Make more informed project investment decisions by knowing what issues to examine in the planning process and how to analyze their impacts Poor or insufficient planning is primarily responsible for the inordinate number of idle and rusting capital facilities around the world, with investment decisions often made on the basis of either intuition or inadequate analysis. Investment Project Design: A Guide to Financial and Economic Analysis with Constraints alerts potential investors and other stakeholders to precipitous changes in the investment milieu as a result of constraints on resources…mehr
Make more informed project investment decisions by knowing what issues to examine in the planning process and how to analyze their impacts
Poor or insufficient planning is primarily responsible for the inordinate number of idle and rusting capital facilities around the world, with investment decisions often made on the basis of either intuition or inadequate analysis. Investment Project Design: A Guide to Financial and Economic Analysis with Constraints alerts potential investors and other stakeholders to precipitous changes in the investment milieu as a result of constraints on resources and infrastructure, economic and political turmoil, and population growth. The guide Includes descriptions of specific methods of financial and economic analysis for new investments and for expansion of an existing enterprise Covers project risk assessment, mitigation and avoidance Provides real-life case studies, adapted for presentation, and addresses the design of projects large and small, as well as those in both private and public sectors Features spreadsheet layouts and computations
Investment Project Design is the ultimate resource in the methods of designing and appraising investment projects
LECH KUROWSKI is an economist with over twenty-five years of experience in investment projects analysis. Currently a professor of economic analysis at the Wroclaw University of Economics in Wroclaw, Poland, he has performed investment studies and has served as analyst for investment proposals prepared by consulting companies for governments and private investors in over forty countries in Europe, Asia, and Africa. DAVID SUSSMAN is an industrial engineer who has served as consultant to medium and small-scale enterprises and has conducted workshops and seminars throughout the world, particularly in Latin America. He was responsible for most of the important systems design and developed many of the concepts used in the investment project analysis program of the U.N. Industrial Development Organization. He has designed financial management systems in both the public and private sectors. Please visit the companion website for case descriptions, spread sheets, and supplementary discussion of markets and other topics. www.wiley.com/go/investmentprojectdesign
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Acknowledgments xi Symbols and Most Frequently Used Acronyms xiii Introduction 1 CHAPTER 1 Investment Environment 9 Systematic Project Analysis 10 Project Environment and Strategy 11 Project Development Process 33 Planning Horizon and Project Life 43 Project Scope 44 Preinvestment Studies 46 Investment Planning Infrastructure 58 Appendix 1.1: Elements of Commercial and Wider Domains 60 Appendix 1.2: Outline of Business Plan for a Manufacturing Enterprise 62 Appendix 1.3: Outline of Design/Study Report 63 Appendix 1.4: Information Flow Details 67 Notes 69 References 74 CHAPTER 2 Preparing Pro-Forma Financial Statements 75 Accounting System 77 Process of Financial Analysis 81 Financial Costs and Benefits 84 Investment Costs 87 Production Cost 116 Operating Cost, Factory Cost, and Cost of Product Sold 122 Financial Statements 127 Appendix 2.1: Depreciation Methods 142 Appendix 2.2: Starting Inventory Balance 148 Notes 150 CHAPTER 3 Financial Indicators and Criteria 155 Static Indicators 155 Types of Static Indicators 156 Dynamic Indicators 169 Financial Criteria for Investment Decisions 188 Analysis of Joint Ventures 203 Project of an Ongoing Enterprise 206 Appendix 3.1: Example of Cost of Capital Calculations 219 Notes 225 References 228 CHAPTER 4 Financing the Project 231 Capital Structure 232 Cost of Capital 249 Notes 255 References 256 CHAPTER 5 The Economic Perspective 257 Private Sector 259 Public Sector 259 General Rationale for Economic Evaluation-Who Needs It? 260 Macroeconomic View-Impact on the National Economy 262 Price Distortions 266 Applicability and Scope 272 Economic Pricing Principles 278 Shadow Prices of Primary Resources (National Parameters) 292 Conversion and Adjustment Factors 297 Appendix 5.1: Costs and Benefits of Revenue Projects 299 Appendix 5.2: Global Pricing Framework-Importable Input Forgone 301 Notes 303 References 307 CHAPTER 6 Economic Cost/Benefit Analysis 309 Adjustments for the Wider Domain 311 Valuation at Market Prices 311 Define the Accounting Unit 317 Value-Added 343 Notes 354 References 358 CHAPTER 7 Investment Decisions under Uncertainty and Risk 359 Forecasting 359 Risk-Dealing with Uncertainty 364 Quantitative Risk Assessment 369 Qualitative Risk Assessment 380 Risk Management 380 Risk Immunization for Financiers 383 International Investors and Risk 385 Appendix 7.1: Discrete Probability Analysis-Multivariate 386 Notes 387 References 390 CHAPTER 8 Project Appraisal 391 Macro-Micro Appraisal 392 SWOT Analysis 393 Stakeholder Perspectives 396 Appraisal Report 399 Caveats for the Appraiser 406 Notes 407 References 408 CHAPTER 9 Implementation Planning and Budgeting 409 Implementation Planning 410 Project Management 412 Conducting the Implementation Project 416 Implementation Budget 437 Appendix 9.1: Sample Responsibility Matrix for a Portion of a Project 438 Appendix 9.2: Checklist of Project Implementation Costs 438 Notes 442 References 443 About the Authors 445 Index 447
