Sunday 6 February 2022

Analyze project phases to increase effectiveness of project




    
All concoressions, graphic materials, formulas, tables and figures of work on the topic: Project analysis (subject: Economic and economic theory) are included in the archive, kotory can be downloaded from our site.



1. Project analysis in the system of economic knowledge.


The development of modern economic theory and practice is inextricably linked with the need to analyze and justify certain management decisions, in particular design ones. The allocation of project analysis in a separate direction of applied science was primarily due to the need for a systematic approach to the preparation and evaluation of projects. The design experience at all its stages, accumulated under the conditions of the administrative economy, was based on the principles and methods of the administrative-command system and was detached from modern methodology and rich tools used in world economic science.

Project analysis is a methodology used to identify, compare and justify alternative management decisions and projects, which allows, in turn, to make choices and make verified decisions in conditions of limited resources.

The main components of project analysis are: the concept of the project, which determines its main features as an object of research; phases and stages of the life cycle; the principles on which project analysis is based; criteria for the selection and evaluation of projects, as well as aspects of project analysis containing market analysis, technical, institutional, environmental, social, financial and economic analysis.

The main functions of project analysis are:


- development of an orderly data collection structure that would allow effective coordination of activities in the implementation of the project;

- optimization of the decision-making process on the basis of analysis of alternative options, determination of the sequence of implementation of measures and the choice of optimal technologies for this project;

- a clear definition of organizational, financial, technological, social and environmental problems arising at different stages of the project;

- assistance in making competent decisions on the feasibility of using resources for the implementation of the project.

2. Definition of the project, its purpose, signs.


A project is a one-time set of interrelated measures aimed at meeting a certain need by achieving specific results in the established material (resource) provision with clearly defined goals within a given period of time.

As goals of the project, economic and social results can be put forward, for example, increasing the production capabilities of the enterprise, creating or reconstructing market and social infrastructures, solving social and environmental problems, etc.

The purpose of the project is the desired and proven result achieved within a certain period of time under the specified conditions for the implementation of the project.

The main features of the project include:

1. Quantitative measurability. This means that all costs and benefits from the project must be quantified, since the analyst gives an assessment of the project based on the figures.

2. Time horizon of action. No project can exist without time constraints, in which there are two goals:

- the first is the determination of the period during which the success or failure of the project can be determined;

- the second is that the assessment of the real value of financial costs and benefits is impossible without taking into account time constraints.

3. Target orientation. The project is always aimed at achieving a specific goal, meeting a certain need. The objectives of the project should be clearly formulated, measurable, the restrictions set, and the established requirements carried out.

4. Life cycle. The project arises, functions and develops.

5. System functioning of the project, elemental composition. There is a relationship between the elements of the project. However, the composition of the project does not always remain unchanged: some of its elements may appear or leave it.

6. Existence in a certain external environment, the elements of which have a significant impact on the project.

When analyzing a project, you can also highlight the following additional features of the project:

resource constraints;

uniqueness, the latest tasks and problems;

complexity;

the need for legal and organizational support, etc.

The main properties of the project are scale, complexity, quality and duration. By nature and scope of activity, industrial, organizational, economic, social and development projects are distinguished.

3. Project oration and its participants


The project takes place surrounded by a dynamic external and under the influence of internal environments. For the successful implementation of the project, it is necessary to determine and take into account any possible action of these environments in relation to the project and its environment. Factors of the project's immediate environment include the areas of finance, sales, production, material and personnel support, infrastructure, as well as the management of the enterprise; to the internal environment - economic and social conditions for the implementation of the project, its organizational structure, participants, project management style, methods and means of communication.

Project participants realize different interests in the project process, form their own requirements in accordance with the goals and motivation and influence the project based on their interests, competence and degree of involvement in the project.

The composition of the project participants, their role, distribution of functions and responsibilities depend on the type, type, scale and complexity of the project, as well as on the phases of its life cycle. To determine the composition of the project participants, build its functional and organizational structures for each project at the stage of concept development, it is necessary to determine:

- subject area - goals, objectives, works and main results, that is, what needs to be done to implement the project, as well as its scale, complexity, permissible deadlines;

- the ratio of property involved in the project process (what is the cost and who owns?);

- the main ideas of the project (how to do?);

- the main active participants of the project (who will do it?);

- the main passive participants of the project (who is involved in the project?);

- what are the motivations of the project participants? (possible profit, loss, risk, etc.).

 

Participants: initiator (author of the idea), customer (future owner and user of the project results), investor (invests in the project), project manager (legal (individual) person to whom the customer and investor delegate the authority to implement the project - planning, control and coordination of work of all project participants), project team (specific organizational structure, headed by the project manager and created for the period of the project), contractor (participant of the project entering the project relations with the customer and assumes the obligation to perform work under the contract), the subcontractor (enters into contractual relations with a contractor or subcontractor of a higher level), the designer (performs under the contract design and research work within the project), the general contractor, suppliers, li censors (allocate licenses for the right to own a land plot, conduct trades, perform certain types of work and services), authorities, owner of the land plot, manufacturer of the final products of the project, consumers of final products, other participants of the project.

4. Classification of projects by the main properties of the project


The main properties of the project, which arise from its features and by which they can be classified into types, include: the scale of the project, its size, the number of participants and the degree of impact on the environment.


Scale and size of the project

? large (carried out according to targeted economic programs and contain many multiprojects, united by a common goal, resources used and a single schedule of development and implementation.

? average (includes work on the design and construction of enterprises, development and arrangement of small mineral deposits (oil, gas, coal), if their design is carried out on the basis of typical design solutions, and construction is carried out by a complete-block method, the essence of which is that most of the object under construction is made not on the construction site, but on the capacity of the contractor)

? small (research and development at industrial enterprises, Including design, technological and organizational and economic preparation of production, production of experimental and industrial samples of new products, reconstruction, technical re-equipment and modernization of production. the forces of the enterprises themselves. The period of development of such projects does not go beyond one or two years)



Level of alternative

? mutually exclusive (carried out if it is impossible or untartiated to implement other projects)

? alternative to capital (carried out in the case when each of them cannot be carried out without the use of financial means necessary for the implementation of other projects)

? independent (carried out in the case when the results of the implementation of one do not affect the results of the implementation of the others and any information about the parameters of one does not change the information about the results of the others)

? mutually influential (carried out if during their joint implementation there are auxiliary (systemic, synergistic, emergent) positive or negative effects that are not manifested in the implementation of each of the projects separately)

? complementary (carried out if for any reason they can be accepted or rejected only simultaneously)

Project Duration

? short-term projects (up to 3 years);

? medium-term (from 3 to 5 years);

? long-term (more than 5 years).


 


5. Types of projects. Project management


Investment projects. Construction of a new enterprise, reconstruction of the production or construction of a dam are projects for which the project is defined and fixed: the purpose of the project (production volume, dam size); end time and duration; project costs. The necessary resources and the actual cost of the project will depend primarily on the progress of the work and the promotion of each project. For this type of project, the necessary capacities must be provided in accordance with the schedule and the period of readiness of the stages and the completion of the project.

Research and development projects. The development of a new product, research in the field of construction structures or the development of a new information and control system are characterized by the following features: the main goal of the project is clearly defined, but individual goals should be clarified as partial results are achieved; the completion period and duration of the project are determined in advance, but they can be adjusted depending on the interim results obtained and the overall progress of the project; project cost planning often depends on allocated allocations and less on the actual progress of the project; the main restrictions are related to the limited ability to use capacities and resources (equipment and specialists). As a rule, the available opportunities determine the costs of the project and the period of its readiness.

Organizational projects. Reforming the enterprise, implementing the concept of a new management system, creating a new organization or holding an international forum as projects are characterized as follows: the goals of the project are predetermined, but its results are quantitatively and qualitatively more difficult to establish than in the first two versions, since they are usually associated with organizational improvement of the system; the term and duration are set in advance; resources are provided to the best of their ability; project costs are fixed and subject to cost-effectiveness control, but require adjustments as the project progresses.

Economic projects. Privatization of the enterprise, the creation of an audit system, the introduction of a new tax system are economic projects that have their own characteristics: the purpose of the projects is to improve the economic performance of the system, so it is more difficult to evaluate them on time than in previously considered types of projects; the main goals are planned in advance, but require adjustments as they progress; the same applies to the terms of the project; resources for the project are provided as needed within the limits of the possible; costs are determined in advance, monitored for efficiency and specified as the project progresses. This means that economic results must be reached in a fixed time at fixed costs, and resources are provided as needed.

Social projects. Reforming the social security system, health care, social protection of the unsecured segments of the population, overcoming the consequences of natural disasters and social shake-ups are social projects that have their own specifics: goals are only planned and should be adjusted as interim results are achieved; their quantitative and qualitative assessment is significantly complicated; the timing and duration of the project depend on the probable factors or are only planned and subsequently subject to clarification; project costs, as a rule, depend on budget allocations; resources are allocated as needed within the limits of the possible. Social projects are the most uncertain.

6. Project life cycle. Different approaches to the project allocation to the implementation phases


The life cycle of the project is the period of time from the project plan to its completion, which can be characterized by the moment of implementation of the first costs of the project (the appearance of the project) and the receipt of the last benefit (liquidation of the project).

The life cycle of a project is a concept that considers a project as a sequence of phases, events and stages, each of which has its own name and time limits.

The life cycle of the project is the basic, initial concept for researching project implementation problems, financing works, making decisions about the feasibility of investments and detailing the project. Regardless of the size, volume and cost of the operations performed, any project in its own development goes through periods of design, preparation, implementation, completion and liquidation. All these states of the project, as a rule, are divided into components, which are called "phase", "stage" and "stage".

Today, there is no single approach to the distribution of the project implementation process into components. This is due to differences in the approaches of project participants to the division of the project into the most important starting points that allow planning, tracking, monitoring and evaluating the development of the project and, if necessary, adjusting its implementation.

The World Bank's approach to dividing the project cycle at the stage reflects the most important targeted installations of this financial and credit institution for the project - high-quality preparation, expertise of selected projects, negotiations on the provision of credit resources and, of course, the final assessment of the project.

More often, the project cycle is divided into three phases: pre-investment, investment and operational, which, in turn, branch out at the stage. This approach is actively used in the practice of project analysis.

The pre-investment phase includes the following stages: pre-identification; identification; preparation; development and expertise; detailed design.

The investment phase covers works that can be combined at the following stages: preparation and tendering; engineering and technical design; construction; production marketing; staff training.

The main stages of the operational phase are: commissioning (is the limit between the investment and operational phases, so it can be in both); production operation; replacement and updates; expansion and innovation; final evaluation of the project.

7. Identification of the project. The emergence of the idea of the project.


At the stage of identification, the choice of goals of the project is carried out, the definition of its tasks that ensure the implementation of the most important plans. At this stage, a list of all possible ideas capable of ensuring the fulfillment of the goals of economic development is drawn up. Since the overall goal of any project is to obtain additional benefits, the selection of projects is carried out by comparing possible results from the implementation of various projects.

When selecting the ideas of the project, analysts come, on the one hand, to the need to reduce the number of ideas under consideration, and, on the other hand, the need for a detailed approach to selected ideas in order to study these options more thoroughly and select the most attractive. The responsibility assigned to the analyst in the process of choosing a project requires convincing motivation from him to choose or reject any version of the project. As a rule, when selecting project ideas, the number of options that deserve detailed study is reduced to two or three, which allows you to quickly and without large costs to assess the most important points of the project's investment opportunities at the macro and micro levels.

Macroeconomic analysis is carried out, as a rule, in three areas:

resource, which allows you to assess the opportunities associated with the use of resources or products;

sectoral, aimed at determining the potential of a certain sector of the economy;

regional, which assesses the capabilities of a particular region of the country, its potential, attractiveness for a particular project idea.

The purpose of macro-analysis is to develop an investment proposal and collect information for potential investors.

At the same stage, in addition to macroanalysis, it is necessary to conduct microanalysis, the purpose of which is to diagnose individual entities that have potential and investment attractiveness, which will allow to formulate the previous goals of individual investment proposals.

8. Selection of the project idea and deductions of the worst options.


When selecting the ideas of the project, analysts come, on the one hand, to the need to reduce the number of ideas under consideration, and, on the other hand, the need for a detailed approach to selected ideas in order to study these options more thoroughly and select the most attractive. The responsibility assigned to the analyst in the process of choosing a project requires convincing motivation from him to choose or reject any version of the project. Quite common criteria for rejecting project ideas are:

insufficient demand for the proposed product obtained as a result of the project implementation, or the lack of significant benefits from this product;

high cost of the project compared to the expected revenues;

lack of obligations on the part of the organization or people who will benefit from the project;

lack of political support;

technology that is not suitable for the project;

excessive scale of the project, which does not correspond to organizational and managerial capabilities;

excessive risk of the project;

high cost of raw materials and significant costs for the payment of skilled labor.

As a rule, when selecting project ideas, the number of options that deserve detailed study is reduced to two or three, which allows you to quickly and without large costs to assess the most important points of the project's investment opportunities at the macro and micro levels.

Preliminary evaluation of the investment proposal according to the following criteria:

technical feasibility of the project;

ecological admissibility;

financial feasibility (assessment of the required amount of investment and return);

institutional admissibility;

evaluation of alternatives to the project;

assessment of the risk and uncertainty of the external environment.

The analysis is carried out on the following aspects: commercial or marketing; technical; institutional; ecological; social; financially; Economic.

9. Project experts.


The expertise of the project is understood as its assessment by interested or independent organizations according to formal and informal criteria. The task of the examination is to check the rationality of the project, determine the feasibility of its implementation. It is at this stage that the final decision on the adoption or rejection of the project is made. Of course, the examination is carried out according to individual components.

Commercial expertise is carried out to assess the acceptability, availability and price attractiveness of the resources involved in the project, market trends and prospects of the products being produced, as well as the pricing policy for the product being produced. Experts pay special attention to the assessment of measures for the purchase of raw materials and materials, as well as the sale of project products.

