Moulinex, Panasonic, Philips, Samsung, Sharp, Siemens, Sony, Tefal, Toshiba, Zanussi ... The company ranks 219th in the Top-400 largest Russian companies (RA Expert, 2006) and 116th in the Top-200 largest private companies in Russia (Forbes, 2006).
Practitioner tells
Dmitry Sedykh
Deputy General Director of LLC Engineering Center Energoauditcontrol, MoscowIn the preparation of most investment projects, we have a working group of the project, which includes the head, Chief Engineer project, industry specialist, investment specialist, finance specialist, lawyer, tax consultant, marketing specialist. The areas of responsibility of the participants are described in the table.
LLC "Engineering Center" Energoauditcontrol "is engaged in the development, implementation and maintenance of automated systems electricity metering, dispatch control, process control in projects of any degree of complexity. Main customers: OJSC Gazprom, State Unitary Enterprise Moscow Metro, OJSC Russian Railways, OJSC AK Sibur, power sales and generating companies. The number of staff is 300 people.
Roles of participants in a typical investment project
Role | What is responsible for |
Working group leader |
|
Industry Specialist |
|
Investment Specialist |
|
Finance specialist |
|
|
|
HR-, PR-, GR-, IR-managers |
|
Marketing Specialist |
|
What documents need to be approved
To make it easier for the General Director to analyze investment projects, the following documents need to be developed:
1. Investment project appraisal methodology. This document should contain answers to the following questions:
- What should be studied especially carefully in the process of preparing a project?
- What indicators are required by the company's management to make a decision and how should they be calculated? (V financial analysis the meaning of terms and coefficients can be understood in different ways, however, employees of one company must work in unified system coordinates.)
2. Regulations for the preparation and adoption of an investment project. This document contains the following information:
- distribution of responsibility between project participants;
- sequence of sighting documents;
- the timing of the project;
- other requirements for the organizational part of the work.
Entrust the preparation of documents to the department CFO; the latter must take this work under his personal control. Let the direct developers be employees of the planning and economic or investment department (depending on the structure of the company).
Types of investment projects
Investment projects can be broken down into three categories:
- Large-scale investment projects. The investment level ranges from $ 50,000 to $ 300,000. Such projects require drawing up a detailed business plan, regardless of whether external funding will be attracted.
- Small investment projects. They are justified by simplified documents, are not submitted for consideration by the company's management as separate projects (discussed as part of project packages). These projects include, for example, the launch of new products, entry into new markets, changes in logistics schemes.
- Investment activities. Projects that do not have a revenue side, although they indirectly affect the company's revenues. Their economic analysis cannot be performed apart from overall activities companies. For example, the implementation of an ERP system is unlikely to bring direct benefits, but will provide opportunities for growth and implementation of many other revenue-generating projects.
- Compliance with the strategic plans of the company. If the essence of the project coincides with the strategic development plans, it should be implemented first, even if it is less profitable than other proposed projects.
- The predicted profitability of the project, taking into account the risks. In business, high profitability is always associated with high risks, therefore, any investment project must contain their assessment.
- Resources required for implementation. This refers not only to investment, but also the required production capacity and administrative efforts. Some projects can take so much of the CEO's efforts that he will not have time for the main business.
Practitioner tells
Dmitry Kalaev
Deputy General Director of Naumen, Moscow
You should formalize your project selection procedure. To do this, develop a regulation for the preparation of an investment project and a business plan template: investment projects should be described in the same way and evaluated according to a single methodology. For example, you can select projects according to the following criteria:
What documents must be submitted to the project participants
The main document that is shown to a potential investor is a business plan. On average, it takes one to two months to prepare, although in difficult cases the process may take longer. You shouldn't plan for this job for less than one month. When preparing a business plan, many difficulties are always revealed, a lack of information is revealed, therefore, it is usually impossible to shorten the time frame (see. ).
