GPM First
Chapter 6 of Project Management (978-1-4094-5419-9) by Dennis Lock

Financial Appraisal and the Business Plan

The methods and procedures described in previous chapters have not advanced us very far through the project life cycle, and there will be more data to analyse and more decisions to be made before any actual project work can be authorized. But at least we should now have an outline deinition of the project, together with an estimate of what it should cost and an initial idea of how long it will take to complete. This chapter advances the process of project consideration a little farther by comparing the estimated time and costs with the beneits that the project investor or owner wants. Those data and comparisons will form the basis of the business plan or project proposal.

Project Feasibility Analysis

Managers frequently have to make decisions on whether or not to authorize investment in a project, or they might be asked to decide between two or more different project options. Depending on the type of project under consideration, their inal decision will depend on many factors, including answers to questions like the following:

  • Is the project feasible technically?

  • Are we confident that the claims of the engineers, designers, consultants or architects are valid?

  • What are the environmental implications?

  • What are the implications, if any, for our staff?

  • For a new consumer product development, can we produce it, will people like it, how many can we sell and at what price?

  • Is the project likely to be finished on time?

  • How much will it all cost?

  • For machinery or process plant, what are the expected operating costs?

  • Is there no better project strategy than the one proposed?

  • What are the technical risks?

  • What are the commercial risks?

  • Is the return on our investment going to be adequate?

  • For a management change project, have the intangible beneits been evaluated as well as the tangibles?

  • How can we raise the investment money?


It is sometimes necessary to commission one or more feasibility studies from independent experts to answer many of these questions. A feasibility study might examine more than one possible project strategy in depth.

For example, a project to develop a copper mine in an undeveloped region can be approached from a number of strategic standpoints. Many geological, environmental, political and economic factors must be considered for each of a number of different case options. Should the ore be mined, given some treatment to concentrate the copper, and then be shipped a great distance to an existing smelter and refinery? Or should a new smelter and reinery be built at the new mine location? A feasibility study for any new project could, therefore, examine several different strategic options in considerable depth.

Experts’ reports can be open to doubt or give rise to further questions but a feasibility report will usually be required as part of the business case to be considered by the potential owner or fund provider for a very large project. Whatever the circumstances, a careful appraisal of the expected financial outcome is likely to have great influence on most project authorization decisions.

Different Viewing Platforms for the Project Investor and the Project Contractor

Most projects involve at least two different principal organizations, each on one side of a contract. On the one hand there is the organization that perceives a need for the project and then inds the motivation and the money that allows it to happen. On the other side of the contract is the organization hired to undertake the work (the contractor). These two principal participants can be found in almost every project, although their identities are often shrouded in organizational complexities. For example, in IT and management change projects the customer and main contractor often reside within the same company or group of companies. Also, many projects have several small contractors rather than one main contractor.

This chapter, therefore, examines the comparisons of expenditure and resulting beneits as they might be viewed by the customer and the contractor. The relationships between the timing of payments and the resulting revenues or benefits are quite different for these two parties.

In a typical project the project owner must ind all the funds and cannot usually expect any beneits until after the project has been completed. The project contractor, on the other hand, can expect to receive interim payments (known as progress payments or stage payments) from the project owner, in accordance with the amount of work that can be certiied as being successfully completed. Thus the project contractor does not usually have to fund the whole cost of the project up to completion and handover. The following case example illustrates these points.

Case Example: A Luxury Service Apartments Project

A property development company, APDC plc, has identified a site upon which to construct a building that will contain ten luxury apartments. APDC estimates the total project construction cost to be £5 million. The location is attractive and all apartments should be let as soon as they are built and ready for occupation. The company intends to let these to tenants as service lats, which means that maintenance and other services will be included in the rentals. The life cycle and cost/benefit patterns for this project are presented in Figure 6.1.

