Project Evaluation
Evaluation of Economic Potential
- Net present value (NPV) calculation using discounted cash flows for various business scenarios
Our approach
Evaluating the economic potential of a project may take on very different forms depending on what is being
examined. Sometimes a rough assessment by experts is sufficient, while in other cases the evaluation may be
based on specially commissioned reports.
Evaluation normally comprises the following steps:
- Overview of all expenditures over the entire lifecycle. These may include research and development expenses, construction of a production plant, costs of operating the production plant (production costs), marketing expenses, logistics costs, and possibly desinvestigation costs.
- Overview of revenues over the entire lifecycle, e.g. through market analyses and analysis of market factors (volumes, price trends over time)
- Defining scenarios
- Evaluation of the financial criteria (gross cash
flow, net present value, cash flow return on investment, etc.) - Assessing the risks and benefits, e.g. technical feasibility, market behavior, competition
- Inclusion of strategic aspects, e.g. corporate development, core competencies
- Overall evaluation of the plans (e.g. portfolio analysis)
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