Conflict Management
Course: project economics and evaluation
Course code: C11PV
Coursework title: Project Appraisal
Student Number: H00152083
Lecturer: Dr. Esinath Ndiweni
1. Introduction
The work is centred on the importance of project appraisal therefore emphasising on the financial and non-financial techniques of appraisal.
The object and, therefore, the importance of a project appraisal is making an analysis to see whether the project is viable. It is vital to know whether a project is technically feasible and whether it is going to be an economic liability or not.
A project appraisal is an important part of any project and should be taken seriously because a lot rests on it. The effects of a project appraisal are long reaching and have very definite long term effects because of the capital investment that is always required in any project.
Once a decision has been made to go ahead with a project, it is irreversible. Even if, through some catastrophic event, the project has to come to an unpredicted halt, the investment has been made so all could be lost. These high expenditures can be critical, not just for that particular project but for the health and survival of the entire business. As such, this paper combines the importance of both methods in order to help in assessment of project performance.
2. Literature review
Recent literature has been emphasising on the need to consider the use of both financial and non-financial methods when dealing with project decisions. It is fundamental for a project to consider these techniques in order to measure a success of a project. This part of the paper is focused on critically analysing and evaluating these techniques and justifying why both are important. Some of these methods are very simple (e.g. payback period) while others are particularly sophisticated and complex (e.g. Net Present Value, Real Options Reasoning). Simpler methods do not take into account the time value of the money and do not include the risk
Course code: C11PV
Coursework title: Project Appraisal
Student Number: H00152083
Lecturer: Dr. Esinath Ndiweni
1. Introduction
The work is centred on the importance of project appraisal therefore emphasising on the financial and non-financial techniques of appraisal.
The object and, therefore, the importance of a project appraisal is making an analysis to see whether the project is viable. It is vital to know whether a project is technically feasible and whether it is going to be an economic liability or not.
A project appraisal is an important part of any project and should be taken seriously because a lot rests on it. The effects of a project appraisal are long reaching and have very definite long term effects because of the capital investment that is always required in any project.
Once a decision has been made to go ahead with a project, it is irreversible. Even if, through some catastrophic event, the project has to come to an unpredicted halt, the investment has been made so all could be lost. These high expenditures can be critical, not just for that particular project but for the health and survival of the entire business. As such, this paper combines the importance of both methods in order to help in assessment of project performance.
2. Literature review
Recent literature has been emphasising on the need to consider the use of both financial and non-financial methods when dealing with project decisions. It is fundamental for a project to consider these techniques in order to measure a success of a project. This part of the paper is focused on critically analysing and evaluating these techniques and justifying why both are important. Some of these methods are very simple (e.g. payback period) while others are particularly sophisticated and complex (e.g. Net Present Value, Real Options Reasoning). Simpler methods do not take into account the time value of the money and do not include the risk
References: Akalu, M. (2001). “Re-examining project appraisal and control: developing a focus on wealth creation.” International Journal of Project Management 19: 375-383. Hermes, N., P. Smid and L. Yao (2006). “Capital Budgeting Practices: A Comparative Study of the Netherlands and China”, Working Paper, University of Groningen, p.36. Hawkins, C.J., and D. W. Pearce (1971), “Capital Investment Appraisal” (MacMillan Press). Jones, C., Software Assessments, Benchmarks, and Best Practices, Information Technology Series, Addison Wesley, 2000 Verbeeten, F. (1993). "Do organizations adopt sophisticated capital budgeting practices to deal with uncertainty in the investment decision? A research note." Management Accounting Research 17: 106-120. http://www.nibusinessinfo.co.uk/content/strategic-issues-investment-appraisal (accessed on March 24, 2013) http://www.accountantnextdoor.com/investment-appraisal-8-non-financial-factors-that-every-accountants-and-managers-should-consider/ (accessed on 22nd march, 2013) http://www.letslearnfinance.com/advantages-and-disadvantages-of-payback-period.html (accessed on March 23rd, 2013)