Technical expertise should first of all determine the advantages of technical proposals, their adequacy to the capabilities of local conditions and costs. Technical expertise is subject to the scale of the project, its location, availability of attracted raw materials and equipment, the level of development of production and social infrastructure, the amount of costs and the system of their regulation.

Environmental expertise is carried out in order to determine the impact of the project on the ecosystem, as well as to assess the impact of the project on air and water basins, the degree of environmental risk associated with its implementation.

Institutional expertise, that is, the assessment of the administrative and managerial aspects of the project, is carried out in order to determine the possibility of implementing the project in a given political, economic and legal environment, as well as to establish organizational conditions that allow successfully achieving the set project goals.

Financial expertise involves an assessment of the financial capacity of the object implementing the project, the validity of financial forecasts, the ability to cover loan payments in a timely manner, the financial consequences of the project for investors, customers and enterprises implementing the project.

Social expertise allows you to determine the extent of the project's impact on the social environment, the benefits that residents of the project implementation region receive, as well as the possible negative impact of the project on the population.

Economic expertise is designed to evaluate the project from the point of view of national interests, society as a whole, including answering the question whether it is appropriate for the project to use national resources, whether there are adequate incentives for different participants in the project, which provides for the promotion of national development.

10. Costs and benefits in project analysis


One of the main tasks of project analysis is to determine the value of the project. The value of a project is defined as the difference in its positive results, or benefits (hereinafter referred to as "benefits"), and negative results, or costs, that is,

Project Value = Benefits - Costs

To determine the value of the project, it is necessary to evaluate all the benefits received from the project and find out whether they exceed the costs of it throughout the life cycle. Since many of the project's assets are designed for a long service life, the project analysis compares future benefits with the necessary current project costs.

Several conceptual provisions are used to analyze projects, among which additional costs and benefits are allocated.

If the new project is a continuation of the activities of the enterprise, carried out on the development of existing production, then the purpose of the project analysis is to establish the difference between the situations "with the project" and "without the project". Taking into account the benefits and costs increed as a result of the project requires clarification of the previously mentioned formula.

Value of the project = Change of benefit - as a result of the project - Change in costs as a result of the project


This approach is not identical to the comparison of situations "to the project" and "after the project", since the comparison of the states "before" and "after" of the project does not take into account changes in investments and production that occurred independently of the project, and therefore leads to an inaccurate calculation of the costs and benefits of the project.

In general, all decisions on determining the value of the project, as a result of the expediency of investing in its implementation, stem precisely from the comparison of additional benefits with additional costs. In practice, this was embodied in the so-called concept of limit. The decision to increase the volume of production should be made at the rate of the amount of additional costs, and not the average cost of production of a unit of production. This is an additional or marginal cost.

When deciding on the volume of output, they are guided by the rule that the volume of output should increase as long as the marginal costs are lower or equal to the marginal benefits.

11. Alternative value of the project and alternative solutions


One of the key provisions of project analysis, especially in the field of economic analysis, is the concept of alternative value. An alternative cost arises in the presence of limited resources on an object or activity that is valuable to someone. If there is no such limitation, then all the needs of society in any period can be met. In this case, there is no need to choose between individual options, coordinate the processes for determining priority needs and select those that require priority satisfaction.

As soon as there is a limited resource, the satisfaction of all requests is impossible. Thus, the limited resources necessitate the choice of:

- directly from objects where there is an alternative;

- indirectly from institutions or procedural organization for social interactions, which, in turn, affect the choice of final objects.

Alternative value is the lost benefit of using limited resources to achieve one goal instead of another, the best of those that remain, the option of their application.

Thus, in the project analysis, each cost used for financial (from the point of view of the firm) or economic analysis (based on the impact on national income) is an alternative cost. Therefore, the concept of alternative cost is key in project analysis.

12. Value of money in time. Project cost discounting


The concept of estimating money over time is based on the fact that the value of money changes over time, taking into account the norms of profit in the money market. The rate of return is often the loan interest, that is, the amount of income from the use of money in the capital market. In the process of comparing the cost of funds, two concepts are used: the future value of funds (FV) and the present value of funds (PV).

Future value (FV) is the amount of funds invested at the moment, in which they must be converted after a certain period of time, taking into account a certain interest rate.

The interest rate refers to the measurement of the time value of money, the amount of interest on an investment that can be received for a given period of time. If the investment is carried out in a short period of time, then use a simple percentage - the amount that is accrued on the initial value of the deposit at the end of one period. It is calculated by the formula:

And = r ? and ? n,

where I - monetary expression of interest, the amount of interest money accrued during the investment period; p - the initial cost of the deposit; i - interest rate; n - the number of payment periods.

The future value is calculated as follows: FV = PV + I, where PV is the present value of money.

If the investment is carried out in a long period of time, then a complex percentage is used. This is the amount of income that is formed as a result of investing, provided that the amount of the accrued interest is not paid after each period, but joins the amount of the principal deposit and in the subsequent payment period itself generates income.

The process of transition from present value (PV) to future (FV) is called compounding (accrual is a transaction that allows you to determine the value of the final future value using complex interest).

The equation for calculating the future value by compounding is as follows:

FV = PV(1 + i)n,

where (1 + i)n is the coefficient (factor) of future value for i and n.

The discounting process is an operation opposite to compounding (increasing complex interest) at a specified final amount of funds.

Discounting is the process of determining the present value of a cash flow by adjusting future cash receipts using a discount ratio.

13. Cash flows of the project. Impact of depreciation on the amount of cash flow.


Cash flow refers to the difference between the amount of money received and spent, the actual net cash that goes to the company (or is spent by it) over a certain period.

Cash flow from the company's assets should be equal to the amount of cash flow to creditors plus cash flow to shareholders (or owners).

Cash flow from assets contains three components: operating flow of money, capital expenditures and increase in net working capital.

The operational flow of money is the flow of money, which is the result of the daily work of the production and sales firm. Capital expenditure is the net cost of acquiring assets without selling assets. The increase in net working capital is the difference between an increase in current assets due to the implementation of a new project and an automatic increase in payables and accruals.

Cash flow to creditors and shareholders represents net payments to creditors and owners throughout the year. Cash flow to creditors is calculated as interest paid minus net new loans, and cash flow to shareholders as dividends paid minus net new share acquisitions.

The project analysis considers only the agreed (which is a direct consequence of the decision to implement the project) and additional (taking into account all changes in the future cash flows of the company, which are the direct consequences of the implementation of the project) cash flows.

Project cash flow is equal to cash inflows minus outflows or operating cash flow minus changes in net operating capital.

Depreciation is a type of expense that the company does not pay to external suppliers as wages, but accumulates into a separate fund, which reduces the amount of taxable income and thus creates additional cash flow. The positive effect of depreciation is that their accumulation is accompanied by the emergence of additional funds to expand the business, which contributes to an increase in the business activity of the company. Thus, the main reasons that make depreciation an important item of cash flow are: the significant importance of this item in the investment budget, the reduction of tax liabilities, which allows to increase the net income of the company, as well as non-monetary costs, which, although they belong to the costs, can be used for purposes other than investment.

Since the value of money in real terms can decrease over time due to inflation, the following two rates are used in the project analysis:

the real interest rate (r) is the rate of return on capital excluding inflation. In the case of using the real interest rate, it is necessary to calculate cash flows at constant prices, that is, to neutralize the impact of inflation;

nominal (present) interest rate (i) - the rate of return from the investor's position in the private market, which includes inflation (t) and is therefore determined by summing up the real rate of interest and the value of the inflation rate: i = r + t ,

where r is the real interest rate (return on investment); t is the rate of inflation.

If inflation has a significant rate, then the calculation of the nominal interest rate is carried out according to the formula of compound interest: i = r + t + r*t , where r*t is the inflation premium.

An inflation premium is a premium for inflation expectations, which investors add to the real, risk-free level of income (rate of return).

The value of the real rate is determined by the equation:

r = (1 + i) : (1 + t) - 1

If only real (constant) prices are used in the project analysis, then annual production operating costs and benefits should not be increased by inflation to determine the cost of capital.

14. Project cost structure. Cost structure management

15. Calculation of break-even point. Break-even Graph. Safety margin


The purpose of the break-even analysis and the determination of the volume of products for which the volume of sales revenue is equal to the costs.

Break-even analysis involves the following assumptions:

* does not take into account changes in production stocks from period to period (production volume is equal to sales);

fixed operating expenses are the same for any production volume;

* variable citrates vary in proportion to the volume of production, and therefore the total amount of costs also varies in proportion to the volume of production;

* the price of the product is considered a constant value during the project cycle;

* the share of sales of the product in the amount of revenue does not change;

* fixed costs are considered permanent.

Break-even point is determined by the formula:

where FC is fixed costs;

P - the price of the unit of the product;

VC - variable costs per unit of product

To determine the impact on profit, a decrease in the volume of sales of products is used: the safety margin is the value by which the actual volume of sales exceeds the critical volume of sales.

16. Methods of project efficiency assessment.


The most well-known and most commonly used in the practice of making investment decisions is the net present value (NPV), which reflects the increase in the value of the company as a result of the project, since it represents the difference between the amount of cash receipts (cash flows - inflows) that arise during the implementation of the project and are driven (discounted) to their present value, and the amount of discounted values of all costs (cash flows - outflows) necessary for the implementation of this project.

where Bt - full benefits for the year t;

Ct - full expenses for the year t;

t - the corresponding year of the project (1, 2, 3, ... n);

n - project life, depth of horizon in years;

i - discount rate (interest rate).

.

The spread of the method of assessing the effectiveness of projects using NPV is due to the ability to directly determine the effect of the project, as well as to assess the total net benefits from several independent projects (the property of additiveity is provided only by the indicator of net present value). However, this indicator does not reflect the relative extent of the increase in value as a result of the project implementation, which is of great importance for the investor.

Another common criterion, which is much less commonly used in the practice of design solutions, is the benefit ratio (benefit cost - B / S). It is defined as the amount of discounted benefits divided by the amount of discounted costs and calculated by the formula

V/S.

The most acceptable conditions for the application of the benefit factor - costs are the presence of strict capital restrictions.

The next integral indicator, which today is most often used in international practice of investment design, is the internal rate of return (IRR). Very often in the literature, this criterion has the names "internal return on investment", "internal discount rate". This indicator reflects the discount rate at which the net present value (NPV) is zero.

To calculate the value of the internal rate of return of the project, you can use the formula

Sometimes in the practice of IRR calculations, a formula is used

,

where i1 is the discount rate at which the NPV value is positive;

i2 - discount rate, in which the project becomes unprofitable and NPV becomes negative;

NPV1 - net current value at and1;

NPV2 - the value of the net current value at i2.

In the project analysis, this indicator gives analysts a benchmark for comparing the alternative cost of capital (the actual discount rate acceptable for the project) with the value of the internal rate of return.

Modern project analysis emphasizes the cumulative application of NPV and IRR indicators.

Quite common in financial analysis is the payback period (pay back - RV), which demonstrates for what period the project will cover the costs. In projects that last more than a year, the payback period always involves discounting based on the value of money by time. Unfortunately, too often the so-called "simple payback period" is used, which does not provide for discounting future benefits and costs, so it does not allow you to correctly assess the feasibility of planned investments.

Quite often, in the practice of analysis, analysts are faced with the need to compare projects that have different life cycles. To solve this type of problem, you can use the criterion of equivalent annuity (EA), or the average annual net present value, which is calculated using the formula

,

where NPV is the net present value of the project;

A1 - the present cost of the annuity at the specified discount rate and the life cycle of the project.

The selection of projects using this indicator is carried out according to the highest value of the equivalent annuity, since infinite reinvestment is envisaged until the lifespan of all projects ends at the same time.

Profitability index (RI) is an indicator that reflects the growth of the company's value by 1 UAH. Od. Investment. The calculation of this indicator is carried out according to the formula

.

This indicator estimates cash receipts in the t-th year received through investments (CFt) with the value of I0's initial investments.

Unlike previous criteria applicable to all benefits and costs, Bruno's criterion is used to assess the project's potential in replacing imports. This indicator determines whether the country saves foreign currency on domestic production or export of goods as a result of the project. At the same time, the criteria for net savings of foreign currency due to the refusal to import goods, which are now produced due to the project or export revenues, are divided by the costs of domestic production (project) of this product. It is calculated as follows:

There are a number of general rules for the use of alternative decision-making and efficiency criteria.

If the project has budget constraints, then it is necessary to monitor whether the net annual cash flows change their value from positive to negative value (and vice versa) more than once. If net cash flows change the mark no more than once, then it is necessary to apply the criteria of the internal rate of return for the ranking of projects, the benefit factor - costs and its variety - the benefit factor - costs in the presence of strict capital restrictions.

In the case when net cash flows behave unsustainably with the restriction of operating (production) and capital expenditures, you can use the indicator of the benefit factor - costs, and if only the capital budget is limited, the benefit factor will be more preferential - costs within the established capital expenditures.

In the absence of a budget constraint and availability of funds, it is necessary to optimize the use of resources in the set of choices, increasing the scale of the most effective projects until the marginal elections of the project are equal to the marginal costs.

Cash flow sustainability involves the use of criteria for ranking and selection such as net present value (NPV) and internal rate of return (IRR). For unsustainable cash flows, only the NPV indicator should be limited.

When considering mutually exclusive projects, it is possible to apply indicators of net present value, and to prevent discrimination of large projects - indicators of the internal rate of return. In conditions of uncertainty and a high degree of uncertainty in the future, the selection criterion will better serve as a payback period.

It is possible to overcome the difficulties of assessing benefits from the project in cash when ranking projects using cost efficiency criteria. As a criterion in this case, you can use fixed costs for most complex goods (products).

If one of the priorities of the country's development and the task of the project is to save (inflow) foreign currency, then bruno's criterion should be used.

