Abstract
Theoretical and practical issues related to the applicability of the evaluations of construction project financing having regard to the complexity, timeframe and the limited nature of the resources available have been lately increasingly attracting researchers‘ attention. The assessment of decisions as to the timing and volume of funding of a project is extremely important and relevant for any organisation; therefore, it has been considered necessary to explore different models for possible financing by applying empiric and financial models, as well as theoretical mathematical methods. The objective of the present research exercise was to develop an optimal model for the appropriation of financing of defined scope according to different financing scenarios. For that purpose the researchers used a hypothetical reference heuristic financing appropriation plan for four periods of identical duration in three construction objects. By reference to the linear programming theory an optimal plan was identified by assigning, in individual periods and to each object, different priorities rated in points. The financing appropriation plans are assessed in terms of their impact upon the enterprise value that is computed applying the cash flow discounting method and the tax shield effect theory. Since the selection of the financing source is an important factor for the enterprise value the calculations were performed assessing three possible scenarios of the enterprise financing taking into account the enterprise‘s liquidity: a – an enterprise has accumulated sufficient own funds to finance the project, b – an enterprise has accumulated funds sufficient only to pay the interest for borrowed capital, c – an enterprise does not possess any disposable monetary resources to finance the project during its implementation, therefore it capitalizes the interest payable to the bank. It was concluded that under scenario a the selection of a financing plan does not affect the enterprise value, as the enterprise finances the investment from own resources. In the case of scenario b the loan obtained from the purpose of the investment creates additional value, the choice of the plan, however, does not affect the enterprise value. When capitalising the interest payable to the bank under scenario c, the highest value of an enterprise is created in the case of selection of an optimal plan that is developed by setting an overall limit of the amount to be funded, i.e., by prioritizing mathematical logics without referring to the up-front appropriation of financial resources by objects. The present article deals with the theory of the evaluation of investment project solutions. The results of the evaluation of the solutions for construction project financing appropriation are presented by criteria for optimal solutions and possible financing scenarios. Santrauka Statybos projektų finansavimo vertinimo teorinių ir praktinių pritaikymo klausimų nagrinėjimas, atsižvelgiant į šių projektų įgyvendinimo sudėtingumą, laiką bei reikalingų išteklių ribotumą, pastaruoju metu sulaukia vis didesnio dėmesio. Sprendimų, kiek ir kada finansuoti projektą, vertinimas yra labai svarbus kiekvienai organizacijai, todėl turi būti tiriami įvairūs galimo finansavimo modeliai, taikant empirinius ir finansų bei matematikos teorijos metodus. Tyrimo tikslas – parengti optimalų statybos projekto nurodytos finansavimo apimties paskirstymo modelį pagal skirtingus finansavimo scenarijus. Tyrimui naudotas sąlygiškas euristinis finansavimo paskirstymo planas keturiems vienodos trukmės laikotarpiams pagal tris objektus. Taikant tiesinio programavimo teoriją, optimalus planas randamas kiekvienam objektui konkrečiu periodu suteikus skirtingus balais įvertintus prioritetus. Finansavimo paskirstymo planai vertinami pagal jų įtaką įmonės vertei, kuri skaičiuojama taikant pinigų srautų diskontavimo ir skolinto kapitalo dėl mokesčių sutaupymo papildomai sukuriamos vertės teoriją. Kadangi įmonės vertei svarbus finansavimo šaltinio pasirinkimas, skaičiuota vertinant tris įmonės finansavimo scenarijus atsižvelgiant į įmonės likvidumą: a – įmonė turi sukaupusi pakankamai nuosavų lėšų projektui finansuoti; b – įmonei pakanka nuosavų lėšų tik palūkanoms už skolintas lėšas sumokėti; c – įmonė neturi laisvų piniginių išteklių projekto įgyvendinimo laikotarpiu, todėl kapitalizuoja bankui mokėtinas palūkanas. Nustatyta, kad a scenarijaus atveju įmonės vertei finansavimo plano pasirinkimas įtakos nedaro, nes ji investicijas finansuoja nuosavomis lėšomis. Pagal b scenarijų investicijai paimta paskola sukuria papildomą vertę, tačiau plano pasirinkimas įmonės vertės neveikia. Kapitalizuojant bankui mokėtinas palūkanas pagal c scenarijų, didžiausia įmonės vertė sukuriama pasirinkus optimalų planą, kuris sudaromas nurodžius bendrą finansuojamos sumos apribojimą, t. y. suteikiant prioritetą matematinei logikai atsisakius išankstinio finansinių išteklių paskirstymo pagal objektus. Straipsnyje nagrinėjama investicinių projektinių sprendimų vertinimo teorija. Statybos objektų finansavimo paskirstymo vertinimo rezultatai pateikti pagal optimalumo kriterijus ir galimus finansavimo scenarijus.
Highlights
The objective of the present research exercise was to develop an optimal model for the appropriation of financing of defined scope according to different financing scenarios
The results of the evaluation of the solutions for construction project financing appropriation are presented by criteria for optimal solutions and possible financing scenarios
The assessment of any alternatives for enterprise operations employs a number of assumptions such, as: i) the selection of a financing allocation plan does not affect the amount of investment and cash flows that will be generated upon the completion of the project; ii) investments are effected at the beginning of each quarter; iii) the weighted average cost of capital (WACC) of all three enterprises is the same, since WACC = RA, where RA is return on assets (Modigliani and Miller 1958); iv) there is no bankruptcy costs (Brealey et al 2008a)
Summary
Any assessment of the economic viability of a project should focus on all factors and variables that potentially affect the project value. The discounted cash flow method may be used for project evaluation by making an assumption that the risk throughout the duration of the project is relatively constant (Luehrman 1997) and the company uses its assets passively, i.e., without considering possibilities to expand, postpone or terminate the project (Brealey 2008) This possibility is neither taken into account when conducting a sensitivity analysis or under the Monte Carlo simulation method (Müller et al 2004). The value of the option may be calculated as a function of the current asset value, asset price fluctuation, exercise price, period and risk-free return Part of these variables may be computed applying the discounted cash flow method, the latter should be employed in connection with the real option method this adding some flexibility to the projects, i.e., making it possible to modify the projects having regard to an actual situation. The two models are not different; the two models refer to different assumptions, they employ different mathematical calculation methods, and the application of the same in construction and infrastructure projects (Brealey, Myers 2003; Petravicius 2009)
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