Practitioner tells
Dmitry Kalaev
Deputy General Director of Naumen, Moscow
From my personal experience, I can say that it makes sense to prepare two documents: "Project summary" and "Business plan".
Project summary- a brief overview of the project on two to four pages, including the following sections: company and project team, project goal, short description subject area, business idea, market conditions, review of design work, sources of funding. It is being prepared for investors.
Business plan- a more detailed document, which consists of several dozen pages and includes sections such as goals and objectives of the business, information about the enterprise, investment plan, objects of investment and sources of financial resources, characteristics of the company's products (services), market analysis, marketing strategy. Also, the business plan contains the calculated indicators of turnover, fixed and variable costs, profit and profitability of production, payback period, break-even point.
In addition, it makes sense to divide projects depending on costs and the degree of impact on the organization's business. Naturally, a $ 5K project should not be justified in the same way as a $ 1M project. In addition, in order to choose the best one, you usually have to compare projects with each other, so the documents should be prepared in the same way - create an easily repeatable process for preparing an investment project.
Business plan structure
- A business plan usually consists of the following sections:
1. Project summary: short, one or two pages, statement of the main theses and key indicators of the project.
2. Information about the company: should demonstrate the company's ability to implement projects similar to those described in the business plan.
3. Project (description) of the product: information about the essence of the project and the characteristics of the products or services offered for implementation.
4. Strategic plan: competitive advantages of the product, development program, long-term goals of the company within the framework of this project.
5. Marketing plan: market analysis, competitors' activities, product promotion plan, sales forecasts.
6. Investments and operating activities: description of the stages of project implementation, as well as the composition of investment costs, organization of activities after the launch of the project.
7. Financial plan: forecast budget and calculation of all necessary indicators.
8. Risk analysis: assessment of possible threats and their impact on the results of the project, a description of measures aimed at reducing risks.
Practitioner tells
Vitaly Konotop
Head of Budgeting and Controlling Department, Mir company, Moscow
In our company, by order of the General Director, the document "The process of forming and analyzing the feasibility study for opening a retail store" was approved. The data collected on the object goes to the finance department, where the main indicators of the project are calculated. The decision (whether we take this object or not) is made by the governing body - the real estate committee. The meetings are attended by members of the Board of Directors, General Director and other top managers. With a positive conclusion, the feasibility study is once again coordinated with the departments and an order is issued for the company to start the project. Further, the employees of the departments form the budget of the investment project, which is consolidated and analyzed by the finance department.
Analysis of project efficiency
Let's say a project has been developed and you need to make a decision about its future fate. To do this, you need to analyze the project in five areas (reports on which you should demand from subordinates).
1. Technological analysis. Study of how the proposed project launch plan can be implemented and how feasible the conditions for its functioning. Projects most often fail, not because investors misjudged market demand, but because the company is unable to launch the project as planned. The analysis of the technological side is carried out by specialists from specialized production departments, always under the control of the investment department.
2. Legal analysis. Construction, mining, pharmaceuticals - in all these industries, the legal aspects can turn out to be even more complex than the main, proper investment part. Naturally, management's attention to these issues should also be increased. The company's lawyer is responsible for this aspect of the work.
3. Financial and cost analysis. Conducted by the financial and economic service. Based on the project budget, financial model, allowing you to explore it from all points of view and calculate perspectives.
4. Analysis of the effectiveness of the project. Includes calculation of traditional project performance indicators. It is advisable to use a small list of characteristics (from two to four) that can be calculated for the vast majority of the company's projects. Most often, this list looks like this:
- discounted payback period (Pay-Back Period, PBP);
- net present value (NPV);
- Internal Rate of Return (IRR).
All of the above indicators are calculated based on the cash flow forecast for the investment project. Thus, the correct statement of cash flows for the company is extremely important. If it is difficult to do it for one reason or another, classical indicators can be replaced with others. But the replacement is made taking into account the specific features of each project; a standard solution cannot be offered here.