17. Project performance indicator - net present value of the project.


The most well-known and most commonly used in investment decision-making practices is the net present value (NPV), also known as "net present value", "net discounted value" or "discounted benefits". This indicator reflects the increase in the value of the company as a result of the project implementation, since it is the difference between the amount of cash receipts (cash flows - inflows) that arise during the implementation of the project and are brought (discounted) to their present value, and the amount of discounted values of all costs (cash flows - outflows) necessary for the implementation of this project. Many analysts consider net present value to be the best criterion for most projects. To calculate this indicator, we use the following formulas:

,

where Bt - full benefits for the year t;

Ct - full expenses for the year t;

t - the corresponding year of the project (1, 2, 3, ... n);

n - project life, depth of horizon in years;

i - discount rate (interest rate).

, .

In cases where the project involves significant initial investments in I0, the calculation of NPV can be carried out using the formula

,

where CFt (cash flow) is the cash flow at the end of the t.

The criterion of selection at net present value means that the project is approved in case of its positive value, that is, as a result of the project implementation, the value of the company will increase. When choosing from mutually exclusive projects, preference is given to those who have higher net current values.

The spread of the method of assessing the effectiveness of projects using NPV is due to the ability to directly determine the effect of the project, as well as to assess the total net benefits from several independent projects (the property of additiveity is provided only by the indicator of net present value). However, this indicator does not reflect the relative extent of the increase in value as a result of the project implementation, which is of great importance for the investor.

18. Project efficiency indicator - internal rate of return


IRR. This indicator reflects the discount rate at which the net present value (NPV) is zero.

For investment projects, there is a rigid relationship between the net present value and the discount rate: the higher the discount factor, the lower the NPV.

To calculate the value of the internal rate of return of the project, you can use the formula

,

where i1 is the discount rate at which the NPV value is positive;

i2 - discount rate, in which the project becomes unprofitable and NPV becomes negative;

NPV1 - net current value at and1;

NPV2 - the value of the net current value at i2.

In the project analysis, this indicator gives analysts a benchmark for comparing the alternative cost of capital (the actual discount rate acceptable for the project) with the value of the internal rate of return.

Economically, the nature of the internal rate of return is the maximum interest per loan that can be paid for a period equal to the life cycle of the project, provided that the entire project is carried out only at the expense of this loan. This allows you to use IRR to determine the feasibility of attracting credit resources: if the loan interest is lower than the IRR, then the use of these resources is appropriate for the project.

At the same time, some IRR properties may restrict its application. Firstly, there may not be a single IRR for the project (a mathematical model can give several values of the internal rate of return). Such a plurality of the decision appears if the annual net cash flows during the project period change the sign (for example, from negative to positive and vice versa) several times. This happens in cases where the money received from the project is reinvested in the project again.

Secondly, the application of a single value of the discount rate and assumes that its value is constant during the life of the project. However, for projects with long time horizons, given their high uncertainty in later periods, it is unlikely that a single discount factor can be applied throughout the project life cycle.

Thirdly, in contrast to the net current cost and benefit ratio, the cost of the criterion of the internal rate of return sets other priorities when ranking projects that are generally unacceptable for mutually exclusive projects.

Despite such well-founded criticism of the IRR, this decision-making criterion is so firmly rooted in financial analysis that most projects rely on it. The obvious reason is that the IRR gives a meter that is comparable to existing market rates for investments. Most private investors consider IRR as a pointer to what their return on capital will be and make investment decisions depending on the IRR. Thus, despite the fact that one should be careful with the IRR, nevertheless, this indicator will continue to be popular due to its similarity with capital income in the private or public sector.

18. Project efficiency indicator - benefit /cost ratio

The benefit cost factor (B/S) is defined as the amount of discounted benefits divided by the amount of discounted costs and calculated by the formula

W/S

The criterion for the selection of projects using the benefit factor - the cost is that when the value of the coefficient that exceeds or equals one, the implementation of the project is considered appropriate. However, despite the popularity of evaluating projects using this indicator, it has quite significant drawbacks. Firstly, it is unacceptable for ranking on the benefits of independent projects and is absolutely not suitable for the selection of mutually exclusive projects. Since the relative size of cost benefits is compared, it should be remembered that this indicator does not reflect the actual amount of net benefits from the project. For example, a small project can have a much higher benefit ratio - costs than a large project, and if you do not use additional calculations of the NPV criterion, then you can make an erroneous decision on the choice of the project.

The most acceptable conditions for the application of the benefit factor - costs are the presence of strict capital restrictions. In the presence of such restrictions on the budget of the project, the ranking of projects occurs in accordance with the highest value of the coefficient until the budget is exhausted. The formula for calculating the budget in conditions of limited capital becomes as follows:

V/S,

where O - production and operating costs; K - capital expenditures.

With a shortage of resources, the benefit factor - the cost is modified and calculated according to the formula

V/S,

where Rt is the cost of a scarce resource.

This indicator, comparing the amount of net benefits with the cost of scarce resources, allows you to select projects for which unique resources are of serious importance. Scarce resources often include foreign currency, which for many countries is a stimulating factor in development. In this case, the calculation of the coefficient is equal to the ratio of net discounted costs to foreign currency. The main potential problem when using this coefficient is a double score that distorts the results of the assessment.

19. Purpose, methods and main types of commercial analysis of the project.


The purpose of the commercial analysis of the investment project is to assess the investment from the point of view of the prospects of the final market for products or services.

The tasks of commercial analysis are answers to the following questions:

"what are the characteristics of the market where the project products or services will be sold;

"at what price the products or services will be sold;

"what marketing management measures will need to be taken to bring products or services to market and what is the cost of these measures.

Commercial analysis is based on five main approaches, according to which organizations conduct their industrial market activities. These are the following concepts:

improvement of production;

improvement of goods;

intensification of commercial efforts;

marketing;

social and ethical marketing.

Marketing information system

Commercial analysis uses continuous collection and processing of information, as well as preparation and adjustment of forecasts of market factors as the market situation that forms the system of marketing information is formed. The marketing information system consists of four auxiliary systems:

internal reporting;

collection of external information;

marketing research;

analysis of information.

The internal reporting system is aimed at displaying current business information, as well as issuing operational data-Sources of internal information are statistical reporting, accounting statements, results of internal studies, acts of audits and inspections, etc.

The system of collecting external information is designed to provide the necessary information about the state of the project environment in which it operates. Sources of external information are newspapers, magazines, television, radio, published annual reports, production statistics, consumption statistics, industry magazines and newspapers of organizations and enterprises, publications of organizations and enterprises with data on manufactured products, specialized publications, personal contacts with customers, employees of other organizations and enterprises, suppliers, obtaining information from specialized organizations, advertising competitors.

Marketing research involves the exact formulation of the tasks facing the investment project and the definition of marketing research goals. Goals may be to pre-collect information about the market, customers, competitors, product promotion, and select sources of information to facilitate the search for the necessary data.

The purpose of the information analysis system is to process data that allows you to draw conclusions and outline the main ways to solve problems.

20. Analysis of market opportunities of the project.


In the context of a specific investment situation, the problem of analyzing market opportunities is solved, namely, the analysis of the micro environment and macro environment of the project, the analysis of the retail and wholesale market is carried out.

The micro environment of the project is understood as a set of relations that are formed within the organization that carries out the investment project, between the organization and customers, the organization and competitors. From the point of view of the investment project, an analysis of its own activities should be carried out if this project aims to expand the activity of an already existing organization through in-depth penetration into the existing market, expanding the market boundaries with an existing product, bringing a new product to an existing market or diversifying its production, as well as analyzing the activities of competitors and potential buyers. To analyze their own activities, the following indicators are used: data on current sales, volumes of material reserves in warehouses, channels of movement of goods, sales regions, costs, cash flow, schedule of receipt of goods to warehouses.

To assess the activities in the market of competing firms, the following indicators are used: the volume of sales of products produced, the share in the total sales volume, the nature of the products produced (specifications, price, novelty, availability of service), advertising practice; practice of movement of goods (availability of warehouses, types of transportation, work with dealers and distributors), marketing activities of the company (assortment policy, directions of development of new goods, sales policy, methods of intensification of sales, policy of the trip and trends in their change), the level of production costs and ways to reduce them, financial situation, quantitative indicators of activity (volume of products produced, investments, costs for research work, the degree of loading of production capacities for the production of competing products).

To analyze potential buyers, the following indicators are used: market position, share in the total consumption of goods, main suppliers of products, company requirements for products, organizational structure, trading capacities, retail methods, conditions for granting benefits to buyers and suppliers, the effectiveness of sales channels, total sales volume, profitability of trading operations, the amount of sales costs, the cost of maintaining warehouses, the amount of commissions received by the company for Mediation.

In addition, it is necessary to take into account the relationship in the organization, relations with suppliers, intermediaries, contact audiences (financial circles, media, government agencies, the public, their own employees).

The macro environment of an investment project are factors that affect all elements of the micro environment of the project. Among them are common factors: demographic (birth rate, average family indicators, migration indicators, educational level, etc.), economic (level of economic development of the country, wage size, unemployment rate, structure of income distribution among different groups of the population, structure of consumption costs, etc.), natural (availability and possibility of rational use of raw materials and energy resources, need for environmental protection), scientific and technological progress (directions of development, organizations conducting promising research, the possibility of applying fundamental research in applied terms, etc.), political (legislative framework, degree of state control over compliance with regulations, measure of influence on the political situation of public organizations and associations), cultural environment (trends in the cultural environment and the possibility of orientation of organizations in the course of the project implementation).

Analysis of data on trends and processes in the macro environment allows you to determine their possible impact on the progress of the project. The task of project management is also to minimize uncontrolled environmental factors and find an opportunity to influence controlled factors.

Analysis of retail and wholesale markets


The retail or consumer market is a market for buyers of goods and services for personal consumption. The process of general study of the retail market should include the definition of the market itself (first of all, we are talking about goods and buyers of these goods, which differ in the level of income and consumption, social status, nationality, cultural traditions) and the definition of factors that determine the behavior of the buyer when making purchases (economic, scientific and technical, political, cultural factors). Knowledge of the characteristics of the retail market and the factors that determine the behavior of the buyer, allows you to influence the process of making a buyer's decision to purchase goods, which determines the volume of future sales of project products.

The wholesale market is a market of persons or organizations interested in goods and services for their further use in the process of production, resale or redistribution. The wholesale market is represented by enterprises that purchase goods for their further processing, intermediary organizations that resell purchased goods for profit, government agencies that make purchases in order to ensure the performance of their functions. The peculiarities of the wholesale market are large (but few) buyers, their comparable geographical concentration, inelastic demand and the dependence of demand for industrial goods on the demand for consumer goods. Purchases in such a market are conducted by professionals - employees of logistics departments of enterprises and organizations.

21. Forecast of sales volumes of the project.


Measures for the selection of target markets precede the forecast of sales volumes of investment project products. The selection of target markets for project products includes the following successive stages: the study of demand, market segmentation, selection of target segments and positioning of goods in the market. Based on the obtained data, a forecast of sales volumes is carried out.

The study of demand includes an analysis of the current level of demand and its forecasting.

The study of the current level of demand is carried out in the following sequence: the aggregate demand for goods is investigated; analyzes the aggregate needs of the product at the moment; the needs of the goods in a particular region are considered; the needs of those categories of buyers to whom this product can be sold are studied; the consumer's requirements for the goods and factors of preference when choosing a product by the buyer are determined (novelty and technical level of the goods; quality; level of after-sales service; assortment; quality of packaging; climatic conditions; current standards; reliability; price; reputation of the supplier; uniqueness; design; reliability of deliveries; availability of after-sales service); analyzes the demand for the currently available goods from the seller: it turns out what goods the seller does not have, but for which there is a high demand for certain categories of buyers; the volume of consumption of products in the current period and the growth rate in the past period (1-3 years, depending on the type of product) is estimated; production plus imports minus exports; purchasing power of the population; demand for all types of comparable and interchangeable products; incomes of the population with division into regions of potential demand.

The state of demand is influenced by factors of a political nature (adoption of new legislative acts, etc.), economic (change in the growth rate of production, change in solvent demand), demographic nature, scientific and technological progress, factors of cultural and historical order, increased competition, possible emergencies.

The process of market segmentation for the purposes of the project is to further divide markets depending on consumer groups and consumer properties of goods.

There are four principles of segmentation of the consumer retail market: geographical, psychographic, behavioral and demographic.

The use of the geographical principle allows you to divide the market into groups of consumers, united by characteristic features inherent in a particular region. The size of these regions, depending on the direction of segmentation, may vary widely and do not coincide with the administrative-territorial division.

Segmentation using the psychographic principle involves the study of potential customers from the point of view of psychology, namely, taking into account the lifestyle, personality type. Each type has a certain attitude to goods, a purely individual reaction to advertising, new services.

The behavioral principle is connected and largely determined by psychographic. At the heart of its use in the segmentation process is taking into account various aspects of the buyer's behavior. There are the following segmentation variables: a reason for making a purchase, the expected benefits, the status of the buyer, the intensity of consumption, the degree of inclination, the degree of readiness of the buyer to perceive the goods, the attitude to the goods.

Segmentation by demographic principle uses the following variables: age; gender; size, composition and age structure of the family; occupation; education; level of income; religious beliefs; race; Nationality.

Segmentation of consumers of the retail market has its own characteristics compared to the segmentation of the wholesale market, where wholesale buyers are enterprises, wholesale and retail organizations, government agencies, non-profit organizations. For segmentation of the wholesale market, the following variables are used: turnover, production features, organization structure, geographical location, number of employees, level of export sales, number and location of branches, working capital, current liabilities, profitability, relations with competitors.

Methods of forecasting.


1. The method of simple trend analysis is that sales volume is projected based on recent or current indicators.

2. The method of analyzing market share is similar to the previous one, but the forecast is based on the assumption that the share of products of the organization carrying out the project in the market will not change.

3. The method of collective analysis of managers and specialists is that during a business meeting they discuss prospects and determine estimates of sales volumes based on their own experience, results of analysis of market opportunities and opportunities of their organization, as well as business intuition.

4. The method of surveys of sales personnel allows you to identify new trends, strengths and weaknesses of the proposed products, assess consumer resistance to a new product, find out the features of mass users, distribute sales forecasts by product categories, consumer groups and districts.

5. The method of consumer surveys allows the organization carrying out the project to obtain information about the intentions to make a purchase, the level of consumption, changes in trademarks, periods and reasons for purchases.