Figure 6.1 Cost/benefit patterns of the luxury service apartments project


For their investment of £5 million, APDC will finish up owning a building with an appreciating capital value. The beneits resulting from this project will comprise the rent and service charges to be paid each month by the tenants. These have been set at an average of £3,000 per calendar month per apartment. Provided all the apartments can be let without delay, this will produce a gross annual income of £360,000, which is a gross annual return on investment of 7.2 per cent.

The financial calculations for the main contractor that builds the apartments are also straightforward, but cover a shorter timescale. The contactor’s cost estimate before allowancing for contingencies was £4 million, so that a fixed price of £5 million should theoretically net the contractor a maximum possible gross mark-up on costs of 25 per cent (which is a gross profit of 20 per cent of sales). In practice, many things can happen on a construction site to increase costs and erode proit, but a competent contractor should feel reasonably conident of achieving the target proit.

It is apparent that a construction project of this nature need not be subjected to further financial appraisal. The owner can regard it as a secure capital investment and the contractor can expect to be repaid with a fair proit. Of course there would be some risk of failure, but that risk is small when compared with many other kinds of projects.

Relevance of Project Financial Appraisal to the Potential Investor

Most projects requiring considerable financial investment will involve more uncertainty and risk than the luxury service apartments project just described. In many such projects, some or all of the capital invested might be lost in the event of project failure. This increased project risk must often be compensated for in higher expected beneits, and most projects will need an in-depth financial appraisal before they can be authorized.

Management change and IT systems projects are particularly prone to failure and the costs of such failures can be considerable. There are many examples of high-proile public projects that have, to say the least, not provided their expected beneits on time and within budget. Statistics show that past management change and (especially) public sector IT projects have included more failures than successes. Think what a project of this kind (involving high capital expenditure in IT systems and in massive staff reorganization and retraining) would mean for the project investor if it failed. Here are some points to ponder:

  • none of the money invested in a failed IT software and systems design will be recoverable;

  • IT hardware is not best known as an investment proposition, and depreciates so rapidly that it becomes obsolete and worthless in a matter of a year or two, if not worse;

  • staff who have been affected by the failed project, some of whom might have resisted the proposed changes, will be demotivated and demoralized;

  • far from achieving the expected benefits, the failed project will have damaged the organization’s performance, prestige and prospects;

  • those who depend on the changing organization for a service or some kind will suffer reduced or interrupted service.


Competent financial appraisal can go a long way towards preventing project failure. Several appraisal methods are available to the prospective project investor and case examples follow to demonstrate some of these. These will be viewed through the eyes of the project investor, but the viewpoint of the project contractor will be revisited in the last sections of this chapter.

Introduction to Project Financial Appraisal Methods

There are two common approaches to financial appraisal. One is the simple payback method and the other uses one of a range of techniques based on discounting the forecast cash flows. Whichever of these methods is chosen, the appraiser needs to have a good estimate of the amount and timing of each signiicant item of expenditure (the cash outlows) and of the revenue or savings expected (the cash inlows).

The main cash outflow elements of a project can include items such as the following:

  • the initial acquisition cost of software, plant or equipment needed for the project. This might be a single purchase payment, a series of phased payments, or payments scheduled against a leasing or rental plan. The differences between these options are important not only for the timing of payments, but also for the tax implications;

  • interest payable on financing loans;

  • if the project is for new machinery or plant, the costs of operating and maintenance;

  • commissioning, debugging and other implementation costs;

  • staff or operator training costs;

  • all other expenses and fees payable as a result of the new project;


Against these items of expenditure must be balanced all the savings and revenues (the project benefits) that the new project is expected to generate. The following items are just a few of the many possibilities:

  • savings in operating and maintenance costs achieved by replacing old methods with the new project. For example, although a stainless steel tower bought to replace an old steel tower might be expensive initially it would have a longer life and would not need regular repainting;

  • revenue from the sale of products or services made possible by the new project;

  • proceeds from the sale of assets no longer required as a result of the new project;

  • proceeds from the eventual sale of the new project hardware, sometime in the future, after the new project has reached the end of its economic life.


