Separating project risk from the time value of money: A step toward integration of risk management and valuation of infrastructure investments

Espinoza, R. David

doi:10.1016/j.ijproman.2013.12.006

Cited by 46 publications

(28 citation statements)

References 28 publications

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“…The contemporary literature dealing with project risk management identifies that the analysis of risk factors is significant for the project's success and their relationship with the risk management success [19,20,21]. The following hypothesis is based on the previous findings:…”

Section: H2: the Application Of Methods For Risk Analysis And Assessmmentioning

confidence: 99%

Risk Management Impact Assessment on the Success of Strategic Investment Projects: Benchmarking Among Different Sector Companies

2016

APH

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Section: H2: the Application Of Methods For Risk Analysis And Assessmmentioning

confidence: 99%

Risk Management Impact Assessment on the Success of Strategic Investment Projects: Benchmarking Among Different Sector Companies

2016

APH

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“…Espinoza and Rojo [9] and Espinoza [10] use a valuation method approaching Decoupled Net Present Value (DNPV) to disassociate the value of the financial resource through the time of the risk inherent in the investment. For the validation of the method the authors use a theoretical project of photovoltaic solar energy and the comparison with the net present value of the project.…”

Section: Introductionmentioning

confidence: 99%

Application of the Concept of Terminal Value in the Analysis of Projects Based on Renewable Energy

Beluco¹,

Beluco²,

Mendes³

2018

JPEE

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Projects for energy supply based on the exploitation of renewable energy have a very predictable cash flow. The initial costs are usually high, with the acquisition of technologically evolving equipment. However, maintenance costs are relatively low and easily predictable. Likewise, operating costs are often very low as there is no need to buy inputs. Power storage devices are often short-lived and contribute to a relative cost increase. At the same time, these projects are often not approved because they are directly compared to projects based on non-renewable resources, with cash flows that may not be so easily predictable and with much lower start-up costs. Fossil fuels have hardly predictable costs, established by non-technical criteria and related to geopolitical issues. In addition, their operating costs are usually very high, precisely because of the need to purchase fossil fuels. This paper proposes the calculation of terminal value in cash flows of power generation projects and its application for feasibility analysis of projects based on renewable resources. The proposed method suggests the calculation of terminal value as the moving average calculated for five-year intervals with constant growth rate of 5%. This method also encourages the inclusion in the cash flow of annual values that add up to the end of the analysis period the sufficient value to renew the system components at the end of the usual analysis period of 20 -25 years. The application of the proposed method to a diesel wind system simulated with the well-known Homer software indicates the modification of the results of the Homer with the preference for systems with greater wind penetration instead of the systems with greater consumption of fossil fuels.

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“…Descontar um fluxo de caixa significa associar uma taxa de juros à série de valores que representam esse fluxo e levá-los para uma data única, de tal sorte a colocá-los numa mesma base de tempo. Há duas maneiras de promover este desconto: por meio do valor presente líquido ou da taxa interna de retorno (SAITO et al, 2011;ESPINOZA, 2014). Nos tópicos a seguir, cada uma dessas variantes dos modelos estáticos de valoração é explorada em maior grau de detalhe.…”

Section: Modelos Estáticos Para Valorar Projetosunclassified

“…Se o valor presente líquido assim obtido é positivo, conclui-se que vale a pena realizar o projeto; do contrário, que não vale a pena (LUEHRMAN, 1998;WU e LIOU, 2011;ESPINOZA, 2014). A formulação matemática, bem como um exemplo de aplicação deste modelo de valoração estão apresentados no Apêndice 1.…”

Section: Modelo Do Valor Presente Líquidounclassified

“…A taxa assim obtida é comparada com uma taxa de oportunidade (que possa ser obtida em investimentos alternativos) disponível para o proprietário do projeto e, se for maior, leva à conclusão de que vale a pena executar o projeto (ESPINOZA, 2014). A formulação matemática, bem como um exemplo de aplicação deste modelo de valoração estão apresentados no Apêndice 2.…”

Section: Modelo Da Taxa Interna De Retornounclassified

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Opções reais como instrumento para gerir riscos em projetos complexos de infraestrutura de tecnologia da informação

Chaves¹

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Separating project risk from the time value of money: A step toward integration of risk management and valuation of infrastructure investments

Cited by 46 publications

References 28 publications

Risk Management Impact Assessment on the Success of Strategic Investment Projects: Benchmarking Among Different Sector Companies

Risk Management Impact Assessment on the Success of Strategic Investment Projects: Benchmarking Among Different Sector Companies

Application of the Concept of Terminal Value in the Analysis of Projects Based on Renewable Energy

Opções reais como instrumento para gerir riscos em projetos complexos de infraestrutura de tecnologia da informação

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