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Investment Project Design: A Guide to Financial and Economic Analysis with Constraints

Investment Project Design: A Guide to Financial and Economic Analysis with Constraints

Lech Kurowski, David Sussman

ISBN: 978-1-118-26710-3

Nov 2011

480 pages


Make more informed project investment decisions by knowing what issues to examine in the planning process and how to analyze their impacts

Poor or insufficient planning is primarily responsible for the inordinate number of idle and rusting capital facilities around the world, with investment decisions often made on the basis of either intuition or inadequate analysis. Investment Project Design: A Guide to Financial and Economic Analysis with Constraints alerts potential investors and other stakeholders to precipitous changes in the investment milieu as a result of constraints on resources and infrastructure, economic and political turmoil, and population growth. The guide

  • Includes descriptions of specific methods of financial and economic analysis for new investments and for expansion of an existing enterprise
  • Covers project risk assessment, mitigation and avoidance
  • Provides real-life case studies, adapted for presentation, and addresses the design of projects large and small, as well as those in both private and public sectors
  • Features spreadsheet layouts and computations

Investment Project Design is the ultimate resource in the methods of designing and appraising investment projects


Symbols and Most Frequently Used Acronyms.


Chapter 1: Investment Environment.

Systematic Project Analysis.

Project Environment and Strategy.

Project Development Process (PDP).

Planning Horizon and Project Life.

Project Scope.

Pre-Investment Studies.

Investment Planning Infrastructure.

Appendix 1.1: Elements of Commercial and Wider Domains.

Appendix 1.2: Outline of Business Plan for a Manufacturing Enterprise.

Appendix 1.3: Outline of Design/Study Report.

Appendix 1.4: Information flow details.



Chapter 2: Preparing Pro-Forma Financial Statements.

Accounting System.

Process of Financial Analysis.

Financial Costs and Benefits.

Investment Costs.

Production Cost.

Operating, Factory Cost and Cost of Product Sold.

Financial Statements.

Appendix 2.1: Depreciation methods.

Appendix 2.2: Starting Inventory Balance.


Chapter 3: Financial Indicators and Criteria.

Static Indicators.

Types of Static Indicators.

Financial Criteria for Investment Decisions.

Analysis of Joint Ventures.

Project of an Ongoing Enterprise.



Chapter 4: Financing the Project.

Capital structure.

Cost of Capital.



Chapter 5: the Economic Perspective.

Private sector.

Public sector.

General rationale for economic evaluation – who needs it?

Macroeconomic View – Impact on the National Economy.

Price Distortions.

Applicability and Scope.

Economic Pricing Principles20.

Shadow Prices of Primary Resources (National Parameters).

Conversion and Adjustment Factors.

Appendix 5.1: Costs and Benefits of 'Revenue Projects'.

Appendix 5.2: Global Pricing Framework – Importable Input Foregone.



Chapter 6: Economic Cost - Benefit Analysis.

Adjustments for the wider domain.

Valuation at market prices.

Define the accounting unit (AU).

Value Added (VA).

Supplementary Indicators.



Chapter 7: Investment Decision under Uncertainty and Risk.


Risk – Dealing with Uncertainty.

Quantitative Risk Assessment.

Qualitative Risk Assessment.

Risk Management.

Risk Immunization for Financiers.

International Investors and Risk.

Appendix 7.1: Discrete probability analysis – multivariate.



Chapter 8: Project Appraisal.

Macro-Micro Appraisal.

SWOT Analysis.

Stakeholder Perspectives.

Appraisal Report.

Caveats for the Appraiser.



Chapter 9: Implementation Planning and Budgeting.

Implementation Planning.

Project Management.

Conducting the Implementation Project.

Implementation Budget.

Appendix 9.1 Sample responsibility matrix for portion of project.

Appendix 9.2 Checklist of project implementation costs.


About the Authors.


Overview of the Contents
Case Study: Cambria Yarns Project (INCLUDES 3 FILES)
Case Study: Victoria Coke Company Modernization Project
CaseStudy_VictoriaCoke. zip (INCLUDES 2 FILES)
Expanded Financial and Economic Tables for Case Studies
Market Research and Marketing
Notes on Corporate Social Responsibility
Notes on Domestic and International Terrorism