6. The method of market growth is that sales volume forecast data are collected from individual market segments, and then put together.

7. The method of trial marketing is a kind of method of market building. The total volume of possible sales is estimated on the basis of short-term, geographically limited sales of goods.

8. Statistical analysis methods can be used to predict sales volumes. However, the use of these methods is limited due to the lack of both mathematical market models and reliable databases on the state of the market.

22. Project Product Pricing


The orderly method of forming the price of products has the following stages:

1) setting pricing tasks;

2) determination of the specific limits of demand;

3) cost analysis;

4) analysis of prices and goods of competitors;

5) selection of pricing method;

6) setting the final price.

Setting pricing tasks is to determine the organization that carries out the project, its priorities at the current stage. This can be ensuring survival, which is the goal in cases where there are too many manufacturers in the market and there is acute competition or the needs of consumers change dramatically. To ensure the survival of the organization and the sale of products, prices are set as low as possible, but those that guarantee the coverage of costs. This can be a maximization of current profits, which is used when current financial indicators are more important than long-term ones. Set such prices to ensure maximum profit. This may be gaining leadership in terms of market share, which is used when the task is to capture the largest market share, while thinking that in the future there will be an opportunity to have the lowest costs and the highest long-term profits. Prices in this case are reduced to a reasonably possible level. Winning leadership in terms of product quality is used when the goal is to make products the highest quality on the market. This requires setting high prices to cover the cost of achieving high quality.

The price set by the organization carrying out the project will determine the level of demand for the product, reflecting the so-called demand curve. This curve shows how many products can be sold and at what price. If, under the influence of a small change in price, demand almost does not change, it is called inelastic demand. If the demand changes significantly, it is called elastic. It should be noted that demand will be less elastic in the following circumstances: the products have no substitutes on the market; There are no competitors; buyers do not immediately notice an increase in prices; buyers are slowly changing their habits and are not in a hurry to look for cheaper products; buyers believe that the increased price is justified by improving the quality of products; Buyers believe that the increase in prices is due to inflation.

The relationship between the price of a product and the quantity that sellers want to sell is called an offer. The so-called law of proposal says that other things being equal, the higher the price of the goods, the greater the seller's desire to develop it and offer it for sale.

It must be borne in mind that for the so-called equilibrium market, such a price is set that the amount of goods that buyers want to purchase exactly coincides with the amount of goods that sellers want to sell. The point of price equilibrium is at the intersection of supply and demand curves.

The establishment of a project on the product for certain reasons, the marginal upper prices (as a rule, in cases where state regulation of the chip is applied) may be associated with a decrease in project revenue due to the restriction of supply when there is a shortage of goods on the market. Demand determines the maximum price that can be requested for a product. The minimum price is determined by costs.

23. Goals and content of technical analysis.


Technical analysis occupies an intermediate place between market analysis and financial analysis. This aspect of the investment project demonstrates the possibility of technical implementation of the project with an acceptable level of costs.

A huge variety of technologies, types of raw materials and equipment are very difficult to type the technical analysis of the investment project. For this reason, in most methods of a general nature (in contrast to narrow-sectoral) recommendations for technical analysis are reduced to a long list of issues that need to be reflected in it. One of the most comprehensive lists of this kind is recommended by the International Finance Corporation (IFC).

All questions related to the technical analysis of the investment project can be divided into 13 groups:

1. Location (place of project implementation);

2. Scale of the project, the possibility of increasing the scale of production;

3. Technology;

4. Equipment, organization of its operation and repair;

5. Infrastructure;

6. Scheme of the enterprise;

7. Organization of preparation and implementation of the project;

8. Project schedule;

9. Preparation and development of production;

10. Quality assurance;

11. Calculation of project costs;

12. Material and technical supply;

13. Current production and sales costs;

In the classical project analysis, you should choose a place on the territory of a fairly large geographical region, which can cover several states. At the same time, interstate comparison of the investment climate is the main task. If we are talking about investment projects in Ukraine, the very formulation of the task eliminates such problems. A priori, we are dealing with the investment climate of this state, and no matter how harsh and unsuitable for life, we are not able to choose another. Such a lack of choice should be realized and try to compensate for it by other factors, for example, high profitability, quick payback, special guarantees, etc.

List of questions relevant to Ukraine:

1. Map of the location of the enterprise with the indication of the main roads, railways and waterways on it

2. Schemes of land plots, issues of ownership of them

3. Characteristics of plots (soil), suitability of the site for the project

4. Transport access to the site

5. Nearest ports

6. Location of sales markets and ways to access them

7. Nearest settlements

8. Nearest industrial facilities

9. Land value and investment costs

10. State of negotiations on land plots

11. Obtaining licenses or other permits for land plots

24. Organization of movement of goods of the project


The movement channel of the project is a set of organizations or individuals. engaged in the transfer of ownership of the project's goods during its movement from manufacturer to consumer. The functions of the channels of movement of goods are as follows: sale of goods; collection of information necessary for planning and organizing the movement of goods; establishing contacts with potential consumers; participation in the promotion of goods; adaptation of the goods to the requirements of the consumer; organization and negotiations for the purpose of transferring goods from manufacturer to consumer; organization of movement of goods related to transportation and warehousing of goods; financing; taking risks. When carrying out the project, two basic types of product movement channels are used - direct and indirect.

Direct channels of movement of goods are associated with the movement of goods from manufacturer to consumer without the use of independent intermediaries. Methods of organizing direct channels of movement of goods are as follows: trade in delivery, parcel trade, trade through its own trading network. When carrying out a project, direct channels of movement of goods should be used in the following cases: when the consumer market is concentrated; products require the organization of a specialized service; products are highly specialized for their intended purpose; the price on the market is unstable and price changes should be made promptly; the specifics of the project products require prompt changes to the design under operating conditions; there is a wide network of own warehouses.

Indirect channels of movement of goods are associated with the movement of goods from the manufacturer to an independent participant in the movement of goods, and then to the consumer. The indirect channel is characterized by the level and width of the channel and is used in cases where the project products are brought to an insufficiently studied market or when the products are supplied without pre-sales preparation, and the after-sales service is not difficult.

When choosing the types of channels of movement of the project goods, the following factors are taken into account: characteristics of consumers (quantity, concentration, needs, motivation); potential of organization of the manufacturer of goods (goals, state of resource support, experience); characteristics of goods (consumer indicators, including storage conditions, cost, potential volume of output); characteristics of competing organizations (consumer indicators of the product, potential volume of output, cost, indicators of product traffic channels). It should be noted that in the relations between producers and sales participants, emphasis is placed on pricing policy, sales conditions, territorial rights, service structure (liability, duration of the contract and terms of its termination).

The pricing policy is associated with discounts received by sales participants for performing trading functions, mass purchases, cash payments, as well as commissions. The terms of sale determine the price and guarantees of quality, terms of payment and transportation, compensation for unsold products and discounts for return. Territorial rights define geographical areas where sales participants and target markets can operate. The structure of services characterizes the role of each participant in sales channels. It determines who trains sales staff, supplies goods. conducts advertising events, stores stocks.

The organization of the movement of goods is characterized by the following indicators: the efficiency of order execution; the ability to urgently supply products for special orders; the possibility of replacing the goods with high-quality; providing various consignments of goods; availability of an effective service; the level of prices for the provision of services; quality of the warehouse network; the level of stock of goods and spare parts; coordination of the assortment; stability of supplies.

25. Objectives of environmental analysis. Methods of ecological analysis


The purpose of the environmental analysis is to establish the impact of the project on the environment, to assess all benefits and costs incurred as a result of this impact, and to form measures necessary to mitigate or prevent environmental damage during the project.

Regardless of the category of the project, its environmental analysis is carried out according to a certain scheme:

The first stage is the characteristics and analysis of the environmental conditions in which the project will be carried out, which requires the analyst to give a description of the natural and geographical environment of the project, its physical and biological balance, all aspects directly related to the implementation of the project.

The next step in the research is to identify the positive and negative consequences that will occur in the event of the project, as well as the development of measures to eliminate negative consequences that cannot be eliminated. At this stage, measures aimed at environmental protection are being developed.

The third stage involves identifying and analyzing alternative project implementation opportunities, such as locations, the use of project technologies, etc. For each alternative, it is necessary to determine the benefits and costs using economic ratios, institutional suitability of local conditions and requirements.

After identifying alternatives to the project, it is necessary to develop measures aimed at reducing the negative impact on the environment. The action plan should determine economically justified in terms of costs measures that can reduce negative consequences to a permissible level. This plan also provides for compensation measures if it is found that reducing the negative impact is impossible or too expensive given the costs.

An important step in the environmental analysis of the project is the preparation of management and specialists who would be responsible for the environmental safety of the project, implement measures to protect and control the environment. At this stage, it is possible to create separate environmental departments on the ground in those agencies and institutions that are interested in implementing the project in environmental safety conditions.

The final stage of environmental diagnostics of the project is the development of a plan for monitoring (current control) of the environment and the impact of the project on it. The plan specifies the type of current control, determines the persons and institutions that should carry it out, assesses the cost of control measures.

For a cost assessment of the project's consequences, as well as a comparison of the environmental impact of several projects, ranking methods, ball assessment methods for other methods of expert evaluation are used.

In the conditions of the existing alternative to the practical implementation of the project and when comparing possible options at the stage of project formulation, when the enterprise is not yet functioning, several methods of assessing the impact of the project on the environment are used: the method of checklists; matrix method; Flow chart method; method of joint analysis of maps. Modern international practice of assessing the environmental consequences of projects most often uses methods based on determining the market price of production of goods and services (in accordance with the following three approaches: determining resource productivity, the principle of lost profit (income), alternative cost) and direct costs associated with the implementation of the project, which primarily include methods for analyzing cost efficiency and assessing preventive costs.

26. The purpose, objectives and methods of institutional analysis of the project


The purpose of the institutional analysis of the project is to determine the degree of influence of external (political, economic, sociocultural, legal, etc.) and internal (level of qualification of the personnel involved in the project, management of the organization that carries out the project, etc.) factors on the possibility of successful implementation of the project.

As the main tasks of institutional analysis, the following can be distinguished:

analysis of the political orientation and macroeconomic policy of the government;

identification of project objectives and directions of development identified by the government as priority;

assessment of the level of project management and determination of parameters of its successful implementation;

characteristics of the personnel potential of the organization and assessment of its ability to successfully perform the tasks;

analysis of the consistency of the project goals with the interests of its participants;

diagnosis of the organizational structure and the degree of its compliance with the achievement of the project results.

Institutional analysis requires the use of a special methodological apparatus and tools. Thus, along with methods and models of quantitative assessments (descriptive models that determine the relationships between several variables; analytical models characterizing possible dynamic deviations; decision models, etc.), institutional analysis requires the use of methods of qualitative assessments and situational analysis. Methods of expert assessments are important for making a project decision when conducting institutional analysis of projects. Therefore, analysts who use multistage survey techniques (Delphi, Kuturov method, etc.) should strive to reduce the degree of subjectivism of expertise and provide expert assessments of quantitative characteristics that would allow to assess the extent of the impact of certain factors on the effectiveness of the project.

27. Factors that affect the organization of the project


Factors affecting the organization of the project are divided into external and internal.

The assessment of external factors involves the study of the political and legal conditions for the implementation of the project, state policy on investment, taxation, regulation of import and export operations and foreign trade activities, as well as the legislative framework on labor. When considering large-scale projects, the analyst should determine the possibility of state support for the project under consideration and the need for bureaucratic approvals.

Analysis of internal factors contains an assessment of the level of management of the project team, the possibility of effective project cycle management. This stage of training involves consideration of the compliance of the level of qualification and experience of the management team, the degree of its motivation, the commonality of their corporate culture with the goals and values of the project and the company implementing it. It is also important to analyze the labor potential of the personnel who are planned to be involved in the implementation of the project and the organizational structure of management.

28. Internal organizational environment. Principles of internal organization.


Analysis of the internal environment of the project is based on the basic principles of the correct organization, with the help of which it is possible to conclude about the ability of the organization to implement the project. If these principles are observed, the ability is recognized as quite high.

Organizational activity is the process of grouping the various activities necessary to achieve the goals set, subordinating each group to the manager (manager) with the powers necessary to lead this group, and ensuring vertical and horizontal coordination in the structure of the enterprise. The organizational structure should ensure:

- distribution of responsibilities so that everyone knows who is doing and what and for obtaining what results is responsible;

- elimination of obstacles to normal activities arising from a vague definition of the range of duties;

- creation of a communication network to ensure the decision-making process that meets the goals of the enterprise.

The goals of the organization are based on the following principles, according to which the goals of the project and the goals of the project organization are coordinated:

The principle of unity of purpose. The structure of the organization is effective if it helps everyone to contribute to the achievement of the goals of the enterprise.

Principle of efficiency. An organization is effective if it is constructed in such a way as to contribute to the achievement of the goals of the enterprise with minimal undesirable consequences or costs.

Choosing the desired criterion of effectiveness can cause some difficulties. Thus, one manager determines the efficiency of profit, the second - competitiveness and prestige in the business world, the third - low turnover. However, whatever the criteria for measuring efficiency, this principle is at the heart of any organizational structure.

29. Group of principles of internal organization of the project relating to the assessment of the level and range of management


Meanwhile, as the main reason for organizational activity is the desire to make people's cooperation effective, the reason for the multi-stage organization is limited management range. The presence of organizational levels is caused by the fact that there is a quantitative limit on the number of employees whose activities the manager can properly control. Each organization must determine how many subordinates a manager can have.

The principle of range of management. For each managerial position, there is a limit number of employees who are able to effectively manage one person.

The French scientist Graicunas in 1933 expressed the principle of the range of control in the form of a mathematical formula, which proceeds from the fact that the complexity of management increases exponentially with the growth of the number of subordinates. According to his theory, there are three types of official connections "subordinate - manager":

1) direct single connection;

2) direct group communication;

3) cross-link.

Direct single communication directly and personally connects the manager with his direct subordinates. So, if A has three subordinates - B, B and G, then we have three direct single connections.

