Enhanced Approach for Project Assessment Through Better Capex forecasting & Improved Financial Assessment

Techniques

Sustainable Increase in Shareholders wealth is the most important objective of any

Business. Continual Business Growth is the key to achieve this. Growth strategies
adopted by companies ranges from Inorganic growth (Mergers, Acquisitions, Takeovers
etc.) to Organic growth (Growth on its own by Capacity building & expanding).
Research has shown why and how most of the Inorganic growth strategies have failed.
ABC has been known for Organic growth and it has been achieved through exceptional
project implementation capabilities. In highly competitive & rapidly developing
economies, companies with a strong balance-sheet, like ABC, has many options for
deploying its huge resources. However, In such situation the sponsor of the
project also have a major concern that these huge resources (financial as
well as non financial resources) are being deployed on the most appropriate
Option / Project. A consistent capital cost estimation / forecast and advanced
techniques for financial assessment of project can be a great tool to address
this concern.
We Intend to address this concern by following:
1. To study present Capital cost estimation methodology of ABC at Stage Gate -3
(for EPC Stages of the project)
2. Compare actual spent against each stages & activities of Capex wrt SG3
Estimate and study the variance
3. Find out the Cost drivers that drags the base line estimate and find out
the ways to make their estimation more consistent
4. To study the present project financial assessment techniques & its limitations
5. To find out financial assessment techniques that addresses or minimize
the limitation of the present techniques and give improved assessment
parameters.
Data Required: We intend to study at least 3 Capex estimate at SG3, its methodology
& actual spent cost data against each. We also need to study the financial assessment
of these projects. As an outcome we would like to develop methodology to improve the
forecasting accuracy And will finally conclude our recommendations.
If required, We can change the actual numbers to protect its confidentiality. However,
during study phase we gently request to go through the actual data & methods so that
we can analyze it properly.

Project Participants: Project Captain: