PROJECT MANAGEMENT How to Dermine the Value of the Project? (E)
What is the project? How to select and justify the project? How to plan and execute the project?
Posted: Sep 2010
In everyday's business activities, many opportunities arise that could be considered as projects. If the project is large inough enough ( financialy ), its return on investment and level of priority needs to be determined in order to evaluate it against other projects. These types of projects are called capital projects. They require from company to invest its money—its capital—to implement the project. Capital projects are evaluated on following factors:
Cost/benefit analysis – The costs of the project are compared with the benefits of the project.
Time value of money – The future value of today’s money.
Present value of future payments – The value today of future cash flows.
Risk – Assessment of project failure risks.
Cost/benefit analysis, the time value of money, and risk are components of many financial methods that are used to evaluate a project. Some of the methods are:
Average Return on Investment
Net Present Value
Internal Rate of Return
Every method has it application and ocasion. Before that, it is neccessary to to define the time value of money and the present value of future payments to better understand the formulas.
Continue on Project Management:
1. Project Management Overview
2. 9 Areas of Project Management
3. Project Lifecycle – 5 Stages of Project
4. How to Determinine a Value of the Project?
4.1. Simple Payback
4.2. Average Return on Investment (ROI)
4.3. Net Present Value (NPV)
4.4. Internal Rate of Return (IRR)
4.5. Cost/benefit analysis
4.6. Time value of money
4.7. Present value of future payments
4.8. Justification of Addopted project
5. Project Planning – Project Charter
6. Work Cascading Structure (WBS)
7. Project Scheduling ( Arrow-on-Arrow and Gantt Chart )
8. Project Scheduling ( CPM and PERT )
9. The Responisbility Matrix
10. Resources and Budget Planning
11. Clasification of Projects