Investment projects: definition from the process perspective

Scandinavian Journal of Management, 1995

Many investments in modern society take place in project networks. This article proposes a project network approach for describing the design and implementation processes in major investments. The design process of major projects is "fuzzy", takes a long time, and is hard to capture. The implementation process, on the other hand, takes place in "semi-hierarchical" networks, and is easier to plan and control. The actor that controls the transformation of the political design process into the implementation process has a unique strategic position in the dynamically changing network. This means linking processes that are characterized by separate logic and network structures. Data from processes of design and implementation of three shopping malls illustrate the theoretical framework.

The growth of an enterprise's value as the basic aim of entrepreneurship is determined by long-term prosperity that is impossible without the implementation of a successful and permanent investment policy. Rational decision-making in the field of investment evaluation is necessary for other stages of the whole investment process. The article deals with a discussion of the results of a questionnaire-based research of enterprises in the Czech Republic that was performed by the Faculty of Business Administration in 2007. It makes use of the part of the research concerning the choice of decision-making criteria. The abovementioned regional investigation in the Czech Republic is then compared to similar pieces of research, both national and foreign. The published article is a part of the solution of the Faculty's research intention 'New Theory of Organizations' Economy and Management and their Adaptation Processes' registered in the Czech Republic under the document No. MSM 6138439905.

2018

The paper offers a scientific and methodological approach to assessing the efficiency of innovative projects which develops and supplements the theoretical bases of innovative projects analysis through the accounting of recursive dependence of investments on such factors of innovative process as (1) the constructive complexity of the product, (2) the number of stages of the innovative process and (3) the innovative capacity of the enterprise. It is also proposed to enter an adjustment factor (multiplier) to reflect the causal connection between the net present value of innovative projects and the abovementioned factors of innovative process and to improve the accuracy of calculation of cash flows under the project linking the assessments with the certain stages of the project and the corporate capacity. This will reduce the overall integral risk of project implementation for potential investors. The author's concept and the system of models for planning the production and innovations allow revealing quantitative correlation between investments, innovations, and sources of financing and can be used for a reasoned strategic decision making by enterprises implementing innovative development model.

The focalisation in the criticism of the systems of investments evaluation, which are formed in the frame of regional policy, is justified, as far as in this sector has been observed an insistence of the decision makers in stagnant mechanisms that in the course of application to them were proved insufficient. Moreover, an unwillingness of the public sector services to proceed in checking the effectiveness of the applied techniques of selecting viable investments has been noted. Afterwards the expiry of also third decade from the application of developmental laws it is realised that a readjustment of methodologies/criteria in evaluating and choosing of desirable investment plans is strongly required. A substantial dialogue should be start for the implementation of a completed, modern and effective system of investments evaluation that will ensure the promotion of viable and efficient investments.

There are some scientific questions related to the NPV and IRR which have not been worked up. From these issues, this paper discusses the economic content of the two categories and the questions of usability for project evaluation and ranking. The main research methods are methodological analysis, model editing and examination of the mathematical formulas. The paper proves that the NPV is the discounted amount of the surplus profit generated above the profit requirement, and points out, that content band of the real reinvestment rate assumption is fundamentally different from everything that can be found about this in the literature. Because of the NPVs are not comparable, the paper systematically eliminates the distortion effects. Thus, the NPV transforms into a special kind of rate, namely, the difference between the factual rate and the required rate of return. This NPV rate (with equal required rates of return) gives the same ranking list as the IRR. The aggregate capital needs is a new conception and gives a new viewpoint to analysis of investment projects evaluation. The paper defines the special content of aggregate capital needs and compiles an index number for it. The paper examines the two main tools of investment project evaluation, i.e. the net present value (NPV) method and internal rate of return (IRR) method. Application appropriateness of the two methods is sharply debated from the first half of the last century. Many writings already were born in the 1950s (see Alchian, 1955; Solomon, 1956; Bierman and Smidt, 1957). Since then the discussion is running. The literature of finance expresses a very determined preference for NPV. In spite of this, business professionals of developed countries apply the IRR in a large proportion for decision-making. For example Arnold and Hope (1990) cite two surveys done in the 1970s and 1980s, demonstrating that the largest British companies (that are otherwise able to pay the best experts) definitely rank the IRR higher than the NPV in practice. They mention that a lot of American surveys prove that the practice prefers the IRR in the USA as well. The practical method preferences are widely researched. Szűcsné Markovics (2012) gives a literature review about the researches on methods which are used by companies throughout the world. Illés and Keszthelyi (1998), Illés (2000) and Daróczi (2004) examined the practical use of different methods based on empirical researches on the complex evaluation of decision-making process. According to my experiences, in business economics literature generally there is not a strong method preference, but the IRR method often seems to be better. Different disciplinary roots According to Volkman's (1997) research, the emergence of method qualification contradiction could be attributed to the fact that finance propagates the more

