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
Spis treści
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
O autorze
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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