Fiscal measures can have a signiicant effect on the outcome. Many cash inlows will attract taxes, while some expenditure might be offset by allowances against taxation. Some capital investment projects might generate cash inlows in the form of government grants or special tax incentives and allowances. These circumstances vary considerably from place to place and from one country to another. They can complicate financial appraisal calculations considerably and are best handled by experts. The examples in this chapter illustrate general methods and have been kept relatively simple by excluding these iscal elements.

The Simple Payback Method

Simple payback is the appraisal method familiar to most managers. It seeks to answer the blunt question, ‘How long would this project take to pay for itself?’ The method compares the predicted cash outlows and inlows relating to a new investment option against those of an alternative option (which in many cases means comparing the relative merits of proceeding with a project against the option of doing nothing). Costs and income or savings are analysed over consecutive periods (typically years) until a point is reached where the forecast cumulative costs of the new project are balanced (paid back) by the cash inlows that the project is expected to generate.

Case Example: Payback Analysis of a Boiler Replacement Project

A project is under consideration for the installation of new, more efficient central heating boilers for a group of industrial buildings situated in a cold region. Also included within the scope of this project are an electronic optimizer control unit and heat insulation for the buildings (all measures that should improve fuel economy). Total installed cost of the project is estimated at £60,000, and the work could be carried out over a week or so in mid-2013.

Benefits claimed for the new system include a reduction in fuel costs from the current £90,000 to £80,000 in each calendar year, although only £5,000 savings could be expected in the year 2013 because the project would not come on stream until July. Maintenance of the new plant is free for the remainder of the year 2013, under the terms of a guarantee. After that, maintenance costs are expected to be £6,000 for the second year, rising to £8,000 for the third year as the plant begins to age, finally reaching £10,000 per annum (which is the same maintenance rate as the old system).

The forecasts for each calendar year can be tabulated, as shown in Figure 6.2. In this case, it is seen that the project seems set to breakeven before the end of 2017, so that the payback period is between four and ive years.

The payback period can be pinpointed with greater accuracy by drawing a graph. There are two ways in which this can be done and both methods are shown in Figure 6.3.

The curve labelled A is the expenditure to be expected if the existing plant is retained and the proposed new project is not authorized. Curve B is the alternative expenditure pattern expected if the project proposal is accepted and the new plant is installed during June 2013 for start up on 1 July 2013. Curves A and B intersect at C, which is the breakeven point, where the additional costs of the new project have just been balanced by the resulting savings. A vertical line D has been drawn to highlight the breakeven date, which is seen to be about two-thirds through 2017.

Curve E shows another way of drawing the graph. In this case only one curve has to be drawn. This is the cumulative net cash low, plotted using data from the table in Figure 6.2. The point at which this changes from an outflow to an inflow is marked at F, the point where the curve crosses zero. This should, and does, give the same breakeven result as the two-curve method described above. It would, however, allow more sensitive vertical scaling, giving a greater crossing angle at the intersection and, therefore, a more accurate result.

Figure 6.2 Boiler replacement project: simple payback calculation


Figure 6.3 Boiler replacement project: payback graphs


Discounted Cash Flow

The simple payback method is adequate provided that the total payback period is one or, at the most, two years. It is less satisfactory when looking ahead for longer periods, especially when high rates of return on investment are required. The reason for this is that any given sum of money earned or spent in the future has less real value than the same amount of money earned or spent today. The main cause lies in the notional earning power of today’s money. If £100 is received today and invested for an annual net return of 10 per cent, that £100 should be worth £110 after one year. Put another way, £110 received or spent in one year’s time is equivalent to receiving or spending only £100 today. Today’s £100 is called the discounted or ‘net present value’ (npv) of the future £110.

Although cost inlation can also have a signiicant effect, it is usually ignored for the purposes of appraisal calculations (partly because the amounts arising from inflation usually occur on both sides of the inlow/outlow equation and therefore tend to cancel out).

