scholarly journals Influence of the contractor’s payment method on the economic effectiveness of the construction project from the contractor’s point of view

2018 ◽  
Vol 8 (1) ◽  
pp. 562-570
Author(s):  
Jacek Zawistowski ◽  
Janusz Kulejewski
Keyword(s):  
Cash Flow ◽  
Net Present Value ◽  
Construction Project ◽  
Cash Flows ◽  
Optimization Techniques ◽  
Point Of View ◽  
Economic Effectiveness ◽  
Unit Price ◽  
Payment Method ◽  
Lump Sum

Abstract The scope of the paper is the problem of the economic effectiveness of the construction project from the contractor’s point of view. The two main construction contract types are taken under consideration: the unit price contract based on the bill of quantities and the lump sum contract. The net present value (NPV) is adopted in this paper as the basic economic efficiency criterion of the construction project. The NPV of the project for the contractor is calculated here as the sum of all future monthly contractor’s cash flows (both incoming and outgoing) discounted by using the monthly cost of contractor’s capital invested into the project. For the cash flow calculations, two basic payment methods are considered, depending on the type of the contract: the monthly payments in the case of the unit price contract and the payments for the WBS (Work Breakdown Structure) billing elements in the case of the lump sum contract. The contractor’s monthly cash flow analysis also makes it possible to determine the monthly cash requirements for the contractor to finance the works each month and the total cash requirement to finance the project as the whole. This allows the contractor to correctly plan the financing of the project depending on the type of contract and the payment method. Moreover, using the optimization techniques known in the scheduling theory, for example based on the priority rules as in the case of the RCSP, one may try to improve the economic effectiveness of the project or to lower the cash requirement for the project.However, as shown by the authors, it does not have bring the expected results in the case of the lump sum contract.

scholarly journals Risks of Design Stage in Iraqi Construction Project

2018 ◽  
Vol 24 (3) ◽  
pp. 114
Author(s):  
Alaa Kharbat Shadhar ◽  
Buroog Basheer Mahmood
Keyword(s):  
Construction Projects ◽  
Construction Project ◽  
Fast Response ◽  
Unit Price ◽  
Design Stage ◽  
Project Completion ◽  
Lump Sum ◽  
Full Study ◽  
Effect Level ◽  
Design Documents

The management of construction projects needs to complete the basics of system management and work. Starting from the idea and how to turn it into a full study and ended at the construction project completion arriving at the purpose prepared for it, so the projects need to control on its operation and integration system in order to succeed. It is no secret for who concerned in construction projects field that the design stage is a very important stage in construction project because it determines the final features of the project through the requirements provided by the employer for the consultant to formulate it during this phase in the form of plans, drawings, and specifications, then translated on the ground as the shape of completed project meets those requirements. Therefore it has been necessary to focus in this paper on the design stage also demonstrated and analysis the most important risk facing this stage and their impact on a construction project by introducing a questionnaire to identify the most important risks factors at this stage affecting on the project. The paper had been shown that the effect of the design stage on Lump sum type of project contract was higher than the unit price, while the most important factor effect on a project its fast response of design team to prepare the design documents in order to facilitate the workflow and sequence of execution with effect level 3.714.    

scholarly journals Economic Evaluation of CCUS Retrofitting of Coal-fired Power Plants Based on Net Cash Flow

2021 ◽  
Vol 237 ◽  
pp. 02021
Author(s):  
Jingqi Jin ◽  
Feng Xue ◽  
Bin Cai ◽  
Xinxin Yang ◽  
Yening Lai ◽  
...  
Keyword(s):  
Cash Flow ◽  
Carbon Capture ◽  
Power Plants ◽  
Large Scale ◽  
Net Present Value ◽  
Operating Cost ◽  
Economic Feasibility ◽  
Unit Price ◽  
Low Carbon ◽  
The Impact

Carbon Capture, Utilization and Storage (CCUS) is one of the key technologies for realizing large-scale low-carbon utilization of coal-fired power plants in service. How to evaluate its economics is crucial to the decision-making of traditional coal-fired power enterprises. This paper analyzes the changes in the physical, emission and economic parameters of in-service coal-fired power plants without and with the CCUS retrofit. A method for evaluating the economic feasibility of coal-fired power plants retrofitting based on net cash flow is proposed, which compares the impact of CCUS retrofit on the net present value of the remaining life cycle of the power plant. The impact of uncertain parameters such as carbon dioxide sales unit price, carbon capture device operating cost, free carbon quota, and carbon emission right price on the evaluation results are analyzed.

scholarly journals SIMULATION MODELLING AS A TOOL FOR RISK ANALYSIS AND DEVELOPMENT OF STRATEGY TO INCREASE REAL ESTATE INCOME

