Economic Efficiency Of Investment Projects Research Articles

ВИКОРИСТАННЯ МЕТОДІВ ОЦІНКИ ЕКОНОМІЧНИХ РИЗИКІВ ДЛЯ ПРИЙНЯТТЯ РІШЕНЬ ЩОДО ІНВЕСТУВАННЯ

The article uses methods of quantitative evaluation of economic risks that allow in conditions of uncertainty to provide an industrial enterprise with information on a less risky investment project for the adoption of a managerial decision. Several methods for assessing the risk of investing are used: the size of the dispersion, the value of the coefficient variation, the size of the semivariation, the size of the coefficient of semivariation, the value of the coefficient of asymmetry. Dispersion is a statistical term that describes the value range values expected for a particular variable. Dispersion is used in studying the variability of profits from a specific trading strategy or investment portfolio. This is often interpreted as a degree of uncertainty and, therefore, the risk associated with a certain portfolio of securities or investments. Semiivariation is an indicator of data that can be used to assess potential investment risks. Semivarianity is calculated by measuring the dispersion of all observations that fall below the middle or target data set. Neoclassical theory goes out for understanding that risks are just unfavorable scenarios for an investor company. Therefore, it is necessary to take into account the unfavorable deviations. When the management subject is loyal to risk, then it is necessary to use the coefficient of semivariation, which can also be determined which of the projects. If the company wants to successfully investigate the project, it is important to identify situations where the probability and magnitude of a positive (or negative) result is much larger than the opposite result. Understanding asymmetric risk is crucial for making correct decisions. The ability to identify asymmetric risk helps to avoid potentially dangerous situations where there are not enough errors. It also allows you to use the opportunities for investments where there are several ways to win. The criterion of maximum asymmetry is the minimum risk criterion. The results of the quantitative assessment of economic risks enable to substantiate the economic efficiency of investment projects.

Methodology for Analysing and Evaluating the Effectiveness of Investment Projects: from Idealism to Consumer and System Approaches

The article studies the theoretical and methodological approaches of subjective and objective idealism, general scientific subjective and consumer methodological approaches in relation to the systematization of the fundamental foundations for evaluating the effectiveness of projects. The scientific positions of the economic schools of mercantilism and marginalism are analyzed, the views of the economic school of physiocrats, the ideology of objective rationalism of classical political economy are considered. In the course of theoretical scientific research, the process, trend and regularity of transformation of the main principles of subjective and objective idealism into the basic characteristics of consumer and system methodological approaches, respectively, which are the basis for evaluating the economic efficiency of investment projects, are established.

Methodical and applied aspects of fuzzy sets approach to considering uncertainty for a feasibility study of investment projects

The paper is devoted to the fuzzy sets approach to modeling uncertainty and risk during the feasibility study of measures for real investment that are planned and implemented as projects.The purpose of the study is to analyze, summarize and test fuzzy tools to support decision-making on real investment measures, which are planned and implemented in the form of projects. Initially, at the general level, the existing methodical apparatus for finding fuzzy estimates of performance indicators (criteria) of investment projects was analyzed.Then the issue of quantitative (numerical) characterization of fuzzy estimates of performance indicators of project investment measures in the context of aspects of chance and risk was considered. Within this framework, relevant characteristics (indicators) and methods of their measurement have been generalized.An example of approbation of the researched tools on the materials of the investment project for the purchase of filling and packaging equipment for a domestic enterprise specializing in the production and sale of coffee products is given at the end of the paper.The results of testing the fuzzy-ultiple toolkit of investment decision support on the materials of the investment project for the purchase of packaging equipment for a domestic enterprise specializing in the production and sale of coffee products, testified to the high level of its ability. It should also be noted that from the point of view of the needs of the modern scientific and practical field of economic substantiation of real investments, the development of the methodological apparatus for evaluating the economic efficiency of investment projects for situations of combined uncertainty of initial data is relevant.