Tables can be obtained which list discount factors over a wide range of percentage discounting rates and periods. Project life periods are usually broken down into years for discounting, but shorter periods are sometimes chosen, especially where very large sums are involved. A short but useful table of discount factors is given in Figure 6.4. However tables are now outdated and any person can calculate the discount factors using a pocket calculator. For example if the discount rate per annum is to be 5 per cent, dividing 1 by 1.05 repeatedly will produce the relevant factors. That’s how I calculated the table in Figure 6.4. Microsoft Excel can also be used.

The discounting rate chosen for a particular project is a matter for management judgement, subject to the following inluences:

  • prevailing interest rates;

  • the rate of return on capital invested expected in corporate financial objectives (the dominant factor);

  • advice from the company’s financial director or senior accountants.


Case Example: Net Present Value of the Boiler Replacement Project

The boiler replacement project described earlier in this chapter can be used to demonstrate the npv concept. The example has been kept simple and does not include all the possible cash low items. Taxation has not been taken into account: in practice beneits would have a corresponding tax charge against them, whilst many outlow items would be set against tax as allowable expenses.

A six-year period has been chosen in this case, because the company’s management has considered this to be a reasonable life expectancy for the new boiler without further change. In many other financial appraisal cases, some event forecast or planned for a ixed date in the future will place a inite limit on the project life and determine the appraisal period. Examples of such events are the expiry of a lease on a building, the planned discontinuance of a product, or the date forecast for a mineral deposit to become exhausted to the point where it is no longer economic for mining.

Npv calculations can seem a little strange at first but they are really quite simple if the correct procedure is followed. The secret lies in careful tabulation of all the financial elements, setting each item of cash inlow and outlow in its appropriate time period on a sensibly designed layout.

Figure 6.4 Table of discount factors for calculating net present values


In the boiler project example, the tabulation and calculation of net lows before discounting has already been performed (Figure 6.2). The discounting calculations are illustrated in Figure 6.5. Using a discount rate of 10 per cent (chosen rather high to emphasize the effects of discounting), it is seen that this project has a npv of minus £1,812 after ive years. In fact it would not breakeven (the npv would not move into positive territory) until the year 2019. That result depends on the boiler working well without major overhaul for more than its predicted trouble-free life of six years. This is a more pessimistic (but more realistic) result than that obtained from simple payback analysis.

Figure 6.5 Boiler replacement project: net present value calculation


Calculating the Expected Rate of Return on Investment for the Boiler Project

Suppose that management want to know the expected rate of return on their company’s investment in the boiler project over the ive-year period. The rate of return is equivalent to the percentage discounting rate that would give a forecast npv of zero. This rate can be found by repeating the calculation shown in Figure 6.5 with different percentage discounting rates until one is found that yields the required zero npv. There are three possible ways in which this can be done:

  1. One of the test calculations might, with good fortune, yield zero npv or a value which is suficiently close to zero to be accepted.

  2. It is more likely that no calculation using a whole-number percentage rate will give zero npv. The calculation will probably have to be performed several times (called reiterations), changing the discounting rate in small steps until the rate is found that gives zero npv.

  3. A graphical method can be used instead of reiterations by trial and error; calculations can be made using a few whole-number discounting rates that give a range of fairly small positive and negative npv values. These npv values must be plotted on a graph against the discounting rates that produced them. The point at which the line crosses zero npv will allow the forecast percentage return on investment to be read off.


Case Example: Financial Appraisal of a Tollbridge Project Using Discounted Cash Flows

Here is a slightly more complicated case. Mrs Goldbags, a lady of considerable wealth, owns land that includes a long section of a river valley. Two fairly busy highways run alongside both banks of the river for many miles and Mrs Goldbags wishes to profit by linking these highways with a short road bridge that would cut road journeys and save road users much time and inconvenience. She plans to recover her initial investment and thenceforth make a proit by charging a toll for each road user who crosses the bridge in either direction. Here are the parameters for the proposed tollbridge project:

  • project start, 1 July 2014;

  • forecast road opening date, 1 July 2016;