A direct group job connection exists between the manager and every possible combination of subordinates. Thus, the manager can work with one of the subordinates in the presence of the other, with all subordinates at once, etc. if A has three subordinates, then all official connections include communication B with B, B with D, B with B, B with D, B with G, G with B, B with B and D, D of B and B.

Cross-official relationships arise when subordinates work with each other. For B, B and D, there are six cross-sectional relationships: B-B, B-G, B-G, B, G-B, G - B.

Based on the analysis of these links, Greikunas derived his formula, which looks like this:

D = n{2 n-1 +(n-1)}, Where D is a possible number of job connections, n is the number of subordinates.

30. A group of principles of internal organization of the project regarding the structural division of the organization, which is due to the limitlessness of subordinates in one  level


The limited number of subordinates that can be directly managed necessitates the structural division of the organization. Grouping activities and employees into structural units makes it possible to expand the organization unrestricted. Structural units vary depending on the basic schemes used for grouping activities, the main of which are listed below.

The function of the company is understood as what it does. The main functions of the production enterprise, the basic scheme for which is given below, are production, sales and financing, trade - procurement, sale and financing, transport - operation, movement, financing, etc.

The main advantages of functional grouping of activities are the logic of this method, taking into account the factor of professional specialization of employees and increasing the responsibility of senior management personnel for the final results of the performance of a particular function. However, if the company produces a wide range of products, operates in different territories or has excellent markets, other schemes of organizational groups are used.

The basis of the organizational structure is authority. Authority is a means by which groups organized by type of activity can be subordinated to one manager, thanks to which the coordination of organizational units is carried out. Powers ensure the availability of primary communication in the enterprise, since they are related to those messages that relate to decisions made.

31. Social analysis: its purpose, goals, objectives and methods of conducting


Project analysis considers the external environment of the project not only from the point of view of ecology, but also the social environment. The purpose of social analysis is to determine the acceptability of options for the implementation of the project from the point of view of users, the population of the region where the project is carried out, the development of a project implementation strategy that allows you to get support from the population, achieve the goals of the project and improve the characteristics of its social environment.

The analysis of the project involves determining the impact of the project on the people participating in it, using its results, receiving appropriate benefits, on producers, suppliers and other project participants.

The main components of social analysis are: assessment of the population living in the project area, from the point of view of ethnic-demographic and socio-cultural features, living conditions, employment, recreation and determining the degree of impact of the project on these parameters; establishing the level of adequacy of the project to the culture and organization of the population in the area of its implementation; development of a strategy to support the project at all stages of preparation, implementation and operation by the population of the district.

When analyzing the social environment of the project, the analyst should segment, determine the target groups of the population to which the project decision is aimed, identify changes that may occur in the social organization and lifestyle of the project population as a result of the project implementation.

An important aspect of the study of the social environment is the characteristic of demographic processes and ethnographic structure of the population, which is usually submitted by gender, age, belonging to a certain ethnographic group, health status, level of education and territorial distribution of the population. In the study of the demographic situation, cultural traditions, employment structure, income level, housing conditions are considered

When conducting a social analysis of the project, analysts should predict the social development of the regions to which the project relates. Based on the study of state policy, priority directions of regional development and criteria for supporting projects, sociologists project the social environment of the project.

One of the conditions for achieving the success of the project is to gain commitment, support the active population and organizations for the operation and maintenance of the project. Their participation can take many forms: advice on the selection and planning of investments, the provision of labor, materials or financial investments, project monitoring, etc.

When designing the social environment of the project, it is necessary to determine the scorecard that reproduces the development of the project region. The most common is the system of social indicators that reflect the demographic condition, employment, social structure, living conditions, public life, health care and crime rate of the project region.

32. Financial analysis. Inflation rate indicators. 

Capital expenditures of the project. Attribution of capital expenditures to assets. Project financing sources.

Financial analysis of the project is carried out in order to determine the financial viability of the project to decide on the feasibility of its investment and financing.

Analytical work on assessing the financial aspects of the project requires the establishment of the most attractive possible alternatives to the project in conditions of uncertainty, as well as the development of a strategy for managing or controlling the critical parameters of the project.

A very important part of the financial justification of the project is the forecasting of the balance sheet of the document, which reflects the accumulated assets of the company and the sources of their financing, based on the assessment of the movement of funds and other assets and changes in liabilities. The forecast of the balance sheet reflects the permissible development of accumulated assets and the source of their formation.

Inflation indicators

The rate of inflation is defined as the value of changes in price indices (which is an expression of the value of the consumer basket relative to a certain period, %). CPI - commodity price index) - consumer inflation, producer price index (CPI) and GDP deflator. The ease of use of CPI consists primarily in the use of a fairly large number of goods and a high frequency of data updates by statistical authorities (usually a month), while data on the GDP deflator, which, however, covers more goods available only quarterly.

The Price Index (I) is the ratio of the price in the period t (Pt) to the price of the base period (Pb), that is:

The rate of inflation is defined as the ratio of the difference in the price index of the current period and the price index of the previous period to the price index of the previous period:

The annual rate of inflation (or for better distinguishing them into a separate indicator - the inflation rate) reflects a change in inflation for the year. The annual inflation rate is used to reflect the real interest rate on an expression called the Fisher formula:

i = r + n,

where: n - inflation rate, r - real interest rate, i - nominal interest rate.

Knowing the future amount of money and the interest rate of annual income, you can calculate the current value of this monetary amount, based on the compounding formula:

P= C/(1+h)n,

where C is the future amount with an increase, P is the initial invested amount, h is the interest rate, n is the number of periods for which income is summed up.

Such a financial equivalent of the future monetary amount becomes lower the longer the period of its receipt, and the higher the rate of return.

All sources of investment resource formation are divided into three main groups:

own;

involved;

loans.

The share capital price (CAC) is calculated according to the following formulas:

for ordinary shares -

,

where DP is the forecast value of the dividend for a certain period; Tsa - the market price of a common share;

p - the projected rate of dividend growth;

for preferred shares -

,

where D is a fixed dividend in monetary terms; CPA is the market price of a preferred share.

33. Economic analysis. Matrix of economic attractiveness and efficiency at different stages of project realization

Economic analysis of the project is carried out in order to establish its national attractiveness, assess economic efficiency on the basis of the alternative cost of resources used in the project and project products and determine the possibility of promoting the project to the national welfare of the country.

Determining the economic attractiveness of the project is associated with its assessment in terms of the possibility of achieving certain economic goals of the country's development. Evaluation of the economic efficiency of the project is carried out in order to establish the effectiveness of the use of society's resources within the project.

In practice, analysts often use the method of positioning projects according to the criteria of economic attractiveness and efficiency, for which the project is attributed to one of the squares of the matrix (Fig.), which reflects the government's position on supporting certain projects.

The most attractive in this matrix is the upper right square, in which both the attractiveness and efficiency of projects are higher. These are projects for the development of new markets, improving the country's competitive position, and producing new products. As a rule, they are implemented in the private sector, since cost-effective projects are almost always attractive from a financial point of view.

Cost-effective projects (top left square), which are not cost-effective, need government support to improve their efficiency. Therefore, the active role of the state in identifying projects, promoting the best of them, their partial financing provides opportunities for the implementation of these projects. These are projects that ensure the development of the infrastructure of the regions and the country as a whole (transport communications, communications, seaports and airports, etc.), as well as projects aimed at social development. A characteristic feature of such projects is the need for their state financial support. To improve the efficiency of the project, the state can support the initiative of private investors and donors.

Unattractive from the point of view of benefits for society projects (lower right square) should be carried out exclusively at the expense of private investment. The participation of public funds in such projects can be justified only if it is possible to obtain solid financial benefits.

34. The concept of shadow formation, the mechanism for determining shadow principles for individual project resources


The social value of resources is determined on the basis of shadow prices. The shadow price is a social assessment of a product or resource, expressed in monetary terms and formed on the basis of:

- marginal costs of production of the necessary resource;

- the cost of import analogues based on the equivalent of world prices;

- the value of the alternative cost of resources spent on the production of this product.

The first approach involves assessing the marginal (marginal) costs of production of the required resource, which reflect the necessary costs of the manufacturer in the production of an additional unit of production. With under loaded capacities, the marginal costs are less than the cost per unit of production, which makes the release of additional volumes beneficial for both enterprises and society as a whole. If the economic system is balanced, then the involvement of new resources in the production requires large costs and marginal costs begin to exceed the cost of production.

To determine the equivalent of the world price of export and imported goods, parity prices are used, which reflect the equivalent of the price of the world market, expressed in local currency.

There are import (comparative local prices for imported goods) and export parity (comparative prices paid for export goods).

In determining world prices, it is custom usual to use the conditions for exporting a franco-board (FOB), which reflect the terms of payment from a large export port, or the conditions for importing "cost, insurance, freight - CIF) in a large import port of the traditional market.

To assess the economic value of import-substituted goods or goods that can be imported, the price of import parity is calculated. The economic value of import parity is calculated by transferring the currency value of imports to the national equivalent at the official exchange rate, and then the positions of the project that are not import-substituted (transportation in the country, marketing and sales costs) are adjusted for the conversion rate, which reflects the distortion of the economic cost of these services.

The conversion rate (or conversion rate) is also used to determine the economic value of goods and services, if the financial indicators of the project are calculated. This coefficient reflects the degree of distortion of the social value of the product through state regulation of economic processes.

The higher this indicator, the more distorted prices in this market compared to the competitive market.

Goods not involved in foreign trade are those goods whose import and export are economically impractical (due to high transport costs or properties that have a tendency to rapid damage) or for which there are restrictions on importation and export from the state, as well as the cost of which is less than the price of CIF and greater than the FOB price.

All the above-mentioned methodical approaches to the establishment of shadow prices were based on the world prices or their analogues in determining the economic value of these goods and resources. However, there are resources for which there is no world price - land, labor, various services. They are used a third way to determine the shadow price - the recognition of their alternative value.

Project analysis is a methodology used to identify, compare and justify alternative management decisions and projects, which allows, in turn, to make choices and make verified decisions in conditions of limited resources.

The main components of project analysis:

- the concept of the project, which defines its main features as an object of research;

- phases and stages of the life cycle; the principles on which project analysis is based;

- criteria for the selection and evaluation of projects,

- aspects of project analysis: market analysis, technical, institutional, environmental, social, financial and economic analysis.

The concept of project analysis is a set of methodological principles that determine the sequence of collection and methods of data analysis, methods for determining investment priorities, ways to take into account a wide range of aspects before making decisions on the implementation of the project.

One of the main tasks of the PA is to establish the value of the project, which is determined by the difference in its positive results and negative consequences.

The methodology of project analysis is based on the system of the following principles:

- alternative (choosing the best option available),

- conditionality (a clear distinction between benefits and costs caused by the decision to implement the project or abandon it),

- margin (consideration of the quantitative value of the impact of changes that directly relate to the adoption of the project or its deviation),

- comparison of the situation "with the project" and "without the project" (taking into account the expected changes over time in the flows of benefits and costs both for the project situation and without the project),

- determination of the deadline for the start and end of the project.

The project is a one-time set of interrelated measures aimed at achieving specific results in the established material (resource) provision with clearly defined goals within a given period of time.

The purpose of the project is the desired and proven result achieved within a certain period of time under the specified conditions for the implementation of the project.

The project differs from the current activity in temporality, uniqueness, target orientation.

Investments - investment of funds, property and intellectual property in tangible and intangible assets.

An investment project is a package of investments and related activities that are characterized by:

a specific goal (goals), solving the problem of achieving results;

limited financial resources and the period from the beginning to the completion of the project;

the presence of certain external conditions (institutional, economic, legal, etc.);

interconnection of processes of investment of resources (monetary, financial, intellectual) and obtaining results.

The functioning of the organization and the project differ significantly from each other according to such criteria as the type of problems solved, the nature of the activity, the degree of intensity of resource use, the possibility of using the accumulated experience, the price of errors, etc.

The main properties of the project are scale, complexity, quality and duration. By nature and scope of activity, industrial, organizational, economic, social and development projects are distinguished.

The main features of the project: quantitative measurability, time horizon, target orientation, life cycle, systemic functioning of the project, its elemental composition, existence in a certain external environment, etc.

Additional project features: resource constraints; uniqueness, the latest tasks and problems; complexity;

Depending on how the implementation of one project affects the results of another, there are projects: independent; mutually exclusive; conditional; replacements; synergistic. Projects are also classified according to the following criteria: class, type, type, scale, complexity, duration.

The project takes place surrounded by a dynamic external and under the influence of internal environments. Factors of the project's immediate environment include the areas of finance, sales, production, material and personnel support, infrastructure, as well as the management of the enterprise; to the internal environment - economic and social conditions for the implementation of the project, its organizational structure, participants, project management style, methods and means of communication. Environmental factors include: political, economic, social, legal, scientific and technical, cultural, natural and environmental, infrastructure

Project participants: initiator (author of the idea), customer (future owner and user of the project results), investor (invests in the project), project manager (legal (individual) person to whom the customer and investor delegate the authority to implement the project - planning, control and coordination of work of all project participants), project team (specific organizational structure headed by the project manager and created for the period of the project), contractor (project participant, entering into relations with the customer and assumes the obligation to perform work under the contract), the subcontractor (enters into contractual relations with a contractor or subcontractor of a higher level), the designer (performs under the contract design and research work within the project), the general contractor, suppliers, li censors (allocate licenses for the right to own a land plot, conduct trades, perform certain types of work and services), authorities, land owner, producer of final products of the project, consumers of final products, other project participants.

The stages of project management include:

* start and construction of the project;

* current management and coordination;

* crisis of the project;

* completion of the project.