INTENSIFICATION OF THE USE OF RENEWABLE ENERGY SOURCES – THE OBJECTIVE NEED TO IMPROVE RESOURCE CONSERVATION AND INCREASE THE COMPETITIVENESS OF PRODUCTION OF PRODUCTS OF THE AGRARIAN SECTOR OF UKRAINE

Purpose. The aim of the article is substantiation of theoretical bases of RES use and practical aspects of economic efficiency of various projects on use of solar energy depending on territorial conditions of the enterprises of agrarian and industrial complex of Ukraine as a factor of resource saving and energy efficiency. Methodology of research. Dialectical methods of cognition of processes and phenomena, economic, financial, comparative and monographic methods (for analysis and evaluation of the effectiveness of RES in different territorial conditions of Ukraine), are used to achieve this goal as well as abstract and logical method (for theoretical generalizations, conclusions). Findings. The efficiency of solar energy use in different territorial conditions of Ukraine is substantiated. The efficiency of projects under different scenarios of production of agro-industrial complex (drinking water) is calculated on the example of PJSC “Dobra Voda” of Zboriv district of Ternopil region. It is established that the most effective project for this enterprise in all studied production scenarios is a project with a capacity of 1 MW, the second place in terms of efficiency is occupied by a project with a capacity of 850 kW, in third place ‒ a project with a capacity of 700 kW, and the least effective is a project with a capacity of 585 kW. The economic efficiency of investment projects in the dynamics of 25 years using discounting methods was studied and it was found that the project with a capacity of 1 MW is the most effective in all scenarios of production at the enterprise. It is concluded on the basis of an in-depth study of the effectiveness of existing projects in different territorial conditions of Ukraine that these projects for the use of solar energy in the eastern and southern regions of the country may have better performance indicators of economic efficiency 1.5-2 times. Taking into account the experience of the EU-28, it is substantiated that in Ukraine, which has a strong biological potential, the priority should be to accelerate the development of bioenergy, which will increase RES and on this basis to replace gas and oil, reduce production costs, improve its competitiveness; to clean the environment in all regions of the country; increase the number of jobs and improve the social and economic living conditions of the population. Originality. Theoretical approaches to the assessment of economic efficiency of projects of different capacity for the use of solar energy according to the options that take into account the territorial features of their implementation at the enterprises of the agro-industrial complex of Ukraine are substantiated. Practical value. The main provisions and conclusions set out in the article contain methodological and practical recommendations for the formation of a system of resource conservation and the use of renewable energy sources at enterprises. Key words: resource saving, energy efficiency, renewable energy sources, solar energy, wind energy, biomass energy, hydropower, efficiency, competitiveness.

Проецирование эволюционной трансформации идеализма на базовые методологические подходы оценки экономической эффективности проектов

The article studies theoretical and methodological approaches of subjective and objective idealism, General scientific subjective and consumer methodological approaches, analyzes the scientific positions of economic schools of mercantilism and marginalism, considers the views of the economic school of physiocrats, the ideology of objective rationalism of classical political economy. In the course of theoretical research, the process, tendency and regularity of transformation of the main principles of subjective and objective idealism into the basic characteristics of consumer and system methodological approaches, which are the basis for evaluating the economic efficiency of investment projects, are established.

