Practical Techniques for Effective Project Investment Appraisal

Overview

Spending money on projects automatically necessitates an effective appraisal system – a way of telling if the correct decisions on investment have been made. Has your company got such a system?

You may already carry out some form of discounted cash flow or DCF appraisal. However, are there other measures you could be using? And do you use best practice in approaching and executing appraisals?

Practical Techniques for Effective Project Investment Appraisal contains examples of appraisal process spreadsheets, designed to be of practical use in your business. In addition, detailed checklists mean you won’t overlook any factors during the appraisal process.

In particular, the Report:

• Reviews the techniques and measures commonly used when appraising project and capital expenditure.

• Reviews developments of conventional measures, discussing the pros and cons of such developments.

• Highlights the importance of all parties involved in appraisals understanding the significance of interest rates, costs of capital and the effects of inflation.

• Offers examples of good practice with regard to the existence and rigorous application of sound appraisal methods.

• Demonstrates the need for straightforward, but thorough sensitivity analyses – proper sensitivity analyses lead to true risk management.

• Considers measures and models which may be used to appraise other situations; for example, where there is an environmental impact and cost-benefit analyses are required.

• Reviews how lenders perceive investment and summarise the form of PFI (Private Finance Initiative) ventures and projects.

Content

1. Review of basics
2. Rates/inflation/taxation and other issues
3. Other measures
4. Risk management through sensitivity analysis
5. Need for consistency in methods and measures
6. Accounting for intangible benefits
7. Lenders’ view of projects and other issues

The author

Ralph Tiffin is a chartered accountant and has also practiced as a mechanical engineer. Ralph runs his own accountancy practice which has a wide range of successful businesses as clients. The practice has a respected reputation as a management and training consultants. Ralph is an expert in the area of project and capital expenditure appraisal and consultant to a range of international businesses from power and telecom utilities to oil companies, food and paper manufacturing companies and banks. He regularly presents technical update courses for the Institute of Chartered Accountants of Scotland and other professional and commercial organisations.