2021 ◽  
Vol 2 (1) ◽  
pp. 97-103
Author(s):  
Lesia Chubuk
Keyword(s):  
Cash Flow ◽  
Simulation Modeling ◽  
Net Present Value ◽  
Flow Simulation ◽  
Cash Flows ◽  
Annual Growth Rate ◽  
Present Value ◽  
Real Property ◽  
Operating Income ◽  
Grain Elevator

The purpose of th article is to substantiate the possibility of applying methods for assessing the effectiveness and risks of investing for the analysis of income in the strategic management of real property. Methodology. The methodical bases of sensitivity analysis and simulation modeling of cash flows of real property income are stated. Results. The critical factors of costs and revenues affecting net present value of total cash flow from grain elevator real property object have been revealed. It is evidenced that the most significant factors influencing the amount of cash flows are the volume of sales of grain elevator services, to a lesser extent the total costs and the lack of sensitivity of net present value to staff salary variations. Simulation modeling of the change in net present value due to the change of the most significant uncertain factors was performed, which confirmed the assumptions about the efficiency of the investigated real property. The key factors are the main services that generate net operating income and critical expenses. Namely, services: storage, drying, shipment by road and rail, costs: fuel for drying, electricity, fuel for transportation of grain, staff salaries. For each factor, the relevant limits of change were established (determined by experts taking into account the average annual growth rate of the indicator) and cash flow simulation was performed. Practical implications. Statistical analysis of the model's behavior under the influence of random factors shows that the most probable value of the net present value of cash flows will be positive, despite the simulation of a significant change (+/- 40%) in electricity and fuel consumption factors for grain transportation. The values of the simple and discounted payback period also confirm the efficiency of the elevator property functioning. The indicator of the stability level demonstrate the need of planning input cash flows sources to cover the output cash flows. Value/originality. The expected profitability of grain elevator real property is largely determined by the factor of the volume of basic services sales (storage, drying, shipment and transport of products). This creates the preconditions for the subsequent assessment of the value of grain elevator real property based on the methodology of the income approach.

scholarly journals Methodical approaches to the assessment of investment attractiveness of agricultural enterprises

2019 ◽  
Vol 21 (93) ◽  
pp. 63-69
Author(s):  
R. M. Myniv
Keyword(s):  
Cash Flow ◽  
Net Present Value ◽  
Cash Flows ◽  
Rate Of Return ◽  
Internal Rate Of Return ◽  
Present Value ◽  
Investment Projects ◽  
Agricultural Enterprises ◽  
Internal Rate ◽  
Dynamic Methods

Evaluation of investment efficiency is central to the process of justifying and selecting possible options for investing in investment projects, and is therefore a key to successful implementation of investment activities of agricultural enterprises. The main directions of financing of investment projects of agricultural enterprises are: purchase or construction of unfinished construction objects, new construction, expansion of existing enterprises, reconstruction of existing enterprises and technical re-equipment of existing enterprises. Two main groups of methods of assessing the cost-effectiveness of investment projects have become most widespread: static and dynamic. Static methods involve the calculation of indicators based on undiscounted cash flows. Dynamic methods, on the contrary, take into account the change in the value of money over time and imply bringing the values of all cash flows to the same period by discounting or compounding. Dynamic methods for assessing the effectiveness of investment projects include the following basic methods that rely on most modern Ukrainian enterprises, such as net present value cash flow (NPV), internal rate of return (IRR), payback period (DPP) and project profitability index (PI). On their basis the basic methods of selection of investment projects of agricultural enterprises are formed. Net Present Value (NPV) calculation. is based on comparing what will be invested in the future with what is invested now. The Profitabale Index (PI) is directly related to net present value and is defined as the ratio of the discounted cash flow to initial investment. The IRR (Internal Rate of Return) is the discount rate at which the projected cash inflows are equal to the project's discounted cash flows. As indicators of the effect in calculating the overall efficiency of investments, it is advisable to use changes in the following values of growth: revenue from the sale of enterprise products; gross income; profit before tax; net profit; cash flow; clean products. Gross and net investment should be included in the costs. The use of qualitative methods in investment analysis is due to the following reasons: the subjectivity of the phenomena or characteristics studied; lack or lack of necessary information; inability to analyze objective and acceptable methods; lack of research object (to be created during project implementation). Quantitative methods for evaluating agricultural investment projects include methods of probability theory and mathematical statistics, as well as economic and statistical methods.

