Project management professionals and project oriented organizations are faced with the imperative need to manage, invest and implement projects at an increasing rate and with growing complexity and innovation. With this reality, several major challenges come along:
- How to ensure that the organization is optimizing its overall investment in the most valuable projects?
- And how to make those decisions auditable?
- How to take into account the various aspects of a project’s economic attractiveness as well as the non-economic impacts?
- How to make sure that the estimated investment based on which projects are selected for investment is accurate and predictable?
- And how to prevent unpredictable and adverse changes to the cash-flow and funding requirements?
- How to duly account for the ever-present uncertainty and risk in the project estimates and expected return on investment?
- How to properly account or the time-value of money, taxes and depreciation, in evaluating projects and the alternatives to manage the life-cycle of the strategic assets?
- Once a project enters execution, how to ensure that changes and project performance variations are proactively monitored and managed in order to update expectations of the return on investment and to maximize it where possible?
Project Economics and capital budgeting is the process by which organizations make strategic and long-term investment decisions on projects. Selecting and investing in the “right projects” amongst various mutually exclusive or synergistic alternatives is therefore a key priority for project-based organizations.
Making these business-critical decisions should follow a process that ensures efficiency, predictability and auditability of the investment, and therefore based on best practices and supported by appropriate tools and techniques.
This includes, at the very onset of the project, the use of economic indices of project performance, accurate and properly structured estimates of cost, time, benefits realization, risk analysis and contingency, and the resulting project cash-flow based on which the investment attractiveness is evaluated.
While this upfront process is aimed at setting a stable project investment scenario, once the decision is made and the project enters execution, changes and performance variations will inevitably occur, ranging from adversities that need to be mitigated to emerging opportunities that ought to be captured; the real-life story of the project will seldom unfold as initially envisaged.
Salvo Global’s 3-day master class will be providing the latest best practices, supporting tools and techniques on project economics. Delegates will be updated with the latest developments constitutes a key requirement for all project management professionals involved in managing, operating or influencing management and business decisions involving capital projects.