In principle, this small list can be supplemented as needed with a variety of analytical tools and indicators. However, the need for this usually does not arise, since investment projects, as a rule, are characterized by extreme uncertainty, which means that the possibilities to use financial mathematics are limited.
5. Risk analysis. It is assessed to what extent deviations in forecast data will affect the success of the project, various scenarios for the implementation of the project are studied, and possible losses of participants are analyzed. This part is prepared by the risk manager (in the absence of such a specialist in the company, entrust the risk analysis to the financial and economic service).
General Director Says
Mikhail Kalinin
Chairman of the Board of Cost Management Group, Moscow
Marketing analysis is prepared by the marketing department. In my opinion, it is necessary to cover the following areas: market analysis, analysis of the competitive environment, development of a product marketing plan, quality (reliability) of marketing information.
Technical analysis is usually carried out by the engineering services of the company with the participation (if necessary) of narrow specialists. Employees should assess their own technical capabilities for the implementation of the project, indicate the feasibility of attracting additional resources.
The most responsible and time consuming analysis is carried out by the financial department. It is necessary to assess both the financial condition of your own enterprise (including an analysis of work over the past three to five years, an analysis of the profitability of production of main types of products, a profit forecast for future periods, including at the time of the project implementation), and the project itself (to determine the investment needs of the enterprise for the project, sources of financing, predict profit and cash flow in the process of project implementation, evaluate performance indicators).
Analysis of the influence of external (state policy in the industry, legislative and licensing base, etc.) and internal (management qualifications, experience, etc.) factors can be entrusted to the director of strategic development or done by yourself.
The final risk analysis should be carried out by the project manager (a person with a commercial flair), who needs to proceed from the most pessimistic variant of the project implementation.
Cost Management Group is engaged in the creation and implementation of highly efficient technologies to increase business, manages industrial assets overall size more than USD 150 million. Operates in 12 regions of the Russian Federation. In 2003-2007, the group's managers developed and implemented 11 projects to bring industrial enterprises of the machine-building, food and petrochemical industries to a qualitatively new level of development in a short time.
General Director Says
Ella Gimelberg
General Director, Managing Partner of S&G Partners, Moscow
For rate investment attractiveness of the project, the CEO must understand the adequacy of its marketing component (see case study: The reason for the failure of the project). When preparing calculations, the overwhelming majority of financiers rely not on marketing data, which is obtained as a result of research related to the expected implementation plans, but on the technological capabilities of future production (that is, on how many products a company can produce). Having received such a report, the General Director must clearly understand the sales strategy of the project.
Keep in mind: there are markets where 100% of product sales are not luck, but a legal requirement (for example, markets precious metals and stones, oil and gas, other minerals, as well as scarce markets - cement, metal, wood, etc.). If the project does not fall into these categories, then the General Director first of all needs to get from the subordinates a clear understanding of where and at what prices the company will sell products, what is the promising market share, and the plans of competitors. This information is collected and analyzed by marketers as part of project preparation.
S&G Partners was founded in 2006. Provides services in financial consulting, mergers and acquisitions (M&A), investment design, construction and financial supervision. Main clients: CJSC MFC Gras, OJSC Nechernozemagropromstroy, Deloitte & Touch, Khoory Investment (UAE).
Investment project, concept and purpose
An investment project (IP) is a justification of the economic feasibility, volume and timing of capital investments, including the necessary design and estimate documentation, developed in accordance with the legislation of the Russian Federation and standards (norms and rules) approved in accordance with the established procedure, as well as a description of practical actions to implement investment(business plan).
An investment project is a plan or program of measures related to the implementation of capital investments and their subsequent reimbursement and receipt arrived. The term "investment project" can be understood in two senses:
as a set of documents containing the formulation of the goal of the forthcoming activity and the definition of a set of actions aimed at achieving it;
as this complex of actions (works, services, acquisitions, management operations and decisions) aimed at achieving the formulated goals.
