General scheme for evaluating the effectiveness of...

General scheme for assessing the effectiveness of the investment project

Evaluation of the effectiveness of the investment project must begin with the definition of its public significance, which can be conducted with the involvement of experts. The project is socially significant in the event that the results of its implementation affect at least one of the internal or external markets (financial, products and services, labor, etc.), as well as the environmental and social situation.

Investment projects, depending on their scale (importance) are divided into global, national-economic, large-scale, local.

Global projects have the greatest significance. The implementation of global projects has a significant impact on the economic, social or environmental situation on the planet, and when taking such projects for implementation, this influence must be taken into account.

Next in importance are national economic projects. The implementation of such projects has a significant impact on the situation in the country in which they are implemented, but their influence can not be extended to other countries. When evaluating such projects, it is necessary to limit oneself to taking into account their influence on the situation in the country.

If the project's impact extends to the situation in certain regions of the country or sectors, then such projects are recognized as "large-scale," and when assessing their effectiveness, they do not take into account the impact of these projects on the situation in other regions or sectors.

The least significant are local projects, which do not have a significant impact on the situation in the region, the industry, do not change the level and structure of prices in commodity markets.

The first three groups of projects are considered to be socially significant. It is recommended to evaluate the efficiency of the investment project in two stages.

At the first stage, the effectiveness of the project as a whole is assessed, and a decision is made as to whether it should be further developed. The goal of this stage is to obtain a generalized economic evaluation of design solutions and create the necessary conditions for investors to search. The evaluation begins with the definition of the public significance of the project. If the project is recognized as socially significant, the first stage will include two components: assessing public performance and assessing commercial efficiency. Evaluation of socially significant investment projects should begin with an assessment of their social effectiveness. If the project is recognized as socially ineffective, it is not recommended for implementation, and therefore such a project can not count on state support. If the project is recognized as socially effective, then it goes on to assess its commercial effectiveness. In assessing commercial efficiency, two options are possible. The first option: the project is commercially effective, and in this case go to the second stage - the evaluation of the effectiveness of participation in the project. The second option: the commercial efficiency of the project is recognized as insufficient. Since the project is recognized as socially significant, the lack of commercial effectiveness of this project does not mean that it should not be abandoned. In this case, it is recommended to consider the possibility of using various options for its support (socially significant projects can count on state support), which would increase the commercial efficiency of this project to an acceptable level. After this, the commercial efficiency of the investment project is re-evaluated taking into account the support. If, thanks to support, it has been possible to achieve acceptable efficiency, they are moving to assessing the effectiveness of participation in the project. If the project, and taking into account the possible support, remains commercially inefficient, then its implementation is not recommended. If sources and terms of financing are already known, the commercial efficiency of the project can not be estimated.

Evaluation of local projects, as well as socially significant projects, should be carried out in two stages. But unlike socially significant projects, for which the first stage is to evaluate public efficiency and evaluate commercial efficiency, for local projects only an evaluation of commercial efficiency is carried out. If the local project is found to be commercially inefficient, it is not recommended for implementation and the issue of its support from the state is not considered. At the second stage, local projects are evaluated if they are considered commercially effective at the first stage.

The second stage of the evaluation of the effectiveness of the investment project is carried out after the scheme of its financing has been developed. The second stage specifies the composition of the project participants, determines the financial feasibility of the project and assesses the effectiveness of the project for each of the participants (with the exception of creditors). The effectiveness of the project for creditors is not carried out, so the cost of borrowed funds is defined in the contract, and it is she who determines the effectiveness of the project for creditors. At the second stage of the assessment of the effectiveness of investment projects, regional and sectoral efficiency, the effectiveness of participation in the project of individual enterprises and shareholders, budget efficiency, etc., are assessed. When assessing commercial efficiency, the composition and the system of relationships between the project participants, including the investment project financing scheme, are taken into account.

The commercial effectiveness of the project is evaluated in relation to a certain composition of participants and a certain system of relationships between them, including the project financing scheme.

thematic pictures

Also We Can Offer!

Other services that we offer

If you don’t see the necessary subject, paper type, or topic in our list of available services and examples, don’t worry! We have a number of other academic disciplines to suit the needs of anyone who visits this website looking for help.

How to ...

We made your life easier with putting together a big number of articles and guidelines on how to plan and write different types of assignments (Essay, Research Paper, Dissertation etc)