Investment Management of Business Digital Innovations

This paper considers the issue of investment management of digital innovations in modern business. The main purpose of the research is the development of approaches to the investment management of the innovative digitalisation processes of the enterprises and justification of the economic efficiency of investment projects on innovative information technologies use in the context of their relationship with existing information solutions for enterprise management. The relevance of the research is the necessity to change the methods of doing and managing the modern business, taking into account the achievements of the Third and Fourth Industrial Revolutions, which form innovative business philosophy based on informatisation and digitalisation of manufacturing and delivery processes. The implementation of innovative digital technology in business processes requires significant costs and it raises the issue on their minimization. Systematization of literary sources and approaches for the investment management of industrial digitalisation indicates the absence of complex solutions for this problem. In this regard, based on a comparative analysis, the authors have revealed the features of business development in the conditions of the Fourth Industrial Revolution and justified the need for modern information systems integration for enterprise management on the platform of business processes digitalisation. In order to create the road map of business digital innovations, it is suggested that the Theory of Constraints should be used to determine which of the operating information systems of the enterprise (Business intelligence – BI; Enterprise Resource Planning – ERP; Manufacturing Execution System – MES; Industrial Internet of Things – IIoT) is to begin the digital transformation with. The stages of the project development for the digital transformation of an enterprise are designed based on the structural approach. The economic justification for the selection of alternative digitalisation projects is based on an assessment of the labour costs for implementing two variants of digital innovation of a business entity: a complex automation project with up-front modelling and an integration automation project with the gradual implementation of a new information system. The assessment results have shown the economic benefits of implementing the integration project as it provides 1.58 times fewer labour costs and can be realized by use of universal package solutions such as Business Automaton Software (BAS). The analysis of the results of the implemented business digitalisation projects in Ukraine and the world as well as the potential of planned ones has allowed generalising the effects of their implementation and confirmed the need for further development of the mechanisms for the investment management of business digital innovations. Keywords automation, business, digitalisation, efficiency, greening, ERP, information technology, innovation, investment management, project.

Occurrences in Czech Railway Infrastructure and their Relation to the Economic Efficiency of Investments

The paper focuses on the evaluation of impacts of occurrences in the Czech railway transport system on social and economic benefits and financial efficiency of investment projects in railway infrastructure. The evaluation of financial and economic efficiency of investment projects financed from the funds of the European Union is based on the Guide to Cost-Benefit Analysis of Investment Projects by European Commission from 2014. In the Czech Republic, this Guide has been complemented, for the purposes of economic and financial evaluation of projects in transport infrastructure, by the Departmental Guideline for the Evaluation of Economic Effectiveness of Transport Construction Projects by the Ministry of Transport of the Czech Republic which specifies economic evaluation of projects of roads and highways, railways and waterways important for traffic. The Departmental Guideline defines benefits which can be included into the economic evaluation, e.g. savings in the operation costs, the decrease in costs connected with accidents, the decrease in costs connected with the travel time or negative externalities usually related to impacts on the environment. However, in the case of the railway infrastructure, benefits connected to the increase in safety and fluency of the transport due to introducing security and information systems are not taken into account, even if these investments form a standard part of most railway infrastructure investment projects. The objective of the paper is to identify both the number and the structure of railways occurrences, which can influence effective functioning of railway transport for the purpose of their subsequent research in order to take into account decrease in their use in economic analysis. The methodology of the research is based on detailed analysis of individual occurrences which happened on Czech railways during past three years. The output of this paper provides a detailed statistic of occurrences including damage caused and propose recommendations for the next steps which should lead to the quantification of relevant benefits.

Green energy projects in households and its financial support in Ukraine

ABSTRACTThe paper deals with the solar energy promotion in households in Ukraine. Despite the positive dynamics of solar power plants construction, today the share of electricity, generated on their basis, in the country’s electricity mix remains insignificant. The main reason for this is the need for essential start-up investments. Since the economic efficiency of investment projects depends on installed capacity of plants, the structure and cost of the project financing sources; the paper focuses on estimation of financial sustainability of solar photovoltaic power plants construction under the credit programme ‘Eco-Energy’. The obtained results show the high profitability of own and credit resources’ investment in the considered projects that varies from 78.91% for the 10 kW solar power plants to 128.04% for the 30 kW ones. On this basis, policy recommendations for improving financing and other economic mechanisms to enhance renewable energy development in Ukrainian households have been developed.

Data Management for Solving the Problem of Sequential Shaping Simulation

The publication presents the results of a study of the process of investing in the innovation of the Russian manufacturing industry (sample 2009-2017). Factors of economic efficiency of investment projects of the industry are revealed. It is proved that the efficiency of investment is determined by external factors, primarily by the level of economic concentration (CR3) of the market of innovative products. The coordination of the scientific result with the industry consolidation dynamics model (A.T. Kearney) is presented.