CASH FLOW FOR THE VAT IN THE FARMING

2017 ◽  
Vol XIX (5) ◽  
pp. 113-118
Author(s):  
Tomasz Kondraszuk
Keyword(s):  
Cash Flow ◽  
Balance Sheet ◽  
Financial Statements ◽  
Cash Flows ◽  
Significant Benefit ◽  
Flow Method ◽  
Lump Sum

The aim of this article is to present the possibility of using farmers’ cash accounting method. It is regarding farmers which resigned from the lump sum and became active paymasters of this tax. The cash method used in the tax and revenue book (PKPiR) was critically evaluated. At the same time, on the example of the Agricultural Accountancy Calendar (RKR), it has been shown that it is possible to integrate accounting with the accounting method of VAT accounting with accounting entries in the RKR enabling direct cash flows from operations, investment, financial and private operations. It is also possible to draw up other financial statements: profit and loss account, balance sheet and changes in equity. For a farmer, the significant benefit of using a cash-flow method is to reduce the risk of congestion resulting from the need to settle VAT before receiving payments from the debtor. For the tax office, the necessity to pay the full payment before claiming the input VAT refund significantly limits the possibility of fraud in this regard.

Real Options Models for Maintenance Decision Making for Offshore Jacket Platforms

2005 ◽  
Author(s):  
Sandra Santa-Cruz ◽  
Ernesto Heredia-Zavoni
Keyword(s):  
Decision Making ◽  
Real Options ◽  
Structural Reliability ◽  
Net Present Value ◽  
Investment Project ◽  
Cash Flows ◽  
Point Of View ◽  
Investment Projects ◽  
Financial Variables ◽  
Financial Options

Real options models are currently available as one of the best tools for the assessment of investment projects. This is so mainly due to the capability of the real options models to: (1) account for uncertainties in financial variables that are crucial to the investment project; and (2) quantify the value of the possibility to make a decision on whether to defer, abandon, expand or reduce the project at one or several points along time. Recently, some researchers have proposed the use of real options models for the assessment of infrastructure projects for hydrocarbon exploitation from an economics point of view. The objective of this work is to develop real options models for decision making regarding inspection, maintenance and decommissioning of offshore facilities taking into account the financial and technical aspects of the project. In all cases it is considered that at some point in the future, within the service lifetime of the structure, the decision maker will have an option to carry or not an inspection, and take or not a maintenance or decommissioning action, which will determine the structural and financial performance of the project for its remaining lifetime. The in-service times with no structural failure and the rehabilitation times are modeled as random variables. The cash flows are modeled as stochastic processes considering interruption of operation due to repairs after failure. Analytical expressions are derived for the computation of structural reliability and availability depending upon maintenance actions. An example is given for a jacket platform subjected to fatigue deterioration and damage. Simple and compound options of maintenance and decommissioning options are analyzed. The value of the project is computed by means of an approach similar to that of Black and Scholes for financial options [2]. The results are compared to those obtained under the traditional Net Present Value approach.

Comparative Analysis of Some Metaheuristics for Discrete-Continuous Project Scheduling with Activities of Identical Processing Rates

2016 ◽  
Vol 33 (03) ◽  
pp. 1650015 ◽  
Author(s):  
Grzegorz Waligóra
Keyword(s):  
Comparative Analysis ◽  
Project Scheduling ◽  
Net Present Value ◽  
Renewable Resource ◽  
Concave Function ◽  
Cash Flows ◽  
Future Research ◽  
Scheduling Problems ◽  
Time Intervals ◽  
Lump Sum

Discrete-continuous project scheduling problems with positive discounted cash flows and maximization of the net present value are considered. A class of these problems with an arbitrary number of discrete resources and one continuous, renewable resource is taken into account. Activities are nonpreemptable, and the processing rate of each activity is the same continuous, increasing, and concave function of the amount of the continuous resource allotted to the activity at a time. Three common payment models — lump sum payment, payments at activity completion times, and payments in equal time intervals are analyzed. Adaptations of three well-known metaheuristics — simulated annealing, tabu search, and genetic algorithm are described. The paper focuses on a comparative analysis of the metaheuristics. The algorithms are computationally compared on a basis of an extensive experiment. Some conclusions and directions for future research are pointed out.

scholarly journals Assessment of Investment Projects Based on Economic Flow and Not in Cash Flows

2019 ◽  
Vol 8 (5) ◽  
pp. 133
Author(s):  
Halil Kukaj ◽  
Fisnik Morina
Keyword(s):  
Cash Flow ◽  
Net Present Value ◽  
Cash Flows ◽  
Present Value ◽  
Global Competitiveness ◽  
Investment Projects ◽  
Cash Flow Statement