1. Stage of start and construction of the project

1.1. Strategic project management

Analysis of the external environment of the project, analysis of participants, determination of the purpose and hierarchy of goals, limitations and complexity, analysis of the break-even of the project, selection of project efficiency criteria, assessment of project risks, consideration of alternatives to project options

1.2. Operational project management

Project analysis by aspects, development of project documentation, screening, development of a schedule of works

1.3. Instrumental project management

Organization of the project and determination of its team, forms of communication, material and regulatory support, forecasting of sales and calculation of project costs, search for sources of financing

2. Stage of current management and coordination

2.1. Strategic project management

Public development, product specification, organizational structure management, contract management, revision

2.2. Operational um. Project

Planning and control

2.3. Financial planning

Resource Management, Risk Management

2.4. Control

Monitoring and evaluation, regulation of corrective influences, control of work, cost control, quality control

2.5. Instrumental project management

Project management, joint work technique, advanced training, introduction of certain cultural and ethical norms

3. Stage of project crisis

3.1. Strategic e.g. Project

Change of goals, change of requirements for the project, change management

3.2. Operational um. Project

Project improvements (new goals - new results), analysis of an improved project

3.3. Instrumental um.

Maintaining consensus or eliminating conflict, changing or moving personnel

4. Project completion phase

4.1. Strategic e.g. Project

Project shortening, case completion

4.2. Operational um. Project

Evaluation of the project status, development of documentation for the completion of the project, transfer of experience

4.3. Instrumental project management

Management of the transfer of ownership, implementation of measures to reduce the project, assessment of personnel



The life cycle of the project is the period of time from the project plan to its completion, which can be characterized by the moment of implementation of the first costs of the project (the appearance of the project) and the receipt of the last benefit (liquidation of the project).

According to the UNIDO classification, there are three phases of the JCPS: pre-investment, investment and operational, which, in turn, branch out at the stage.

Pre-investment phase of the stage: pre-identification; identification; preparation; development and expertise; detailed design. In the pre-investment phase, research is carried out to determine investment opportunities, analysis of alternative options and preliminary selection of the project, as well as the preparation of the project: preliminary justification and detailed development, conclusions on the project and the decision on its investment.

At the investment phase, the following works are carried out: establishing a legal, financial, organizational basis for the implementation of the project; acquisition and transfer of technology, as well as major design works; land acquisition, construction work and installation of equipment; pre-production marketing, as well as ensuring the supply and formation of the company's administration; recruitment and training of personnel; commissioning of the enterprise.

The operational phase is considered both in terms of short-term and long-term principles. The first relates to the beginning of production, when there may be problems of purely technical and production, and the long-term approach is related to the chosen strategy and the total costs of production and marketing, as well as sales revenues. The main stages of the operational phase are commissioning; replacement and update; expansion and innovation; final evaluation of the project.

The duration of the project cycle depends on a large number of circumstances, primarily on the type of project and its participants. The cost of pre-investment research is in line with the following factors: the scale and nature of the project; the type, boundaries and depth of pre-investment research; category of customer and research contractor; time and effort required to collect and analyze information.

The World Bank's approach to the classification of project stages is to divide the project cycle into 6 stages: identification, development, expertise, negotiations, implementation and final assessment; the first three form the design phase, the latter - the implementation phase.

Identification - refers to the choice or generation of such thorough ideas that can ensure the fulfillment of important development tasks. At this stage, a list of all possible ideas suitable for achieving economic development goals should be drawn up.

Stage of development. This requires a consistent clarification of the project in all its parameters, namely, its technical characteristics, taking into account its impact on the surrounding environment, efficiency and financial feasibility, acceptability for social and cultural reasons, as well as the scale of organizational measures. The development of the project includes narrowing the circle of ideas proposed at the first stage of the cycle by studying them in more detail. It is possible to conduct several types of research, including preliminary engineering design, analysis of economic and financial feasibility, consideration of administrative management systems that are necessary for the successful implementation of the project and its subsequent operation, evaluation of alternative options under the point of view of environmental protection, assessment of the impact of the project on the local population and its most vulnerable groups, etc. The more we know about different approaches to project management, the more opportunities we have to reject unsuccessful options and begin a detailed study of the selected project.

The examination provides a final assessment of all aspects of the project before requesting or deciding on its financing. At the final stage of the project development, a detailed justification of its feasibility and feasibility is being prepared, indicating those components of the project that will give maximum profit.

At the stage of examination, attention, as a rule, focuses on the best option.

There is a detailed study of financial and economic efficiency, uncertainty and risk factors, as well as individual changes in management or policies that may affect the success of the project.

At the stage of negotiations, the investor and the customer who wants to receive funding for the project are making efforts to reach an agreement on the measures necessary to ensure the success of the project.

The agreements reached are then formalized as documented legal obligations. After negotiations, a protocol of intent, a memorandum or other documents reflecting the agreements reached are drawn up.

The implementation of the project is understood as the implementation of the necessary work to achieve its goals. At the implementation stage, control and supervision of all types of work or activities is carried out as the project develops.

The procedure for conducting control and inspection should be agreed at the stage of negotiations.

At the stage of final evaluation, the degree of achievement of the project goals is determined, conclusions are drawn from the acquired experience for its use in subsequent projects. During this stage, it is necessary to compare the actual results of the project with the planned ones.

Quite common criteria for rejecting project ideas are:

insufficient demand for the proposed product obtained as a result of the project implementation, or the lack of significant benefits from this product;

high cost of the project compared to the expected revenues;

lack of obligations on the part of the organization or people who will benefit from the project;

lack of political support;

technology that is not suitable for the project;

excessive scale of the project, which does not correspond to organizational and managerial capabilities;

excessive risk of the project;

high cost of raw materials and significant costs for the payment of skilled labor.

Aspects of project analysis:

- marketing

- technical

- institutional

- ecological

- social

- financial

The analysis of the implementation of the project involves answers to questions:

- selection of alternative project options was carried out;

- identified the main organizational and political problems that may affect the fate of the project, and determined that they can be solved;

- the expected benefits and costs are determined;

- there is full support from both the government and other project participants.

Model of evaluation of additional benefits: calculation of the increase in benefits obtained through the implementation of the project multiplied by the price of benefits.

Additional cost estimate model: determining the number of additional resources needed multiplied by their price.

Obvious material benefits (costs due to a decrease (increase) in costs or the receipt of additional income (expenses), the value of which, as a rule, is obvious, which makes it quite easy to determine their financial value.

Usually, obvious costs and benefits are used to calculate the financial analysis of the project, since they are based on the assessment of benefits and costs, taking into account market prices.

Implicit benefits (costs) - side benefits (costs) that accompany the project. They are related to the economic or social consequences of the project and are indirect in nature.

Implicit benefits (costs) are necessarily reflected in the economic assessment of the project, when its attractiveness is assessed from the standpoint of society as a whole. To assess benefits and costs from the point of view of economic analysis, it is desirable to use an alternative cost of resources and products.

The methodology for assessing implicit benefits and costs involves the use of the following techniques:

- determination of prices of goods and services of related markets in which these implicit benefits and costs have a quantitative dimension.

- indirect valuation, or valuation of the prices of hypothetical market goods (a survey of people affected by the project, whether they would be willing to pay or receive compensation if there was a market for these implicit benefits or costs);

- maximum - minimum value - determination of the quantitative value of implicit costs, which the benefits should exaggerate.

An alternative cost is the lost benefit of using limited resources to achieve one goal instead of another, the best remaining option.

The concept of alternative cost is key in project analysis.

Classification signs of costs:

- the possibility of reflection in the accounting statements (accounting and economic);

- the degree of dynamics of costs depending on the increase or decrease in production volumes (constants, variables);

- the period of cost (long-term, short-term);

- method of attribution of costs per unit of production (average, marginal);

- origin of costs (operational, financial);

- the degree of coverage of the real cost;

- possibility of distribution.

All expenses whose changes are not directly related to the volume of sales are called permanent (depreciation, administrative overhead, insurance, rent and similar mandatory payments).

The theory of rational behavior of the company requires determining not only the value of average costs per unit of output (average general, medium variables and average constants), but also the values of marginal or marginal costs. The limits are those additional costs that will require the manufacturer to produce one additional unit of production.

One of the most important principles of the manufacturer's behavior: to increase production until the marginal income is equal to the marginal costs.

Operating expenses include the amount of all payments for material resources, remuneration, overhead costs associated with the production of products and the functioning of the enterprise.

Their goal is to assess the effectiveness of the company and the impact on it of the appropriate method of financing (the ratio of borrowed funds and equity).

The replacement cost, or the methodology for assessing the TMZ at the purchase price of the next unit (next-in-first out - NIFO), ensures the reproduction of sufficient funds for the purchase of a new unit with the operation of the old one.

Complex or inseparable - losses that cannot be divided into components and identified with specific actions (equipment insurance, electricity).

The concept of estimating money over time: the value of money over time changes taking into account the norms of profit in the money market. In the process of comparing funds, two concepts are used: the future value of funds (FV) and the present value of funds (PV).

Future value is the amount of funds invested at the moment, in which they must be converted after a certain period of time, taking into account a certain interest rate.

Present value is the future amount of cash receipts given taking into account a certain interest rate to the present period.

Interest rate is the measurement of the time value of money, the amount of interest on an investment that can be received for a given period of time.

Investing in a short period of time, then use a simple percentage - the amount that is accrued on the initial value of the deposit at the end of one period. It is calculated by the formula:

And = r ? and? n,

where I - monetary expression of interest, the amount of interest money accrued during the investment period;

p - the initial cost of the deposit;

i - процентна ставка;

n - the number of payment periods.

The future value is calculated as follows:

FV = PV + I

Investing in a long period of time - a complex percentage - the amount of income that is formed as a result of investing, provided that the amount of the accrued interest is not paid after each period, but joins the amount of the principal deposit and in the subsequent payment period itself generates income.

FV = PV(1 + i)n,

where i is the interest rate in current or real terms;

n - the number of years or term of service of the project;

(1 + i) n - коефіцієнт (фактор) майбутньої вартості для i та n.

Compounding (accrual) - a transaction that allows you to determine the value of the final future value with the help of complex interest.

Discounting is the process of determining the present value of a cash flow by adjusting future cash receipts using a discount ratio.

The cost of equal payments (or receipts) that are made at the same intervals during a certain period is an annuite. There are the future value of the annuity (the cost of the annuity at the time of the last payment) and the present value of the annuity (discounted annuity amount at the date of the last payment).

The project analysis uses two rates: the real interest rate (r) - the rate of return on capital excluding inflation and the nominal interest rate (i) - the rate of return from the investor's position in the private market, which includes inflation (t ) and therefore is determined by summing up the real rate of interest and the rate of inflation. The value of the interest rate is influenced by the profitability and nature of investments, the value and rate of inflation, the risk associated with investments.

i = r + t,

where r is the real interest rate (return on investment); t is the rate of inflation.

If inflation has a significant rate, then the calculation of the nominal interest rate is carried out according to the formula of complex interest:

i = r + t + r · t,

An inflation premium is a premium for inflation expectations, which investors add to the real, risk-free level of income (rate of return).

The value of the real rate is determined by the equation:

Factors (factors) that affect the value of money:

- return on investment - the possibility of making a profit on investments invested in production facilities;

- the value and rate of inflation - trends in price growth over a certain time;

the risk associated with investments is the possibility that the invested money will not be returned, despite promises to do so.

Cash flow - actual net cash that enters the company (or is spent by it) over a certain period. The concept of cash flow means that the cash flow from the assets of the company is equal to the cash flow paid to the suppliers of capital to the company. Cash flow from assets includes three components: operating flow of money, capital expenditures and increase in net working capital.

Total cash flow from assets is calculated as operating cash flow minus funds invested in underlying assets and net operating capital. Operating cash flow consists of earnings before interest and taxes are paid and depreciation minus taxes. The main reasons that make depreciation an important item of operating cash flow are the significant importance of this item in the investment budget, the reduction of tax liabilities, which allows to increase the company's net income, as well as non-monetary expenses, which, although they belong to costs, can be used for purposes other than investment.

Capital expenditure is the net cost of acquiring assets without selling assets. The difference between the projected increase in current assets and current liabilities is defined as a change in net working capital.

The increase in net working capital is the difference between an increase in current assets due to the implementation of a new project and an automatic increase in payable and accruals.

Cash flow to creditors and shareholders represents net payments to creditors and owners throughout the year. Cash flow to creditors is calculated as interest paid minus net new loans, and cash flow to shareholders as dividends paid minus net new share acquisitions.

The project analysis considers only the agreed (which is a direct consequence of the decision to implement the project) and additional (taking into account all changes in the future cash flows of the company, which are the direct consequences of the implementation of the project) cash flows.

Project cash flow is equal to cash inflows minus outflows or operating cash flow minus changes in net operating capital.

In practice, it is quite difficult to calculate the future total cash flows of a company with or without projects, especially for a large company. Therefore, after determining the effect of the implementation of the proposed project on the cash flows of the company, it is necessary to focus only on additional cash flows resulting from the project. This approach is called the principle of independence. Its application allows you to separate the additional cash flows for the project and, as a result, consider the project as a mini-firm with its own future income and costs, own assets and, of course, cash flows.

Depreciation is a type of expense that the company does not pay to external suppliers as wages, but accumulates into a separate fund, which reduces the amount of taxable income and thus creates additional cash flow.

The practice of evaluating the effectiveness of design decisions is based on the following principles:

- assessment of the investment opportunity is based on the comparison of cash flow formed as a result of the project implementation and the investments necessary for its implementation;

- bringing investment capital and cash flow to a single settlement year (which, as a rule, precedes the beginning of the project);

- discounting of cash flows is carried out at discount rates reflecting the alternative value of capital.

Integral indicators (based on the concept of discounting):

- net discounted cash flows;

- net present value;

- benefit ratio - costs;

- internal rate of return;

- payback period;

- equivalent annuite;

- cost efficiency.

The Net Present Value Indicator (NPV net present value, net discounted value, or discounted benefits) reflects the increase in the value of the firm as a result of the project, since it is the difference between the amount of cash receipts (cash flows - inflows) that arise during the implementation of the project and are brought (discounted) to their present value, and the amount of discounted values of all costs (cash flows - outflows), necessary for the implementation of this project.

,

where Bt - full benefits for the year t;

Ct - full expenses for the year t;

t - the corresponding year of the project (1, 2, 3, ... n);

n - project life, depth of horizon in years;

i - discount rate (interest rate).