A properly designed investment project ultimately answers the question: is it worth investing at all money into this business and will it bring income, which will recoup all the costs of manpower and resources? It is very important to draw up an investment project on paper in accordance with certain requirements and carry out special calculations - this helps to see future problems in advance and understand whether they are surmountable and where it is necessary to insure in advance.
The purpose of the investment project is to help entrepreneurs and economists to solve four main problems:
examine capacity and future prospects market sales;
estimate the costs that will be necessary for the manufacture and sale of the products necessary for this market, and compare them with those prices where you can sell your goods to determine the potential profitability of the conceived business;
to find all possible "pitfalls" that lie in wait for a new business;
to determine those signals and those indicators, on the basis of which it will be possible to regularly evaluate the activities of an enterprise.
Classification of investment projects When deciding on investment, it is advisable to determine where it is more profitable to invest capital: in production, securities, the purchase of goods for resale, in real estate or currency. Therefore, when investing, it is recommended to take into account the following main points, for example, capital investments with long payback periods must be financed using long-term borrowed funds. Investments with a significant degree of risk are recommended to be financed using own funds (net profit and depreciation charges). It is necessary to choose such investments that provide the investor with the achievement of the maximum (marginal) profitability. The return on investment should always be higher than the inflation index. The methodological recommendations also imply the use of a number of important principles in the development, analysis and examination of investment projects, the main of which are the use of the principle of alternativeness; development and examination of the project in a number of mandatory sections or aspects, such as technical commercial, institutional, environmental, social, financial (micro-level) and economic (macro-level); the use of internationally accepted criteria for evaluating the effectiveness of projects on the basis of determining the effect by comparing the forthcoming integral results and costs with a focus on achieving the required rate of return on capital and other indicators and bringing forthcoming expenses and incomes to the conditions of their commensurability, taking into account the theory of the value of money in time; consideration of uncertainty and risks associated with the implementation of the project, etc. There are various classifications of investment projects. Depending on the characteristics underlying the classification, the following types of investment projects can be distinguished: I In relation to each other: · Independent allowing simultaneous and separate implementation, and the characteristics of their implementation do not affect each other; · Mutually exclusive i.e. not allowing simultaneous implementation. In practice, such projects often fulfill the same function. Of the totality of alternative projects, only one can be implemented; · Complementary, the implementation of which can only occur together. II By terms of implementation (creation and functioning):
short-term (up to 3 years);
medium-term (3-5 years);
long-term (over 5 years).
Short-term projects involve tight deadlines. The cost of a short-term project may increase in the course of its implementation. The customer is going to increase the cost of the project in order to gain time to maintain priority in the competition in the sales market. Short-term (high-speed) projects, as a rule, are typical for enterprises with a rapidly updating range of products, in refurbishment work, when creating pilot plants, etc. Long-term projects are usually those that implement capital-intensive investments (for example, investments in the construction and reconstruction of real estate objects). III By scale (most often the scale of the project is determined by the size of the investment): · small projects, the action of which is limited to the framework of one small company implementing the project. Basically, they represent plans to expand production and increase the range of products. They are distinguished by relatively short implementation times. Small projects usually do not require a special study of the feasibility study and related issues. At the same time, mistakes made during the formation of projects can seriously affect their effectiveness. The creation of objects of the social and cultural sphere can also be attributed to small projects. · medium projects- these are, most often, projects of reconstruction and technical re-equipment of the existing production of products. They are implemented in stages, for individual industries, in strict accordance with pre-developed schedules for the receipt of all types of resources, including financial; · major projects- projects of large enterprises, which are based on a progressively "new idea" of the production of products necessary to meet the demand in the domestic and foreign markets; · megaprojects are targeted investment programs containing many interconnected final projects. Such programs can be