Valuation of investment projects

Project appraisal is a mandatory requirement of investors before deciding whether or not to finance the project, because it is one of the bases for investors to consider the effectiveness of the project. project and the ability to repay capital and profit from the project to be invested.

1. What is an investment project?

Investment projects are documents made by the investor, which is presented in a very complete and detailed manner for future investment performance for the purpose of confirming. the correctness of investment policy and efficiency of capital. An investment project is a document that honestly reflects the results of specific research on all issues such as market, economy, engineering, finance ... that directly affect the operation, exploitation and calculation. return on investment.

Thus, in terms of content, an investment project is a combination of interrelated activities that are planned to achieve set goals on the basis of achieving specific results in a period of time. certain. In terms of the form of an investment project is a set of documents presenting a detailed and systematic way of activities and costs according to a plan to achieve the results and achieve the most goals. future plans. From a management perspective, an investment project is a tool to manage the use of capital, materials and labor to generate financial, economic and social results in a given period of time.

2. What is project appraisal?

Investment project appraisal means the objective, scientific and comprehensive research and analysis of all economic and technical contents of the project, placed in relation to the natural environment and the social economic environment. Association to decide to invest, finance the project. The fundamental difference of project appraisal compared to project formulation is that price appraisal is a process of checking and evaluating the basic contents of the project independently, separate from the drafting process. judgment.

Project appraisal creates a solid foundation for effective investment. The conclusions drawn from the appraisal process are the basis for the units, establishments and competent State bodies to make investment decisions, permit investment or finance the project.

3. Purpose of investment project appraisal

The appraisal of the price of an investment project is very meaningful to the objects related to that project such as: investors, management agencies, insurance, tax ... Through nearly 20 years of intensive experience In project appraisal, valuation Hoang Quan has identified the purposes of project appraisal including:

• Helping investors choose the best investment plan;
• Assisting state management agencies in assessing the suitability of the project to the general development planning of the sector or country in terms of objectives, scale and efficiency;
• Identify the advantages and disadvantages of the project;
• Help donors make the right decision to fund the project or not;
• Clearly defining the legal status of the parties to the investment.
• Transfer negotiation;
• For the purpose of joint venture capital contribution;
• For the purpose of the equitization of state-owned enterprises;
• Serving the purpose of state management of localities (land allocation, land lease, site clearance compensation, support for relocation ...);
• For the purpose of proving the financial capacity of organizations and individuals;

4. Method of appraisal of investment project prices

Similar to the method of appraisal of other assets such as real estate, businesses, real estate, natural resources ... Methods of appraisal of investment project prices include:

a. Direct comparison/comparison method

Direct comparison method is a method of estimating the market value of an asset based on an analysis of the price of similar assets used to compare with an asset subject to valuation that was successfully traded or in progress. actual purchase-sale in the market at the time of price appraisal to estimate the market value of assets subject to valuation.

• Similar properties to assets subject to price appraisal have the following basic characteristics:
• Has similar physical characteristics.
• There are similar basic economic and technical parameters.
• Have the same function, purpose of use.
• Equal quality.
• In use, can be interchangeable.

b. Process evaluation method

The appraisal of investment project prices are conducted in a dialectical order from general to detailed, from the previous conclusion as a premise for the following conclusion.

• Sensitivity analysis method
• Prediction method
• Risk elimination method
• Other suitable valuation methods ...

5. The investment projects price appraisal dossier

Depending on the type of investment project, the client needs to provide the necessary project procedures. But generally includes the following papers:

• Statement of investor attached research report;
• Document through feasibility study report;
• Certificate of land use right assignment;
• Land allocation decision;
• Detailed project planning;
• Project planning drawings,….

Investment project appraisal service is one of the strengths of Hoang Quan Valuation Company. With abundant price data, human resources with high professional experience, Hoang Quan Valuation will provide customers with information about the value of projects with high reliability for each purpose. expertise.

Hoang Quan Valuation Company Limited - Hanoi Branch

Hotline: 0901.186.700

Email: cskh.hanoi@hqa.com.vn