, .

In cases where the project involves significant initial investments in I0, the calculation of NPV can be carried out using the formula

,

where CFt (cash flow) is the cash flow at the end of the t.

The criterion of selection at net present value means that the project is approved in case of its positive value, that is, as a result of the project implementation, the value of the company will increase. When choosing from mutually exclusive projects, preference is given to those who have higher net current values.

The benefit ratio - costs (B/S) is defined as the amount of discounted benefits divided by the amount of discounted costs, and calculated by the formula

.

The criterion for the selection of projects using the benefit factor - the cost is that when the value of the coefficient that exceeds or equals one, the implementation of the project is considered appropriate. But it is unacceptable to rank on the advantages of independent projects and is absolutely not suitable for the selection of mutually exclusive projects.

Internal rate of return (IRR "internal return on investment", "internal discount rate"). This indicator reflects the discount rate at which the net present value (NPV) is zero.

For investment projects, there is a rigid relationship between the net present value and the discount rate: the higher the discount factor, the smaller the NPV value (see Fig. 13).

To calculate the value of the internal rate of return of the project, you can use the formula

,

where i1 is the discount rate at which the NPV value is positive;

i2 - discount rate, in which the project becomes unprofitable and NPV becomes negative;

NPV1 - net current value at and1;

NPV2 - the value of the net current value at i2.

Economically, the nature of the internal rate of return is the maximum interest per loan that can be paid for a period equal to the life cycle of the project, provided that the entire project is carried out only at the expense of this loan.

The payback period (RV) demonstrates how long the project will cover the costs. In projects that last more than a year, the payback period always involves discounting based on the value of money by time.

To choose between projects that have different life cycles, use the equivalent annuity (EA) criterion, or the average annual net present value calculated by the formula

,

where NPV is the net present value of the project;

A1 - the present cost of the annuity at the specified discount rate and the life cycle of the project.

The selection of projects using this indicator is carried out according to the highest value of the equivalent annuity, since infinite reinvestment is envisaged until the lifespan of all projects ends at the same time.

The criterion for making a decision that evaluates projects only by the costs themselves is called cost efficiency. It can be applied when there are two or more alternative (i.e. competing or mutually exclusive) approaches to obtain the same result.

Return on investment (RI) - an indicator that reflects the growth of the value of the company per 1 UAH. Od. Investment. The calculation of this indicator is carried out according to the formula

.

This indicator estimates cash receipts in the t-th year received through investments (CFt) with the value of I0's initial investments.

Creterius Bruno is used to assess the project's potential in replacing imports. This indicator determines whether the country saves foreign currency on domestic production or export of goods as a result of the project. At the same time, the criteria for net savings of foreign currency due to the refusal to import goods, which are now produced due to the project or export revenues, are divided by the costs of domestic production (project) of this product.

This criterion shows whether it is justified in terms of using foreign currency to export or produce and consume goods within the country as a result of the proposed project, instead of continuing to import it.

When choosing a project, the investor company should determine its own system of priorities, which may include the following possible options:

social significance of the project;

influence on the image of the investor company;

compliance with the investor's goal;

market potential of the product being created;

compliance with the financial and organizational capabilities of the investor;

environmental friendliness and safety of the project;

level of risk;

compliance with the regulatory and legal environment of the project implementation.

The competition of projects provides for: development of conditions of the competition;

creation of competitive councils and expert groups;

clarification of the criteria system;

systematization of replenishment and clarification of the database on promising projects and developments;

holding competitions;

analysis of the completeness of coverage of problems by the winners of the competition and the development of requirements for additional developments.

The project selection procedure is based on the principles that the state:

- can perform the functions of an intermediary and organizer of investment activities, create an appropriate infrastructure;

provide investors with direct and indirect support if it is in their interests or participate in joint business activities;

- can act as the founder of new organizational forms of innovation and investment policy, as well as the initiator of the creation of special investment funds for the concentration of funds from various sources in order to implement priority projects for the state.



The criteria for the selection of investment projects are conditionally divided into the following:

target criteria;
external and environmental criteria;
criteria of the recipient carrying out the project;
criteria of scientific and technical perspective;
commercial criteria;
production criteria;
market criteria;



criteria for regional features of the project implementation.


The first group of criteria determines the direction of investments to be supported by the state, others relate to a specific project. The criteria of each group are divided into mandatory and evaluative.

The choice of formal criteria for deciding on the financial or economic adoption of a project depends on various factors, such as the market perspective, the existence of restrictions on resources to finance the project, fluctuations in net flows of financial resources and the possibility of obtaining benefits when acquiring resources. The most common are the integral indicators: net present value (the difference between the amount of cash receipts that arise during the project implementation and are brought to their present value and the amount of discounted values of all costs necessary for the implementation of this project); benefit ratio - costs (the amount of discounted benefits divided by the amount of discounted costs); internal rate of return (discount rate, in which discounted inflows of funds under the project are equal to discounted outflows); equivalent annuity (the ratio of the net present value of the project to the present value of the annuity at the set discount rate and the life cycle of the project).


To select project options and make a decision on its feasibility, it is necessary to use informal procedures to take into account the values of all factors and relationships that allow us to conclude that the project is feasible. When choosing a project, the investor company should determine its own system of priorities, which may include such possible options as the social significance of the project, the impact on the image of the investor company, compliance with the investor's goal, the market potential of the product being created, compliance with the financial and organizational capabilities of the investor, environmental friendliness and safety of the project, the level of risk, etc. When evaluating these criteria, expert and analytical methods are used: building a tree of goals, a tree of problems, analyzing the sufficiency of existing organizational structures.


External and environmental criteria



legal support of the project the possibility of influencing the perspective legislation on the project reaction of public opinion to the implementation of the project the presence of harmful products and production processes (positive, negative, neutral)
impact of the project on the level of employment

Criteria of the recipient carrying out the project


management skills and experience of entrepreneurs, quality of management personnel, competence and connections, characteristics of third-party managers of marketing strategy, availability of experience in the foreign market data on financial capacity, stability of financial history achieved results and their trends data on growth potential
diversification indicators (high, low, medium)


Scientific and technical criteria


prospects of scientific and technical solutions used patent purity of products and patentability of technical solutions, using the prospects for the use of obtained results in future developments
measure of influence on other projects of state interest

Financial criteria


the expected rate of net present value of the value of the internal rate of return, which satisfies the investor's compliance with the project criteria for investment efficiency, the payback period and the balance of real cash flows, the stability of income from the project, the possibility of using tax benefits to assess the period of product maintenance in the market, the probable volume of sales by year the need to attract borrowed capital (third parties or banking) and its share in investments
financial risk associated with the implementation of the project


Production criteria



availability of raw materials and necessary additional equipment the need for technological innovations for the project availability of production personnel (by quantity and qualification) the possibility of using production waste
the need for additional production facilities (additional equipment)


Market criteria



compliance of the project with the needs of the market assessment of the total capacity of the market for the proposed and similar products (services, technology) until the release of the proposed products on the market (low, medium, high) assessment of the probability of commercial success elasticity of the price of products the need for marketing research and advertising to promote the proposed product to the market compliance with the project with existing sales channels assessment of obstacles to market penetration protection from outdated products
assessment of the expected nature of competition (price, in the field of quality, etc.) and its impact on the price of the product

Regional criteria


resource opportunity of the region measure of social instability
state of infrastructure (telecommunications, banking, transport communications, etc.)



The managerial approach to managing the rational structure of the future project is to choose such technology and production volume that minimize costs. If the sales market is unsustainable, it is almost impossible to manage constant costs. Break-even point is the volume of output at which zero profit is provided, that is, the income from the sale is equal to the cost of production or the result from the sale after covering variable costs is sufficient to cover fixed costs. The break-even accounting point is determined by equating net profit to zero. Achieving a break-even financial point allows you to cover not only operating expenses, but also achieve a certain level of income, which allows you to meet the needs of investors.


A project at a break-even financial point has a payback period that is exactly equal to the project lifecycle, negative NPV and zero IRR.

A cash break-even point can be determined if the operating cash flow is zero. The project at the point of cash break-even never pays off. Its NPV is negative and equals the sum of the initial costs.


The purpose of the break-even analysis and the determination of the volume of products for which the volume of sales revenue is equal to the costs.



Break-even analysis involves the following assumptions:

* does not take into account changes in production stocks from period to period (production volume is equal to sales);


fixed operating expenses are the same for any production volume;


* variable citrates vary in proportion to the volume of production, and therefore the total amount of costs also varies in proportion to the volume of production;
* the price of the product is considered a constant value during the project cycle;
* the share of sales of the product in the amount of revenue does not change;
* fixed costs are considered permanent.

Break-even point is determined by the formula:

where FC - fixed costs; P - the price of the unit of the product; VC - variable costs per unit of product

Operating liveridge (OL) is a percentage change in the operating cash flow relative to the percentage change in the quantity of products sold. It is a key indicator of break-even levels of products. It indicates the degree of dependence of the project or company on fixed costs, and the amount of operational liverage indicates the sensitivity of operating cash flows to changes in sales volume.

Projects usually depend on different options for management decisions that can be made in the future. These decisions are very important, but the traditional analysis of discounted cash flows does not take them into account.

Capital budgeting occurs when profitable projects do not have sources of financing. Traditional analysis of discounted cash flows is questionable in this case, since NPV no longer serves as an appropriate measurement criterion.

Each project is implemented in the future, which, of course, is accompanied by some elements of uncertainty of events related to the project. The analyst should consider all possible unfavorable options in the future. When analyzing the project, risk and uncertainty should be distinguished. Risk is present when probability can be determined on the basis of the previous period, and uncertainty - at a time when the possibility of consequences is determined subjectively, since there is no data.

Under the risk in the project analysis understand the probability of a certain level of losses by the company of part of its resources or lack of income, or the appearance of additional costs in the implementation of the project. The purpose of risk analysis is to provide potential partners or project participants with the necessary data to decide on the feasibility of participating in the project and measures to protect them from possible financial losses.

There are qualitative (determination of risk indicators, stages of work in which it occurs, its potential zones and risk identification) and quantitative (provides for a numerical determination of the size of individual risks, as well as individual projects as a whole) types of risk analysis.

The most well-known methods of risk analysis are the sensitivity method, the scenario method and the Monte Carlo method. The essence of the sensitivity analysis is to measure the sensitivity of the main resulting indicators of the project (NPV or IRR) to a change in a particular variable value. When analyzing scenarios, the expert combines all the possibilities for undefined variables in a greater number of scenarios, each of which involves only one combination of estimating a separate variable value. The Monte Carlo method can be seen as a kind of imitation of the future in the laboratory. Since the corresponding program selects the values of the input variables from random probability distributions, each result reflects the possible state of affairs for the project in the future.

Risk management involves identifying, analyzing, assessing risk and developing measures to reduce it.

Risk reduction methods include: risk distribution among project participants (transfer of part of the risk to co-executors); reservation of funds to cover unforeseen expenses; reducing risks in terms of financing; insurance.

To assess the effectiveness of risk reduction measures, you can use this scheme. First, it is necessary to determine the risk that has the most important impact on the project and determine the overspending of funds, taking into account the likelihood of adverse events.

Then a list of possible measures aimed at reducing the likelihood and danger of a risky event and additional costs for the implementation of the proposed measures are determined. At the final stage, the necessary costs for the implementation of the proposed measures are compared with possible cost overruns due to the onset of a risky event and a decision is made to implement anti-risk measures or abandon them.

As an indicator of the sensitivity of the project to the change of certain variables, the indicator of elasticity of the net present value (NPV), which is calculated by the formula, is used.


The advantage of this indicator is that its value does not depend on the choice of unit of measurement of various variables. The greater the elasticity, the higher is the degree of dependence of the NPV or the internal rate of return (that is, its sensitivity) on the analyzed variable project.



The algorithm for conducting sensitivity analysis involves:

  • - determination of critical variables affecting the net present value (NPV));
  • - assessment of the impact of changing one variable project (with the immutability of all others) on the amount of net present value;
  • - calculation of the effect of the change in the variable under investigation on the value of deviation of the received NPV from the base (assessment of elasticity, sensitivity to changes in net present value from the change in the variable project);
  • - determination of the boundary (critical) value of the variable and its possible permissible deviation from the basic scenario of the project;
  • - calculation of the indicator of sensitivity and critical value for each variable of the project and their ranking by kill (the higher the sensitivity of the NPV, the more important the variable for the value of the net present value, and therefore for the project).




The purpose of marketing (commercial) analysis is to justify the commercial capacity of the project, assess the possibility of implementing this product in the selected market and obtain a level of income that would cover the costs of the project and satisfy the interests of investors.

Demand is the ratio between the price and quantity of goods that consumers desire and can purchase at a given price in a certain period of time under other immutable conditions. Demand is generated by markets that are in a state of development, or buyers.

There are several possible ways in which company A can develop markets:


Encourage existing consumers to buy more units from Company A and buy these units more frequently;

- to convince consumers who buy products from competitors to buy from company A instead;
- to convince consumers who have never bought products offered by company A or its competitors to buy this product before.


The increase in the level of consumption among existing buyers can lead to additional demand, which does not require the emergence of new buyers in the market.

The purpose of marketing research is the collection, analysis and appropriate interpretation of this information, as well as the creation of a base for making decisions of a strategic and marketing nature.



Marketing analysis of the project offers a multi-stage method of market analysis:

  • determination of qualitative aspects and limits of marketing analysis;
  • consideration of the concept of demand development, its main forms and demand development strategy;
  • analysis of the macro environment and market environment;
  • development of the project marketing concept.




To establish the focus of the project, it is necessary to determine which market the project is aimed at (national or international) and whether it is at odds with foreign and domestic state policy.

Marketing research is extremely important for the development of the project, which are systematic and processed information on the market and market environment, which contain analysis of markets, competition, distribution and supply channels.

The marketing concept covers marketing strategy and operational activities necessary for the implementation of the project strategy and the achievement of project or corporate goals. It includes all activities that allow you to implement the project strategy by developing a marketing strategy and marketing complex.