international, state and regional. Megaprojects have the following distinctive features - they have a high cost - from $ 1 billion; funds for the implementation of such projects usually exceed financial reserves, additional sources of financing are needed, for example, bank loans, export loans, mixed lending. Megaprojects require a large total amount of work in man-hours: 2 million man-hours for design, 15 million man-hours - for the construction of facilities; and the implementation period is 5-7 years or more. Megaprojects have an impact on social and economic sphere region and even the country where it is being implemented. To classify a project as small, medium or megaprojects, the following indicators are used: · the volume of capital investments; · Labor costs; · Duration of implementation; · The complexity of the management system; · Attracting foreign participants; · Influence on the socio-economic environment of the region, etc. IV By main focus:
commercial projects , the main purpose of which is to make a profit;
social projects focused, for example, at solving the problems of unemployment in the region, reducing the crime rate, etc .;
environmental projects which are based on the improvement of the living environment;
other
V Depending on the degree of influence of the results of the implementation of the investment project on internal or external markets for financial, material products and services, labor, as well as environmental and social conditions :
global projects , the implementation of which significantly affects the economic, social or environmental situation on Earth;
national economic projects , the implementation of which significantly affects the economic, social or environmental situation in the country, and when assessing them, one can be limited to taking into account only this influence;
large-scale projects the implementation of which significantly affects the economic, social or environmental situation in a particular country;
local projects , the implementation of which does not have a significant impact on the economic, social or environmental situation in certain regions and (or) cities, on the level and structure of prices in commodity markets.
VI A feature of the investment process is its conjugation with uncertainty, the degree of which can vary significantly, therefore, depending on the magnitude of the risk, investment projects are subdivided as follows:
reliable projects characterized by a high probability of obtaining guaranteed results (for example, projects carried out on a government order);
risky projects , which are characterized by a high degree of uncertainty of both costs and results (for example, projects related to the creation of new industries and technologies).
Vii From the point of view of the project participants, the most significant is the consideration of the following participants: · State enterprises; · Joint ventures; · Foreign investors. In practice, this classification is not exhaustive and can be further detailed. 1.3
1.2. Static methods for evaluating the effectiveness of investment projects. Simple, static criteria for the effectiveness of investment projects include the payback period and simple norm arrived. The payback period is understood as the expected period of recovery of the initial investment from net income (cash receipts minus expenses). The economic meaning of the indicator is to determine the period for which the investor can return the invested capital. If the income stream is uneven, the calculation of the indicator involves the determination of the value cash receipts from the implementation of the project on an accrual basis, i.e. as a cumulative value (step-by-step summation of annual amounts of cash receipts until the investment amount is reached). The advantage of the method lies in the ease of its calculation, sufficient simplicity for understanding and acceptability as a subjective criterion in assessing project risk (with a long payback period, we can talk about a significant degree of uncertainty in obtaining the expected investment results). The disadvantage is that it does not take into account the time value of money, ignores cash flows beyond the payback period, and can only be used if the compared projects are of equal duration and the initial investment is one-time. A simple rate of return (an indicator of the accounting return on investment, an investment efficiency ratio, an estimated rate of return) is the ratio of the average amount of an enterprise's income in the accounting statements to the average amount of investment. The average investment amount is found by dividing the original investment amount by 2, provided that after the expiration of the project implementation period, all costs will be written off. If the presence of residual or liquidation value is allowed, its value is excluded. The use of the indicator is based on comparing its calculated level with the organization's standard profitability levels. Only those projects that increase the level of efficiency of production and economic activities achieved earlier at the enterprise are subject to approval. The main advantage of the criterion lies in the ease of calculations and ease of use, and the disadvantage is that it does not take into account the time value of money, and also the accounting profit is used to determine it, while in the process of long-term investment decisions made on the basis of monetary -stream analysis.