In terms of global competitiveness, taking the investments decisions has a great impact to remain in the market. For this, when evaluating the investing projects it is necessary to apply the methods of profitability and liquidity. However, the question arises, if the profitability evaluation of investing project should be made according to the cash flow or the data from the economical flow statement. The aim of this paper is to give arguments why the economical flow statement should be applied instead of cash flow statement for the evaluation of profitability of investing projects. The paper is based on a hypothetical example whereas arguments are derived while applying the indicators: the Net present value and internal norm of profitability.Keywords: Evaluation of investing project, economical flow, net present value, internal norm of profitability

scholarly journals Дисконтирование денежных потоков в оценке инвестиционной привлекательности бизнеса в АТР

2020 ◽  
pp. 94-106
Author(s):  
Дмитрий Скалкин ◽  
Елена Селезнева ◽  
Светлана Ракутько
Keyword(s):  
Cash Flow ◽  
High Sensitivity ◽  
Cash Flows ◽  
Point Of View ◽  
Asia Pacific ◽  
Pacific Region ◽  
Asia Pacific Region ◽  
Long Time ◽  
Definition Of

В статье авторы рассматривают перспективу применения метода дисконтирования денежных потоков (далее – ДДП) в оценке привлекательности российского бизнеса для предпринимателей Азиатско-Тихоокеанского региона (далее - АТР). Обозначена роль АТР в улучшении национального инвестиционного климата, перспективы взаимодействия России с другими странами региона с целью повышения инвестиционной привлекательности российского бизнеса. Дано обобщающее определение понятия «инвестиционная привлекательность» с точки зрения инвесторов и авторское понимание данной категории. Показана высокая чувствительность метода ДДП к прогнозируемым ценам, представлены достоинства, недостатки и дискуссионные вопросы по его применению в оценке привлекательности российского бизнеса. Рассмотрены пре-имущества роста качества инвестиционной привлекательности страны. Обозначена проблема оценочных стандартов России. Предложены методы по совершенствованию оценки привлекательности бизнеса с использованием метода ДДП. Применение данного метода, хоть и имеет свои недостатки, особенно целесообразно, по мнению авторов, когда оценивается инвестиционная привлекательность предприятий, длительное время успешно функционирующих на рынке и находящихся в стадии стабильного экономического развития. The article describes the method of discounting cash flows (DCF) in assessing the business attractiveness. The infor-mation related to the use of this parameter in Russia has been analyzed. The role of the Asia-Pacific region in improving the national investment climate, the prospects for Russia interaction in the Asia-Pacific region aimed at increasing the investment attractiveness of the country's own business have been outlined. The generalized definition of the "investment attractiveness" concept has been shown from the investors’ point of view. High sensitivity of the cash flow discounting method to the predicted prices has been demonstrated. The advantages, disadvantages and debating questions on application of cash flow discounting method in estimating the attractiveness of the Russian business have been described. The advantages of increasing the quality of the country’s investment attractiveness have been considered. The problem of the evaluation Standards of Russia has been specified. Methods to improve the quality of the business attractiveness assessing using the DCF methods have been proposed. According to the authors, the application of this method is especially appropriate, when assessing the investment attractiveness of enterprises that have been successfully operating on the market for a long time and are in the stage of stable economic development.

scholarly journals Is It Correct to Use the Internal Rate of Return to Evaluate the Sustainability of Investment Decisions in Public Private Partnership Projects?

2018 ◽  
Vol 10 (12) ◽  
pp. 4371 ◽  
Author(s):  
Vicente De Albornoz ◽  
Antonio Galera ◽  
Juan Millán
Keyword(s):  
Cash Flow ◽  
Net Present Value ◽  
Point Of View ◽  
Rate Of Return ◽  
Internal Rate Of Return ◽  
Present Value ◽  
Economic Point ◽  
Investment Projects ◽  
Internal Rate ◽  
Investment Criterion

Public Private Partnerships (PPP) are viewed by the private sector as investment projects. An investment criterion, such as the internal rate of return (IRR), widely used by practitioners, is thus necessary in order to determine if the opportunity is sustainable from an economic point of view and worth pursuing. However, a cash flow may have multiple IRRs—is it appropriate in the context of PPPs to use this criterion? This paper provides a clear proposition to determine the potential number of real positive IRRs a cash flow may have, depending on the number of sign variations and the value of the net present value (NPV) calculated with a discount rate equal to 0 (NPV(r = 0)). This proposition can sometimes be used when other tests (such as Norstrom’s Criterion) are inconclusive to determine if a cash flow has a single real positive IRR. The proposition is generally met by the typical cash flow of a PPP project, validating the use of IRR as an investment criterion.

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