Method of options in assessing the effectiveness of investment projects. Evaluation of investment effectiveness

Evaluating the Effectiveness of the Investment Project.

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We propose a model of multi-criteria decision-making on the selection of a portfolio of investment projects selected in terms of their effectiveness, based on the modification of the classical NPV Net Present Value.

In this direction, we should expect interesting results from a scientific and practical point of view. Our approach to assessing the effectiveness of investment projects based on the method of selection of optimal projects taking into account the set of criteria, intended to build interactive decision-making procedures, as the possibility of using rigorous methods, and knowledge and experience of the decision maker DM.

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There are various approaches to selecting the resulting unnormalized preference relations on the basis of a plurality of predetermined.

The simplest of these is the approach based on the principle of Borda that we have proposed in [17]. In this article we provide a description and the main approaches to the selection criteria by which assesses the effectiveness of possible variants of the portfolio of investment projects. It uses the methodology of constructing a set of solutions based on the Pareto principle.

Introduction 2. Justification and Selection Criteria of Efficiency 3. Conclusion 1. Introduction Evaluating the effectiveness quick money making scheme innovative projects is a prerequisite for the selection of the investment portfolio, which is formed by the investor, and is based on a number of criteria. To these, first of all, should include the payback period, internal rate of return, net present value and profitability index and net future value [ 1 ]-[ 5 ].

Today the market has a fairly wide range of computer programs for the calculation and comparative analysis of investment projects, both domestic and foreign developers [ 67 ] software for financial and economic evaluation of investment projects. Despite the variety of software products, there is the problem of formation and selection of the optimal set of investment projects, as all the above systems do not allow determining the optimal level of investment and does not take into account the dynamics of the firms.

A new method for selection of optimal projects taking into account the set of performance criteria is very desirable, and they are of great scientific and practical interest. The impetus for the development of the methodology developed in this work was the desire to provide a computationally efficient, convenient and transparent way to calculate the most efficient investment projects in a given set of projects based on financial performance of the set of criteria understandable for the user.

The theoretical novelty of the proposed methodology is that we offer a method for determining the Pareto frontier, which describes the need, or rather the only foreseeable number of alternatives for future use [ 89 ]. There are two stages of its solution: the definition of the Pareto set and the search for solutions in this set. Then there is the following optimization problem: select from a variety of Pareto optimal solutions is a solution which most suits the decision maker.

The rest of the article is organized as follows. Section 2 provides the justification and the choice of performance criteria. Section 3 describes a new method of selecting optimal projects taking into account the set of performance criteria.

Evaluation of investment effectiveness

Section 4 provides an illustrative example of the application of effective procedures for the selection of investment projects and reports on the results of the experiment. Section 5 concludes.

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In this paper we present the main approaches to the selection criteria by which assess the effectiveness of admissible portfolio of investment projects.

Proposed formulation of the problem of choosing the rational version of the feasible set of portfolio, which is reduced to the problem of decision making in many quality criteria.

The main attention is paid to the development of a methodology for choosing a rational variant of the set of feasible projects based on many criteria of optimality. Application of the method is illustrated with real examples. Justification and Selection Criteria of Efficiency Issues on improving the efficiency project portfolios at this stage are highly relevant both in theoretical and practical terms [ 10 - 12 ].

Problem of evaluating the efficiency of investment projects in the Russian economy

From a theoretical point of view the problem is that the portfolio estimated on the basis of classical indicators such as for example NPV, IRR, PP and many others. However, these indicators have many drawbacks [ 12 ].

None of the above criteria by itself is not sufficient for the adoption of the project. Each of the methods of analysis of investment projects makes it possible to consider only some of the characteristics of the billing period, to find out the important points and details. Therefore for a comprehensive evaluation is necessary to use all of these criteria, including net future value NFV in the aggregate.


In this work [ 13 ], proposed new methods of evaluation of social projects, the model of which is represented as a set of interrelated business processes business process portfolio. On the basis of the process models are laid streaming model of works, resources, finance, and etc.

Methods of investment assessment……………………………………………… Departure from a centrally planned economy, the introduction of market relations, a change in property relations were accompanied by a decrease in living standards, aggravation of problems in social and other areas.

Many projects planned or implemented form a portfolio of projects. Efficiency of the project portfolio is proposed to estimate using the compounding operation of financial flows projects.

In this paper, issues of optimization efficiency of the project portfolio is decided based on the results simulation modeling obtained on the basis of the implementation of a set of experiments, interconnected business processes. Each of the simulation experiments is a variant of the structural organization of clusters of projects - network model.

It is assumed that the various embodiments of business processes in this system are defined by the user. Thus, there is a predetermined set of variants of business processes at the network level. Each set of options for business processes under investigation on the network model.

A result of modeling is calculated flows of projects cluster of each option. Required at the base of some entered preference relations order a given set of options for business processes and identify the best. Formally, the problem of optimizing the efficiency of the project portfolio in general is reduced to an extreme problem: 1 Where with the position of the system approach is necessary to establish - Content evaluation criteria options for portfolio efficiency projects; Argument - Range of permissible values of variable parameters; Operator - selected principle of optimality.

Note that from the above is the case when - we have a given set of options for the effectiveness of the project portfolio, each of which is subjected to investigation of model simulations.

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  • Problem of evaluating the efficiency of investment projects in the Russian economy UDC
  • Evaluation of investment effectiveness
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As noted, the local quality criterion identified some characteristics of the system. For example, - net present value, - profitability index, - payback period, - net method of options in assessing the effectiveness of investment projects value will be called the vector criterion by which alternatives are evaluated, i. Further, without loss of generality, we assume that you want to achieve, perhaps smaller values of all the components of the vector criterion, i.

Thus, there is a problem of vector or multi-criteria optimization. As we know the general solution of this problem is the set of Pareto optimal solutions.

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This set is called in the literature as well: lots of subordinates, non-dominated or efficient solutions, negotiation or compromise set. Recall that the decision called Pareto optimal if the admissible region there is no solutionsto satisfy: Where at least one of the inequalities must be strict. All decisions Pareto form a set.

Note these features of the problem 3. Evaluation of efficiency of each option the project portfolio is made on set of parameters. This leads to the release setwhich in general is much "smaller" area of feasible solution.

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Elements of this set have objective property cannot simultaneously improve all components of the vector criterion. Description of a New Method for Selecting the Optimum Projects Taking Into Account the Set of performance Criteria In paragraph 2, the task of choosing the most effective innovative project in a given set package projects based on many criteria of financial efficiency.

The general solution of multi-criterion optimization, as is well known, is the set of solutions, Pareto optimal. For the case given set of course, but if the initial feasible set of criteria method of options in assessing the effectiveness of investment projects sufficient volume, the number of financial and effective solutions can also be large.

While you need to choose a unique or sufficiently foreseeable number of alternatives, which are recommended for use.

Common approach to solving this problem is the introduction of a global or generalized criterion of quality. The mathematical formulation of the problem in this case is as follows: 5 - multiple Pareto, selected from the allowable region W on the basis of vector criteria from the formula 3.