1.4. Dynamic methods for evaluating the effectiveness of investment projects. The criteria based on the technique of calculating the time value of money are called discounted criteria. In world practice, the following are most commonly used: 1. Net Present Value (NPV) is the discounted value of a project, defined as the sum of discounted revenues minus costs received in each year over the life of the project. РV - present value of project cash flows, I - initial investment costs, CF (1, n) - net cash flow in period t, n - planned period of investment project implementation, r - project discount rate. For a project to be recognized as effective from the investor's point of view, its NPV must be positive; when comparing alternative projects, preference is given to a project with a large NPV (provided that it is> 0). 2. The index of profitability PI characterizes the return of the project on the funds invested in it. It is the ratio of the sum of the elements of cash flow from operating activities to the absolute value of the discounted amount of elements of cash flow from investing activities. The criterion is very convenient when choosing one project from a number of alternative ones that have approximately the same NPV values (if two projects have equal NPV, but different volumes of required investments, then the one that provides greater investment efficiency is more profitable), or when completing an investment portfolio in order to maximize the total NPV values. H. The discounted payback period is equal to the duration of the shortest period after which the net present value becomes and continues to be non-negative. 4. Internal rate of return IRR - represents the interest rate r that makes the present value of the project cash flows equal to the initial investment cost, ie r = IRR if NPV = 0. This is the discount rate at which the project breaks even. There are four ways to find IRR: - trial and error; - using a simplified formula; - using a financial calculator; - applying the standard values of the present value of the annuity at a constant value of the net cash flow. The practical application of this method is reduced to a sequential iteration, with the help of which a discount factor is found that ensures the equality NPV = 0. Based on the interest rates on loan capital existing at the time of analysis, two values of the discount coefficient are selected< таким образом, чтобы в интервале от до функция NPV меняла свое значение с + на - или наоборот. Далее используют формулу: Точность вычислений обратна длине интервала, поэтому наилучшая апроксимация достигается в случае, когда длина интервала принимается минимальной (1%). Преимущества использования IRR, заключаются в следующем: прост в понимании менеджера, учитывает временную ценность денежных вложений, показывает рисковый край (предельные значения процентной ставки и срок окупаемости), для его расчета не требуется предварительно определять величину проектной дисконтной ставки. Недостатки связаны с неоднозначностью математического IRR definitions in the case of unconventional cash flows and incorrect assessment of mutually exclusive projects with different scales of investment. IRR, NPV and PI are actually different versions of the same concept, so their results are related to each other. Thus, one can expect the following mathematical relations to be fulfilled for one project: if NPV> 0, then PI> 1, IRR> r; if NPV< 0, то PI <1, IRR< r; если NPV = 0, то PI =1, IRR = r. Для того, чтобы проект мог быть признан эффективным, необходимо и достаточно выполнение одного из следующих условий: 1. NPV >= 0. 2. IRR> = r 3. PI> = 1. 4. RVd< Т.
An investment project is implementation of investments contributing to the implementation of the investment idea. Such investments must be economically feasible and expedient, have a certain period and predetermined volumes.
Investment project always implies the prescribed practical actions for the implementation of capital investments, in other words the Business Plan.
It is almost impossible to give a specific definition of an investment project, due to the fact that any investment project is a semblance and reflection of the project on the basis of which it was born. All major economic characteristics such projects are usually similar.
Investment project efficiency, first of all, depends on the degree of compliance of the investment project with the strategic goals of investors and participants in this process.
Each investment project has its own limited life cycle. The life cycle of an investment project is, in essence, the period of its existence. Each period includes.
Development of an investment project it is a painstaking process that requires a special approach. When developing, it is necessary to take into account the opinions and wishes of all its participants. Also, during the development of an investment project, it is necessary to take into account all information related to and affecting the course of its implementation. Collecting information and making investment decisions based on the collected information is the main task when developing an investment project.
Investment projects can be divided into many types, according to their specifics.
By investment goals:
- investments to increase production volume
- investments to expand the range of products
- investments to improve product quality
- investments to reduce production costs
- investment in social programs
Types of investment projects according to investment terms
- long-term, more than 3 years
- medium-term, up to 3 years
- short-term, up to 1 year
Types of investment projects according to the volume of investments
- large, over 1,000,000 dollars
- medium, up to 1,000,000
- small, up to $ 100,000
It should also be understood that it is possible to single out other types of investment projects, depending on the criteria considered by the investor.