Factors of economic efficiency of innovative entrepreneurship in the manufacturing industry

The publication presents the results of a study of the process of investing in the innovation of the Russian manufacturing industry (sample 2009-2017). Factors of economic efficiency of investment projects of the industry are revealed. It is proved that the efficiency of investment is determined by external factors, primarily by the level of economic concentration (CR3) of the market of innovative products. The coordination of the scientific result with the industry consolidation dynamics model (A.T. Kearney) is presented.

The sensitivity of the economic efficiency of the modernization of railway crossings on the traffic moment

The paper brings partial results of the research project focused on the evaluation of the financial and economic efficiency of investment projects in the area of railway constructions. The general methodology of the evaluation of the financial and economic efficiency and risks of the public investment projects is in detail solved in the Guide to Cost-Benefit Analysis of the Investment Projects issued by the European Commission in 2014. The evaluation of projects in the transport infrastructure in conditions of the Czech Republic comes out from the mentioned Guide and in detail is solved in the Departmental Guidelines issued by the Ministry of Transport of the Czech Republic in 2017. These Departmental Guidelines deal with the evaluation of the key benefits connected with the transport infrastructure. The presented project deals with the detailed evaluation of benefits connected with the increase of the safety and reliability of the railway, which is not included in the Departmental Guidelines. The subject of the paper is to present the results of the research focused on the evaluation of socioeconomic impacts connected with the generation of occurrences on the railway crossings. The objective of the research is the calculation of the marginal values of the traffic model of the railway crossing, where it is possible to expect that the increase of its safety will be efficient from the economic point of view. The key output of the paper is the quantification of impacts of the projects increasing the level of safety of the railway crossings. These impacts include investment costs, costs for the maintenance and repairs and benefits from the increase of the safety on railway crossings. Benefits of projects increasing the safety of railway crossings are represented mainly by the decrease of the number of victims, injuries and material losses appeared following the occurrence on the railway crossing. Results are consequently related to the traffic moment of the railway crossing and there is assessed the value of “costs of the safety” of the railway crossing. Results of the research are presented on the case study of the variant solution of the security of the railway crossing. At the end of the paper, there are described the basic conclusions of the research and the minimal values of the traffic moment of the railway crossing for the assurance of the efficiency of invested resources, separately for regional and state railways are discussed there.

Efficient Methods of Market Pricing in Power Industry within the Context of System Integration of Renewable Energy Sources

Currently, the majority of world economies (even those located in the sunbelt (+/− 35 degrees of latitude with good sunshine with low seasonality) uses various types of fossil fuels as the main source of energy for their economies. However, this represents a very volatile and unsustainable strategy, since according to various estimates, the fossil fuel era will inevitably end as all carbon fuels are going to be spent in the next few centuries. Unlike traditional energy, renewable energy sources (RES) are not based on energy resources, but rather rely upon natural energy flows. With regard to its unique property, there has been an active construction of power plants of renewable energy and their gradual integration into national energy supply systems in recent decades. At the same time, the existing models of electricity markets were unprepared for their wide distribution. Hence, determination of the market value of energy generated by power plants using renewable energy sources becomes a particularly significant issue. This market value has to take into account the prevention of costs from the use of fossil fuels, as well as the resulting environmental benefits. Our paper proposes methods for solving this problem, contributing to the increase of economic efficiency of investment projects for the construction of renewable energy facilities and the formation of economic incentives for their propagation in energy supply systems. The proposed methods are based on the dynamic differentiation of tariffs for consumers with renewable energy sources depending on their structure of electricity consumption. Its effectiveness is demonstrated by calculating the cost of electricity for households located in the Krasnodar region using renewable energy sources. It is shown that this approach to the formation of tariffs for consumers allows the household to receive additional savings from the efficient use of energy installations on RES and energy storage devices in terms of alignment of the energy consumption schedule. This creates a significant incentive for households to use them and contributes to increasing the effectiveness of government renewable energy support programs, including by solving the acute problem of raising electricity tariffs from the grid.

