Investment design. Life cycle and efficiency of the investment project

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

Investment design is carried out in order to determine the object of investment of financial resources, which will allow receiving dividends in the future. The document drawn up at the same time has some resemblance to a business plan, but at the same time, the project allows you to most fully cover the information and get a solution to a particular economic problem.

The concept of investment and investment

What these terms mean is generally clear to everyone. However, knowing the true meaning of investments will allow you to get good financial results. This will happen due to the activation of the asset growth process.

The term "investment" is understood as a certain way of investing capital, which allows to ensure its safety, as well as increase in value and receive a positive amount of income. Sometimes people do not know where to invest small money. This leads to the fact that they put them "in a stocking". However, such actions are investmentscannot be named, because in this case the money is not protected from the process of inflation. At the same time, banknotes stored at home are not able to bring income to the owner. Where to invest small money? The most common way is to place them on a deposit account opened with a bank. This can already be called an investment, because after a certain period of time, the invested capital will increase in size.

Earn on investments

This process can be carried out by moving capital into bank deposits and securities, as well as real estate. They are all called financial instruments.

What is meant by investment activity? This is a set of measures aimed at achieving investment goals and creating an investment portfolio. This includes making decisions about investing capital in specific objects.

Investments in securities and property can be directed. In the first case, the object of capital placement are various financial instruments that either confirm debt obligations or certify the rights to participate in the activities of the company. Some of the most common securities are options, bonds and stocks.

Property investment refers to the investment of capital in real embodied values, real estate (structures, buildings and land), gold, precious metals, antiques, works of art and other collectibles.

Special activity

To solve complex socio-economic problems in industrial productionand in the case of development work, it is impossible to do without investment design. What is meant by this concept?

Investment design is a special kind of activity. In its implementation, tools and methods are used that can significantly improve the organization of data and detail the structure of the investment project itself. This makes it more understandable. In addition, an important factor is to trace the close relationship between the components of such a project, its functions and technologies. Ultimately, the effectiveness of all actions taken is significantly increased.

Main Tasks

Investment design is widespread in the business sector. It is here that business operations are often carried out related to the investment of free capital, which will make it possible to have additional profit in the future.

The most important task of investment design is to get an entrepreneur to answer the question about the attractiveness of the object for investing money in the current economic conditions. At the same time, such work should:

• ensure a comprehensive analysis of real demand, as well as the potential that the sales market has;
• use the most successful strategies to reach your goal;
• give a detailed and qualitative description of the results of solving production problems withposition of their ability to meet the needs of the consumer as much as possible.

Determining the amount of cash investments

One of the important tasks of investment design is to determine the amount of financial resources required to implement the plan. At each stage of the implementation of such work, the necessary calculations are made. The creation of an investment project is also important to avoid unforeseen capital shortages. The data obtained will make it possible to give recommendations on choosing the most effective ways to attract finance, expressed in lending, loans, shareholding, etc.

As a result of the successful implementation of investment design, a high-quality financial plan is formed, containing coefficients and indicators that will ensure the sustainability of the entire event.

Applied methods

New investment projects are currently being created on the basis of a scientific approach. For this, certain methods are used. Among them:

• analysis of available initial data;
• experimental tests;
• production of analytical calculations and technical expertise;
• production and sales forecasting;
• project testing.

In addition, there are analytical and simulation (dynamic) models. What is their difference? Dynamic models in investment design, unlike analytical ones, do not describe the relationships that exist in the system under study. Their use allows buildingan algorithm that displays the sequence of stages in the development of processes occurring inside the object of study. After that, a preliminary “playing out” of possible situations on the computer is carried out.

Simulation models in investment design are used in cases where the object of study is extremely complex, and its behavior cannot be described by mathematical equations.

Investment project

Such a document is an economic justification for the expediency of investing capital in a particular object. From it you can understand how profitable the investment will be, what actions will need to be taken to obtain the desired profit.

The preparation of such a project is caused by the need to attract investors. No one will ever invest in any object without first having studied all the available conditions. Investors are primarily interested in specific numbers. He needs to know the amount of profit and how long the money invested by him will pay off. Investors are also interested in the existing risks that may arise in the course of work. That is why investment analytics must convince the entrepreneur that this offer will be profitable for him.