  • total costs of designing and building, £20 million, spread evenly over the two-year construction period. For simplicity, this includes start-up costs of recruiting and training staff just before the road opens;

  • toll revenues, based on traffic predictions, £3 million per annum, with no allowance made for growth;

  • maintenance costs free for the first full year of operation (1 July 2016 to 30 June 2017);

  • subsequent maintenance costs £1 million per annum, starting 1 July 2017;

  • management and administration costs (insurances and staff salaries) £100,000 in each full year of operation;

  • all funding is from existing cash reserves, so that there are no loan interest charges to be incurred;

  • rate of return on investment required is 7.5 per cent over an appraisal period ending on 31 December 2029.


The discounted cash low schedule in Figure 6.6 indicates a npv of minus £3,612 million for the tollbridge project. So, this project cannot yield the required 7.5 per cent return on capital invested according to the parameters given. Recalculations tested with different discount factors (not illustrated here) show that the npv becomes positive when the discount factor (and the required rate of return on capital invested) is reduced to 5 per cent.

Figure 6.6 Tollbridge project: net present value calculation


Other ways of viewing this project give different but misleading results. A full year’s operating proit and loss account would, before taxation, show total costs of £1.1 million against sales revenue of £3 million, which is a handsome gross annual operating proit of 63.33 per cent. But that ignores the sunk costs (the invested capital) of £20 million. Using a simple payback calculation (again not illustrated here) this project would give the falsely optimistic impression that this project would breakeven during the year 2022 (after about 12 years).

What the discounted cash flow method shows in this case is that Mrs Goldbags might be better advised to abandon the idea of this project (with all its attendant risks) and place her £20 million in bonds or deposit accounts with a guaranteed yield of 5 per cent or more per annum.

How Much Confidence Can We Place in the Data?

The results of project financial appraisal can be the prime factor in deciding whether or not to commit vast sums of money in launching a new project. Senior managers who are presented with a business case will, if they are good at their jobs, ask searching questions. In particular, they should be asking how much confidence can be placed in the data used in the appraisal. Most estimators and analysts tend to be too optimistic in their predictions. A financial appraisal that predicts a good, very positive npv at the end of several pages of tables and arguments can be very persuasive. However, many of the estimates of costs and time used to build up the business case are only estimates, made as judgements by fallible human beings. They are not facts set in tablets of stone. Quite often, the estimators get it wrong and the project fails to produce all the expected benefits.

We need to make some sense out of such uncertainty. Two commonly used methods are sensitivity analysis and Monte Carlo analysis. Both of these methods deal with the possibility that the data are lawed. They deal with uncertainty, but not with risk events that might change the intended course of the project (risk is the subject of Chapter 7).

Sensitivity Analysis

Sensitivity analysis is one way to gain more confidence in the reliability of an appraisal. The process consists of repeating the discounted cash low calculations with a changed value for one or more of the parameters to test the effect (sensitivity) on the predicted npv.

Still considering the tollbridge project described in the previous section, the estimated cost of maintenance and repairs might be arrived at with some degree of conidence by obtaining an advance quotation for a service contract to carry out this work. The annual costs of managing the operation should be relatively simple to estimate, because the number of staff needed and the salaries to be paid can be assessed fairly well. Two factors in the tollbridge project cannot be so reliably predicted however. These are as follows:

  1. Unforeseen problems during construction that, although not affecting the fixed price agreed, could delay the completion date, thus putting back the start of operations and cash inlows. A few examples from similar projects in the past include exceptionally bad weather, actions by environmental groups, discovery of archaeological remains, disturbance of rare fauna or lora, stoppages through industrial action, unexpected geological conditions and so forth.

  2. The forecast for trafic lows and consequent toll revenues might prove to be very inaccurate when the bridge opens, possibly resulting in revenues well below the target levels.


Using sensitivity analysis, each or both of these factors could be changed, either independently or in combination. The changes might, for argument’s sake, be made in steps of ± 5 per cent. After each change, npv must be recalculated to assess the impact of the changed parameter. The sensitivity of npv to these changes will help to indicate the reliability of the financial appraisal.