Современные подходы к оценке эффективности инновационных проектов в области утилизации газовых выбросов нефтехимических производств

The relevance of the economic issues discussed in the article is due to the high degree of interest of developed countries in the implementation of innovative projects. A competent approach to the analysis and evaluation of their economic indicators is the guarantee of their success. The article is devoted to the study of the analysis of existing approaches to assessing the economic efficiency of investment projects related to the introduction of innovations. The authors consider the key economic indicators of investment projects on the example of the implementation of innovative technology for the catalytic utilization of gas emissions from petrochemical enterprises. The descriptive-comparative, mathematical-statistical and economic methods for evaluating the results of the analysis of innovation performance indicators are used in the article.

New Methodology for Railway Infrastructure Evaluation and its Impact

The paper is focused on the evaluation of the economic efficiency of investment projects in the area of railway structures in the Czech Republic. The economic evaluation of projects of the transport structures including the railway structures has in recent years undergone through significant changes resulting into the final form of the united resort methodology of the Ministry of Transport of the Czech Republic, which from the methodological point of view covers the economic evaluation of all projects of transport structures. The main objective of the paper is to evaluate the impact of methodological changes in the financial and the economic evaluation of projects of railway structures. New methodological approaches can have the influence on economic results of monitored investments. The attention is paid to all aspects influencing the economic efficiency of the projects, especially the issues of investment and operational costs, costs for the trains operation and whole society benefits in the form of time savings, savings resulting from externalities a savings resulting from increased safety on railway are solved. From the methodological point of view, the paper is focused on the comparison of the approach to economic evaluation according to the previous methodologies specialised exactly on projects in the railway infrastructure with the approach according to the new methodology. The new resort methodology unifies specific parts of the analysis for all types of transport constructions and at the same time defines partial methodological approaches intended for particular transport modes. Within the previous methodologies the “transition methodology” valid from the half of 2016 to the acceptation of new resort methodology in November 2017 is also considered. In the frame of research works, the identified differences are also analysed. Impacts of methodological changes are presented on the case study of the model railway construction, from which the significant decrease of values of criterial indicators declaring lower economic efficiency is evident. Impacts are solved individually for particular parts of the financial and the economic analysis. From the case study is evident that all aspects included in the economic evaluation result to the decrease of the total economic efficiency of the investment project on the railway connected with the changes in methodology, however the changes in travel time savings and savings on externalities are the most important.

Методика отбора инвестиционных проектов для предоставления мер государственной поддержки

In the world theory and practice, investment and project analysis is based on cost-benefit analysis, aimed at assessing commercial and economic efficiency of investment projects. The existing methodologies, guidelines and regulations used by state authorities in different countries to select investment projects for the provision of state support measures include the main aspects and criteria of cost-benefit analysis, but at the same time, contain a number of significant drawbacks. The author has developed a new selection methodology for investment projects to provide state support measures, taking into account imperfections of the existing methodological approaches as well as criteria of the applicable regulations, which is recommended for practices in the territory of the Russian Federation. The article provides the examples on how to adapt it and a comparative analysis of the results of the investment project selection.

Метод реальных опционов в оценке стоимости месторождений

Income approach based on the method of discounted cash flows (DCF) seems to be the main instrument to evaluate economic efficiency of investment projects when developing oil and gas fields. However, at early stages of exploration and exploitation of hydrocarbon resources, uncertainty and risks of investors are very high, which limits the use of traditional methods. It is necessary to develop valuation tools accounting high uncertainty of input data on the exploitation of oil and natural gas resources, flexibility of their development by formation of rational production strategy with volatility of the operating parameters such as the world oil prices and the size and value of oil and gas reserves. In this article presents the real options approach which accounts the potential of flexible and adaptive project management providing advantages in assessing development projects as compared to the traditional income methods. Implementation of this method is exemplified by the case of oil and gas fields in the east of the Siberian platform.

