How to evaluate the effectiveness of the project

Determining the effectiveness of a project is necessary for an enterprise that is developing an investment strategy and wants to evaluate its own financial viability. This will help him choose the most effective ways to manage the project.

Instruction manual

1

Use the conditional allocation technique. Most of all it is used when the project is physically isolated from the organization and can be considered as independent. In turn, the project, which becomes a certain part of the company, is conditionally presented in the form of a separate legal entity with its own liabilities and assets, revenue and expenses. Using this method, you can evaluate the effectiveness of a business project and the importance of its financial viability. However, one question remains open - the financial condition of the company that implements the project itself.

2

Use the change analysis method. In this case, an analysis of the increment (change) is carried out. They should be included in the project data reflecting the activities of the enterprise. The methodology becomes especially convenient if the essence of the project is the expansion or modernization of the current production. At the same time, the goal of the project may be to increase revenue from improving product quality or increasing its volume and reducing current costs. The main objective of this method is to compare the increase in net income of the organization with the investments that are necessary to ensure this increase.

3

Use the consolidation method, which is based on an analysis of the financial viability of the company implementing the project. This technique is most used when the project is comparable in scale to the scale of existing production. Using this analysis, you can develop a financial plan for the company.

4

You can use the overlay method. First, consider the project using the conditional allocation method, that is, separately. Analyze the financial viability of the investment project, and then evaluate the cost-effectiveness. After that, develop a financial plan of the company itself without a project, then try to compare the results of the company's activities with the results of the project according to the degree of financial reporting.