Economic consultant, 2022

Introduction. The relevance is related to enterprises’ adaptation to rapidly changing external environment conditions, increasing financial and economic stability, cost optimization, and improving the quality of products and services. The project-process approach allows us to respond to changes and implement innovations more effectively. The article aims to theoretically justify the implementation of the project-process approach at the enterprise. Materials and methods. The materials included articles from periodicals and books devoted to project management and production. System analysis and modeling methods were used. Results of the study. The authors presented the organization’s project-process management model and its implementation algorithm. Indicators reflecting the cost of production, the overall level of costs, individual items at the enterprise as a whole, per unit of production, their dynamics, relative change, etc., can form the basis of the system for assessing the effectiveness of introducing and implementing the project-process approach to organizational management. Conclusion. The project-process approach allows organizations to respond more flexibly to changes in market conditions and customer requirements. It facilitates quick adaptation to new technologies, products, and processes. The approach can become a significant tool for increasing enterprises’ competitiveness and success.

Proceedings of the 1st International Conference on Emerging Trends and Challenges in the Management Theory and Practice (ETCMTP 2019), 2020

The paper reveals a comprehensive approach to economic efficiency assessment of large-scale investment projects in the energy sector. Authors consider scientific approaches to integrated assessment and substantiate its advantages when applying it to the assessment of effectiveness for the energy sector. At present, the accuracy of the estimates of the efficiency of investments in the energy sector is of particular importance in terms of the limited financial resources and the increasing capital intensity of deposit development. However, existing methods of determining investment efficiency for complex projects often tend to lead to incorrect results. The integrated assessment approach proposed in the article aims to overcome the shortcomings of existing approaches. Its peculiarity is to consider investment in a complex project as a single system consisting of subsystemsindividual projects. The whole set of projects is classified according to the nature of the mutual influence, which makes the assessment process much easier. The implementation of an integrated approach requires special care in the performance evaluation and is possible in cases of simultaneous implementation of the projects included in the complex, aimed at achieving the same effects and having synchronized time frames of entry. The positive effect of increasing the accuracy of the assessment and, as a consequence, of significantly reducing the risk of economically unjustified investments, far exceeds the cost of making the evaluation procedure more complex under the developed method.

Management and Organization: Concepts, Tools and Applications, 2017

There are some scientific questions related to the NPV and IRR which have not been worked up. From these issues, this paper discusses the economic content of the two categories and the questions of usability for project evaluation and ranking. The main research methods are methodological analysis, model editing and examination of the mathematical formulas. The paper proves that the NPV is the discounted amount of the surplus profit generated above the profit requirement, and points out, that content band of the real reinvestment rate assumption is fundamentally different from everything that can be found about this in the literature. Because of the NPVs are not comparable, the paper systematically eliminates the distortion effects. Thus, the NPV transforms into a special kind of rate, namely, the difference between the factual rate and the required rate of return. This NPV rate (with equal required rates of return) gives the same ranking list as the IRR. The aggregate capital needs is a new conception and gives a new viewpoint to analysis of investment projects evaluation. The paper defines the special content of aggregate capital needs and compiles an index number for it.

International Journal of Construction Management, 2020

The aim of this paper is to distinguish a number of factors that allow for a better understanding of investment process management in the housing construction industry. The research work that we performed consisted in conducting a questionnaire survey. A total of 192 Polish companies dealing with housing construction took part in the survey. The collected questionnaire responses were then subjected to a thorough analysis and interpretation, with the use of a method called exploratory factor analysis (EFA). In a nutshell, our analysis consisted in reducing the number of survey variables (73) in order to identify a few pivotal factors (4) with the greatest impact on investment processes management in the field of residential construction in Poland. These factors include: the activity of companies in the market environment (1), pro-social policy of the state (2), highly advanced technologies (3) and the use of appropriate market relations (4). In our study, we aim to show how successful construction processes are perceived by industry professionals. The scientific method that we used allows for assignment of a certain order of priority to specific groups of questionnaire variables, dependent on the eigenvalues-related percentage of explained variation.