An investment project is. Assessment, stages, comparison and risks of investment projects
Taking into account the long-term basis of investments, each investor of an investment project wants to have the guarantees he needs, not only the return of his invested funds, but also the receipt of a pre-agreed rate of return or other benefits.
In this regard, a clear action plan is needed that allows one to calculate all possible risks of investment projects on the way from the initial stage of capital investment to the final one - obtaining the planned profit. The most important thing in planning remains. Below we will consider the criteria that allow you to display the life of the project.
Investment project stages:
- Developing a pre-investment plan
- Investment stage
- Operational stage
At the first stage investment project the development of technical and economic calculations of costs and a comprehensive study of the market, including marketing and preparation of all documents. All costs associated with this stage, in case of confirmation of the feasibility of financing the project, are included in the costs preceding the production process and subsequently refer to depreciation charges.
Second phase investment project most capital intensive. At this stage, it is impossible to suspend investment, because this can lead to large financial losses. During this period, the formation of fixed assets is carried out in the form of: the acquisition of premises, equipment or the beginning of construction.
Stage three investment project characterized by a return on investment, but taking into account the current operating costs. The longer this stage takes, the higher the return on investment will be.
Significant weight in the investment decision is payback period of an investment project... This indicator reflects the period between the day the project starts financing and the day when all project costs are paid off and the project begins to make a profit.
Investment projects appraisal does not have a clearly established form, in view of the wide variety of types for capital investments (from investing in a research project to investing in real estate). Evaluation precedes the second stage of project development and carries the main burden for making an investment decision, therefore it is the most important.
For a more accurate assessment, highly qualified experts and consultants are involved who have not only knowledge, but are also able to apply in practice standardized methods for evaluating investment projects:
- financial appraisal(allows you to analyze the solvency of the project)
- economic assessment (determines the attractiveness of the project in terms of profit growth rates)
The methods make it possible to accurately assess the development and risks of investment projects, subject to observance of all points of the business plan and the desire of the parties to make concessions in the event of force majeure.
Send your good work in the knowledge base is simple. Use the form below
Students, graduate students, young scientists who use the knowledge base in their studies and work will be very grateful to you.
Similar documents
Essence of investment and investment plan. Methods for evaluating the effectiveness of an investment project. The current financial and economic condition of the enterprise, the feasibility of implementing the investment project of Pharmacy Pharma-Plus LLC, efficiency assessment.
term paper, added 08/24/2011
Theoretical aspects of determining the effectiveness of an investment project. Indicators for assessing the financial reliability of the project and the methodology for their determination. Brief description of the investment project. Assessment of the commercial efficiency of an investment project.
term paper, added 01/23/2009
Investments, their role and functions in the conditions market economy Russia. Economic assessment implementation of a project for the production of polyethylene. Analysis of the risks of an investment project. Major risk factors. Analysis of the sensitivity of the investment project.
thesis, added 11/30/2010
Economic justification and development of an investment project to replace worn-out equipment at a furniture factory. Selection of sources of financing for an investment project. Calculation of the planned profit and loss, analysis of the sensitivity of the project.
term paper added 03/22/2015
Network models for the implementation of the main stages of an investment project. Phases of the investment project implementation: pre-investment; investment; operational. The commercial efficiency of the project. Discounting and accounting at simple interest rates.
test, added 12/07/2010
Development of an investment project for the prioritization of a new technological line for the production of washing machines. Analysis financial condition enterprise initiator of the investment project: assessment of solvency, marketing and production program.
term paper, added 12/18/2009
Description of the investment project. Production plan and product sales. Determination of production costs. Justification of the performance of organizations within the project as a whole. Commercial appraisal the effectiveness of the project for the investor.
term paper, added 12/08/2010