Mathematical Model of Economical Assessment of Investments in Information Provision for the Management System of a Modern Company

Information provision for a company’s management system not only provides data for evaluating day-to-day operations but also is an efficient tool for improving the reliability of the entire management system. For purposes of efficiently managing projects for implementing modern information provision, the company should design a formalized model for assessing the relationship between project-related financial costs and the number of automated business processes in place at the company. This paper proposes using a mathematical model that contains financial indicators such as net present value, cash flows, and discount rates. Thanks to lower investment risks, the model will improve the economic efficiency of investment projects as part of implementing information provision at the company.

Methodology for assessing the economic efficiency of investment projects in petrochemical companies

The article focuses on the issues of investment potential of petrochemical companies and the need to develop a unified approach transparent for all the participants, to assess the efficiency of investment projects in petrochemical companies. The proposed methodology is to be applied to scheduling project costs and in fact, to ground the establishment of annual financing limits for a project. Additionally, the methodology is expected to reflect the possibility of updating the main indicators, both for financing the purchase of domestic and imported equipment. The methodology also takes into account the mechanism of contract pricing, recalculation of the cost of works and services is performed according to the rules and regulations approved for the estimates in any petrochemical company, inclusive of the indices of changes in current estimated cost to base period prices. The proposed methodology for assessing the performance indicators of investment projects is one of the most multi-faceted and optimal tools for petrochemical companies for attracting additional funding from both their own and other sources. In the conditions of growing business volumes, and in case of complying with the recommendations of the state strategy for the industry growth until 2030, the proposed methodology is transparent and relevant to all the investment participants in terms of cash flow generation for the project.

Estimation of economic efficiency of mineral resource base development projects using the real options method

The article has indicated by the problem of assessing the effectiveness of investment projects of development of mineral resource base in the face of declining quality of raw materials and the transition to the working out of deposits with low content of useful components. The problem of providing with raw materials is relevant for the ferrous metallurgy of theRepublicof Uzbekistan. The decision can be the development of a deposit of titanium-magnetite ores «Tebinbulak» with low iron content. Justification of the effectiveness of such a project requires the use of modern tools. The article has substantiated the possibility of using real options to assess the economic efficiency of investment projects to develop the mineral resource base. In this paper we have considered the concept of real options in relation to the field of investment projects to develop the mineral resource base, have developed a classification of possible options in this area. To assess the value of real option of the project of develop the mineral resources base we have proposed to use Black– Scholes model, have given the interpretation of elements of model in relation to this sphere. On an example of field development project titanomagnetite ores «Tebinbulak» has evaluated the strategic value of the project with realigning option expectations.

Improvement of operational management of innovative production processes based on the implementation of MES

Theoretical and practical issues of improving the quality of operational management of production processes through the implementation of MES (Manufacturing Execution Systems) are considered. To assess the risk of introduction of systems of this class, a basic set of seven influencing factors is defined. The qualitative approach to risk assessment proposes using two ordinal scales, on the basis of which the matrix for estimating the probability of occurrence of risk factors and the degree of their negative impact is built. The quantitative approach to risk assessment proposes using the formula for calculating the integral risk factor. The choice of the matrix organizational structure of management is justified in the realization of projects for implementation of MES at the enterprises with the innovative nature of production. Typical functional subsystems of MES implemented on the SIMATIC IT platform are identified and analyzed. Original express methods for evaluating the economic efficiency of investment projects for the introduction of MES are proposed. Practical testing of methodology is carried out through the example of evaluating the economic efficiency of the project for implementation of a MES at the enterprise with an innovative nature of production. As the results, relevant for the theory of building MES, the generalized algorithms of their functioning are proposed: the algorithm of operational planning of production processes with the use of a MES and the algorithm of the interaction of model functional modules in MES. The advantages of MES of new generation, i.e. management systems of combined production, are analyzed.