Projects for investing capital are very diverse. They are divided according to their goals, scope, life cycle and scope of implementation. Let's take a closer look at each of these elements.

Goals

Any investment project is created to find outdirections for maximizing income from investments in the selected object.

But in addition to this general goal, there are also sub-goals. They allow you to give the project special characteristics. These subgoals include:

• solving an ecological or economic problem;
• increase in output or number of services;
• new product launch.

Scale

Evaluate investment projects according to this characteristic. The magnitude indicates the amount of funds that are planned to be invested in the event, as well as the impact of the final results on the environment.

Yes, there are:

1. Megaprojects. Such investments require significant amounts of financing, equal to more than one hundred billion rubles. These are large programs considering the construction of large industrial facilities. An example of this is the regional investment project for the construction of a natural gas liquefaction plant in the Primorsky Territory.
2. Large ones. Such projects in terms of their capital investments amount to several tens of billions of rubles. Similar amounts will be required, for example, for the reconstruction of a plastic processing site, which is part of a chemical plant.
3. Average. When developing such projects, the planned capital investments approach a billion or slightly exceed it. Money, as a rule, in such cases is directed to the construction of new production facilities or modernization, as well as the reconstruction of alreadyacting.
4. Small. The amount of capital for investing in investment projects of this category ranges from ten million rubles to one billion.

According to the impact of projects, their magnitude is divided into:

1. National economic. These investment projects affect and have an impact on the economy of the entire state. An example of this is the development of a national payment system using plastic cards.
2. Regional. Such programs are similar to the previous ones, but concern only a limited area. An example of a regional investment project is the construction of a bridge in Crimea.
3. Industry. Such investment projects are intended for implementation only in a single area of the national economy. For example, oil production in the offshore area.
4. Local. The purpose of such projects is directly related to a specific locality. An example of this is the construction of a small power plant that runs on local fuel.

Life cycle

Each investment project has to go through a certain time period. The beginning of such a life cycle is the birth of an idea. This is followed by its execution on paper, which implies work on investment design. The life cycle of such an activity ends with the exhaustion of all the possibilities of an already implemented idea in the process of its application in a specific production.

Investment projects based on the time of their implementation

They can be as follows:

• short-term (up to 5 years);
• medium term (5-15 years);
• long-term (over 15 years).

The life cycle of investment projects relating to new construction is always longer than those considering the expansion of production on the existing technical and technological base. In addition, the time interval for the execution of large-scale works always exceeds the same period for local activities. In addition to these indicators, the duration of the life cycle is also determined by the conditions in which the object is located, in whose development capital investments are provided, as well as its environment.

With a favorable investment climate, the duration of the time period for performing work is significantly reduced. Such conditions are quite attractive for entrepreneurs. In this case, the efficiency of the investment project increases, that is, the return on investment per unit of time.

Sphere of implementation

According to this indicator, all investment projects are divided into:

1. Production. These are investment projects aimed at creating real products necessary for the development of the country's economy.
2. Social. Such investments include investments in education, he alth care and other similar areas of public life.
3. Environmental. These projects are aimed at developing methods and methods for protecting the atmosphere from harmful emissions, conserving natural resources, etc.
4. Scientific and technical. Such investments are necessary to maintainfundamental and applied science. The money in this case is invested in the most promising research areas.
5. Into the financial system. Such investments are directed to the development of methods for managing banks, the development of stock exchanges and the stock market, the insurance system, etc.
6. Organizational. Such investments are necessary to improve the management of product quality and production, as well as to create normal working and leisure conditions for working people.

Performance evaluation

Each of the stages of the investment project is subject to careful consideration. At the same time, an economic assessment of the return on capital investments is made. At the first stages, the conclusions drawn are predictive in nature. Subsequently, based on the available actual indicators, the evaluation of the project's effectiveness acquires a calculated character.

Taking into account that any forecasts cannot be 100% certain, some assumptions cannot be ruled out in their description. This is reflected in the accuracy of the assessment. But investors are most interested in the moment of transfer of funds from costly to profitable. To determine it, there are dynamic and static estimates. Which type will be chosen depends largely on the stage of the investment process.