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 Growth is the key to achieve this objective. Strategies adopted by
companies to grow, 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 to build
and expand the capacities. However, In such situation the sponsor of the project also
have a major concern that the 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 estimation methodology of Abc at SG-3 (for EPC Stages
of the project)
2. Compare actual spent against each 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.