Thursday 17 February 2022

Determination of benefits in project analysis

Obvious benefits from the project arise either from an increase in output, which helps to reduce the cost of production, or from the possibility of increasing the price of manufactured products. These are materially tangible benefits, so their quantitative assessment is almost not difficult.

An increase in the physical volume of production is the most typical type of material benefits, the definition of which is based on additional cash receipts arising from the project.

In some cases, the benefits of projects may look like an increase in the quality of products produced, which allows to largely meet the growing needs of buyers of this product, and thus increase sales volumes.

The benefits obtained as a result of the project can also include changes:

qualifications of employees, which makes it possible to improve the quality of products, avoid the risk of marriage, achieve long-term equilibrium;

in time of implementation. This is due, for example, to the construction of specialized storage facilities, which allows the sale of agricultural products during the most favorable prices for it (the sale of grain is not during harvest, but at the end of the year, when the price of it increases);

place of implementation. This type of benefit is most associated with sales projects, when it is assumed that the goods are delivered directly to the consumer;

type of product, such as its sorting and processing. The benefits in this project are due to the fact that in agricultural sorting projects it allows the best vegetables and fruits to be sold fresh at higher prices, and less high-quality goods to be sent for processing, which generally increases the cost of the entire crop.

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