When forming a marketing strategy, first of all, it is necessary to take into account at what stage of the life cycle the industry, the structure of the industry, the essence and power of five competitive forces, the scale of the activities of competitors are located.

The marketing complex provides for the definition of a toolkit that allows you to optimally combine all components - product, price, promotion and sales - to achieve the established goal of the project.

Marketing plan - a document that provides a detailed assessment of products and marketing strategies according to the following scheme: products currently on sale; consumers who buy this product; competitors present in the market of this product; established marketing purpose of the project; tactical means of marketing; detailed incentive plan; impact of the project on existing product groups.

The purpose of the technical analysis is to substantiate the technical feasibility of the project and determine the level of its capital and current costs.


The main task of engineering design is the development of a functional scheme and physical plan of an industrial enterprise necessary for the production of specific products, as well as determining the value of investment and operational costs.

The implementation of the technical analysis of the project involves substantiating the location of the project and its auxiliary production, determining the scale, timing of the project, taking into account possible changes in the product market, project development, preparation of the project scheme of the enterprise and the schedule of the project, setting standards and production standards, procedures for launching a new production, designing material and technical support of the project and its technical support. infrastructure, determination of operating conditions and repair of equipment.

The main criteria for determining the rational placement of the project are the availability of raw materials and resources, the proximity of consumption centers and the existence of the main elements of infrastructure. The determination of the scale of production is influenced by: the capacity of the product market, environmental barriers, the organization's ability to implement large projects, technological risks and the ability to reduce production costs due to the scale effect.


The scale (or size) of the project is understood as the production capacity that allows you to produce a certain amount of production under certain conditions at a certain time.



Procedure for technical analysis of the project:


  • determination of the location of the project and the construction object;
  • justification of the choice of the scale of the enterprise and the design volumes of production;
  • selection of production technology and equipment;
  • identification of the infrastructure of the design object;
  • development of project documentation;
  • preparation of the project implementation schedule;
  • preparation, development and quality assurance of production, establishment of standards and norms of production;
  • estimation of costs for the implementation and operation of the project;
  • design of material and technical supply of the project;
  • calculation of costs of production and sale of project products.




The main factors influencing the choice of technology include the availability of raw materials and its availability for use in this technological process; the possibility of using existing equipment; achieving the specified quality parameters of the final product; determination of the scale of the project, its technological structure, the degree of automation of project production; existing environmental requirements for the production process; availability of the necessary infrastructure.

The possibilities of project implementation largely depend on the availability and quality of all elements of infrastructure support: production, warehouse and social facilities, water supply, sewerage, energy supply, telecommunication systems.

Project development management includes: selection of designers and conclusion of contracts based on the results of the competition, planning and implementation of design works and services, design and coordination of design and estimate documentation.

A significant factor determining the size of the production capacity of the project is the possibility of obtaining economies of scale by reducing the cost of a unit of output due to an increase in its output.

The next factor affecting the size of the project is the amount of investment that the project needs.

The load factor of the enterprise is a measure of the actual size of production, which is achieved by the enterprise in comparison with the design capacity and characterizes the maximum projected production volume.

The period of increasing production is the time in which the planned design capacity of the enterprise is achieved.


The main principles for determining the need for equipment are: rated power of the equipment; the possibilities of this equipment (the degree of load at different technological stages of production); the degree of loading of equipment (the number of machine hours of operation of each of the groups of equipment); planned production program, which is designed in the project.

The purpose of social analysis is to determine the acceptability of options for the implementation of the project from the point of view of users, the population of the region where the project is carried out, the development of a project implementation strategy that allows to gain support from the population, achieve the goals of the project and improve the characteristics of its social environment.


The analysis of the project involves determining the impact of the project on the people participating in it, using its results, receiving appropriate benefits, on producers, suppliers and other project participants.


The main components of social analysis are: assessment of the population living in the project area, from the point of view of ethnic-demographic and socio-cultural features, living conditions, employment, recreation and determining the degree of impact of the project on these parameters; establishing the level of adequacy of the project to the culture and organization of the population in the area of its implementation; development of a strategy to support the project at all stages of preparation, implementation and operation by the population of the district.

When analyzing the social environment of the project, the analyst should segment, determine the target groups of the population to which the project decision is aimed, identify changes that may occur in the social organization and lifestyle of the project population as a result of the project implementation.

An important aspect of the study of the social environment is the characteristic of demographic processes and ethnographic structure of the population, which is usually submitted by gender, age, belonging to a certain ethnographic group, health status, level of education and territorial distribution of the population. When studying the demographic situation, cultural traditions, employment structure, income level, housing conditions are considered.


When conducting a social analysis of the project, analysts should predict the social development of the regions to which the project relates. Based on the study of state policy, priority directions of regional development and criteria for supporting projects, sociologists project the social environment of the project.


One of the conditions for achieving the success of the project is to gain commitment, support the active population and organizations for the operation and maintenance of the project. Their participation can take many forms: advice on the selection and planning of investments, the provision of labor, materials or financial investments, project monitoring, etc.


When designing the social environment of the project, it is necessary to determine the scorecard that reproduces the development of the project region. The most common is the system of social indicators that reflect the demographic condition, employment, social structure, living conditions, public life, health care and crime rate of the project region.


The purpose of the environmental analysis is to establish the impact of the project on the environment, to assess all benefits and costs incurred as a result of this impact, and to form measures necessary to mitigate or prevent environmental damage during the project.


Environmental analysis is an important part of the development of the project, which determines the types of impact of the project on the environment, assesses all the benefits and costs that will be incurred as a result of this impact, and develops measures necessary to mitigate or prevent environmental damage during the implementation and operation of the project.



Elements of environmental analysis of the project are present at each stage of its life cycle. At the stage of generation of the project idea, the project category and the scale of work on environmental analysis, qualitative and quantitative composition of the project environmental analysis team are evaluated. Depending on the degree of negative impact on the environment, there are: projects that rarely have a negative impact on the environment; projects with significant negative impact on the environment, but to which measures aimed at mitigating this negative impact can be quickly applied; projects with significant negative impact on the environment that require detailed environmental assessment; projects aimed at changing the environment.





The scheme of ecological analysis is as follows:


  • analysis of primary environmental conditions;
  • identifying the positive and negative consequences that will occur in the event of the project;
  • justification for eliminating negative consequences that cannot be eliminated;
  • identification and analysis of alternative opportunities for the project implementation, development of measures aimed at reducing the negative impact of the project on the environment;
  • training and training of environmental personnel;
  • monitoring of the environment and analysis of the impact of the project implementation on it.





To determine the degree of impact of the project on the environment, it is necessary to establish what types of impacts will accompany the project. These influences can be classified: by time of action; if possible, elimination; by the method of influence; coverage of the territory; by origin; the possibility of accumulating consequences.


For cost assessment of the project's consequences, as well as comparing the environmental impact of several projects, ranking methods, ball evaluation and other methods of expert evaluation are used. Monetary assessment of environmental impact is carried out to determine the financial and economic attractiveness of the project.


In the conditions of the existing alternative to the practical implementation of the project and when comparing possible options at the stage of project formulation, when the enterprise is not yet functioning, several methods of assessing the impact of the project on the environment are used: the method of checklists; matrix method; Flow chart method; method of joint analysis of maps. Modern international practice of assessing the environmental consequences of projects most often uses methods based on determining the market price of production of goods and services (in accordance with the following three approaches: determining resource productivity, the principle of lost profit (income), alternative cost) and direct costs associated with the implementation of the project, which primarily include methods for analyzing cost efficiency and assessing preventive costs.



The purpose of the institutional analysis of the project is to determine the degree of influence of external (political, economic, social cultural, legal, etc.) and internal (level of qualification of the personnel involved in the project, management of the organization that carries out the project, etc.) factors on the possibility of successful implementation of the project.



As the main tasks of institutional analysis, the following can be distinguished:

  • analysis of the political orientation and macroeconomic policy of the government;
  • identification of project objectives and directions of development identified by the government as priority;
  • assessment of the level of project management and determination of parameters of its successful implementation;
  • characteristics of the personnel potential of the organization and assessment of its ability to successfully perform the tasks;
  • analysis of the consistency of the project goals with the interests of its participants;
  • diagnosis of the organizational structure and the degree of its compliance with the achievement of the project results.



When conducting institutional analysis of analytics, it is necessary to:



scan the conditions for the project implementation (political and legal environment, state policy, macroeconomic regulation, management level, labor potential and management structure);
assess the degree of impact of conditions on the effectiveness of the project, determine additional inflows and outflows of funds while observing the specified conditions for the implementation of the project in a certain environment;


develop measures and a program of possible counteraction to potentially negative impact on the project of external factors, as well as assess the feasibility of providing technical assistance to achieve the established goals of the project.


The assessment of external factors involves the study of the political and legal conditions for the implementation of the project, state policy on investment, taxation, regulation of import and export operations and foreign trade activities, as well as the legislative framework on labor. When considering large-scale projects, the analyst should determine the possibility of state support for the project under consideration and the need for bureaucratic approvals.



Analysis of internal factors contains an assessment of the level of management of the project team, the possibility of effective project cycle management. This stage of training involves consideration of the compliance of the level of qualification and experience of the management team, the degree of its motivation, the commonality of their corporate culture with the goals and values of the project and the company implementing it. It is also important to analyze the labor potential of the personnel who are planned to be involved in the implementation of the project and the organizational structure of management.


All possible components of the impact on the project should be expressed in the amount of additional costs, which will determine the viability of the project in the institutional space under consideration.


Financial analysis of the project is carried out in order to determine the financial viability of the project to decide on the feasibility of its investment and financing.


Analytical work on assessing the financial aspects of the project requires the establishment of the most attractive possible alternatives to the project in conditions of uncertainty, as well as the development of a strategy for managing or controlling the critical parameters of the project.


The financial analyst, developing the project, is guided by a methodology based on the concepts of project costs, changes in the value of money over time, alternative value, cash flow.


Preparation of the forecast balance sheet and profit statement is necessary to assess the level of profitability of the project, the amount of expenses for the payment of taxes and repayment of liabilities. This data allows shareholders, investors and financial institutions to obtain the necessary information to make a decision on participation in the project.


The forecast of the profit statement (project profit plan) is based on sales forecasts and the calculation of project costs. In accordance with the basic rules for determining the costs of the project in the preparation of its financial justification, it is necessary to ignore the previous costs, and the cost of project resources should be calculated on the basis of the costs of missed opportunities.


After the profit statement forecasts, the cash flow from the project it generates is projected. The main tasks of the cash flow forecast are to summarize the preliminary calculations of the financial plan (sales volumes, expenses, taxes, capital raising), to ensure the necessary amounts of funds in circulation for certain dates, to clarify the structure of the project capital, to prepare the main indicators of the project's effectiveness.


When forecasting cash flow, the method of depreciation, the impact of liquidation value, the need for working capital, the use of nominal and constant prices should be used.


A very important part of the financial justification of the project is the forecasting of the balance sheet of the document, which reflects the accumulated assets of the company and the sources of their financing, based on the assessment of the movement of funds and other assets and changes in liabilities.


Preparation of financial analysis of the project necessarily contains a block for determining the conditions for financing, selection and rationalization of sources of financing and development of a plan for coordinating financial revenues. financial resources and the amount of profit received.




All sources of investment resource formation are divided into three main groups:

  • own, which are characterized by ease of attraction, high level of profitability of invested capital, reducing the risk of insolvency and bankruptcy during their use, but at the same time have a limited amount of funds raised and there is no external control;
  • involved, marked by high volumes of their possible involvement, external control over the use of resources, a certain complexity of attraction, partial loss of management of the company (when issuing shares);



loans, which under modern conditions have become the main source of financing for projects. They are mainly used to lend to low-risk projects and well-defined ways to successfully implement the project.


Rationalization of the financing structure is one of the stages of the strategy for the formation of investment resources of the company. The main criteria for optimizing the ratio of internal and external sources of financing of investment activities are the need to ensure high financial stability of the company and maximize the amount of profit from investment activities, which is at the disposal of the company's founders at different ratios of internal and external sources of financing.


Rationalization of the formation of investment resources of the project is based on the principle: the weighted average cost of capital should be less than the internal rate of return on the project, since the calculation of the weighted average cost of capital is associated with the calculation of the discount rate for assessing the project, taking into account the level of risk.


The last step of the project financing stage is to coordinate the time of inflow of funds (paid share capital, long-term and short-term loans, proceeds from the sale of products, payables) and their outflow (costs associated with investments and operation of the enterprise).


The purpose of the economic analysis of the project is to establish its national attractiveness, assess its economic efficiency on the basis of the alternative cost of resources used in the project and project products and determine the possibility of promoting the project to the national welfare of the country.


Determining the economic attractiveness of the project is associated with its assessment in terms of the possibility of achieving certain economic goals of the country's development. Evaluation of the economic efficiency of the project is carried out in order to establish the effectiveness of the use of society's resources within the project.



To determine the economic value of the project, the concepts of alternative value, shadow prices, inalienable benefits and costs, transfer payments, consumer surpluses and externalizes are used.


Finding out the economic value of the project provides an opportunity to assess how the positive results (benefits) exceed its negative consequences (losses) for society, what will be the amount of the nation's winnings in the event of the project.



During the economic analysis, it is necessary to adjust financial indicators that largely distort the real value of goods. To do this, it is necessary to avoid the impact of transfer payments on the formation of the cost of project resources.



The social value of resources is determined on the basis of shadow prices. The shadow price is a social assessment of a product or resource, expressed in monetary terms and formed on the basis of: marginal costs of production of the necessary resource; the cost of import analogues based on the equivalent of world prices; the value of the alternative cost of resources spent on the production of this product.


The study of the impact of the project on the country's economy should be accompanied by the determination of the side effects of the project and their consequences.


Analysts should trace and measure only the most important external effects, since it is almost impossible to assess all side effects of the project, and it is impractical.



The implementation of the project can help reduce prices for consumer goods and services (increase consumer surplus), eliminate the shortage of any product, develop the infrastructure of districts, create additional jobs, etc.


No comments:

Post a Comment