Monte Carlo Analysis

Monte Carlo analysis is a statistical method, associated with some very impressive (but to most of us not very helpful) mathematics. Fortunately, the process is made simple for project managers and financial analysts by the number of off-the-shelf software applications now available. Development of this software in the project management context was originally focused on attempts to predict the probability of finishing a project on time. However, the same principles and a very similar process can be used to predict the probability of cost estimates being under- or overspent.

Monte Carlo analysis of time and cost estimates are both relevant to uncertainty in financial project appraisal because time and costs are greatly interdependent. The illustration in this chapter is for a Monte Carlo analysis of a project’s cost estimates.

An example of Monte Carlo analysis of cost estimates

In Monte Carlo cost analysis, the estimator or some independent authority must first review each cost estimate and from it produce two further estimates. Thus, for every original cost item estimated, three new estimates must be tabled. These are as follows:

  1. the original estimate, which should be the most likely cost experienced for the cost item;

  2. a higher estimate, set at the highest possible or most pessimistic estimate for the item;

  3. a lower value, which is the lowest possible or most optimistic estimate for the item.


Thus every item on the original task list will now have three estimates attached to it, the most likely, the most pessimistic and the most optimistic. Monte Carlo analysis makes use of these different estimates by substituting them at random in many reiterations of the total project cost estimate. At one extreme the computer calculation might contain all the improbably low estimates. At the other extreme all the highest, most pessimistic estimates would be included. Between these least likely calculations, the computer can be made to carry out a great number of project cost calculations in which any of the three possible estimates for each cost item is used at random.

Figure 6.7 shows the kind of result that Monte Carlo analysis can produce after many hundreds or even thousands of repeat calculations. The height of each vertical bar in the histogram indicates the frequency, which is the statistical term for the number of calculations that produce a particular estimated total project cost. The envelope containing these bars is seen to follow an approximately normal distribution curve spread around a mean figure of about £3.4 million pounds.

In practice, the curve might be skewed towards a higher or lower probable total project cost but in this case the highest probability is that the project will cost £3.4 million. If the curve is slewed towards the right (that is, towards the higher cost end of the graph) that implies a higher risk of the project overrunning its budgets or even failing.

Figure 6.7 A histogram and probability curve from Monte Carlo Analysis


Uncertainty in project benefit estimates

Just as cost estimates can be subjected to Monte Carlo analysis, the same three-estimate approach can be used to assess the probability of achieving the desired project beneits. Provided there are enough data, Monte Carlo analysis will produce another graph of the same form as that shown in Figure 6.7, but the distribution curve might have a quite different shape.

At least one company (Isochron Ltd) displays the results of Monte Carlo cost and benefit analyses in a chart which they call the ‘Monte Carlo Box’. Figure 6.8 shows a chart based on that concept. This chart demonstrates how project financial analysts might summarize and compare results from cost and benefit analyses in a business plan, using a format that senior managers can readily understand.

Project Funding

The Project Owner’s Viewpoint

Project funding may not be of direct concern to every project manager – unless shortage of funds puts the future of the project (and its manager) in question. However, here is a list of possible sources from which an organization may be able to ind the capital needed for investment in a project:

Figure 6.8 Chart comparing project cost and benefits after Monte Carlo analysis


  • cash reserves (money held in the bank or in short-term investments, including proits not distributed as dividends to shareholders);

  • sale of assets (for example, the owner of a stately home sells a valuable work of art to raise capital for a building restoration project, or a company realizes cash on its real estate in a sale and leaseback deal);

  • mortgaging property;

  • borrowing from a bank or other financial institution, either as an overdraft or as a ixed-term loan;

  • borrowing through a lease purchase agreement;

  • renting or leasing (in which case the project will be owned by the financing institution and not by the project user);

  • issuing debentures or loan stock;

  • raising share capital, either in a private or public company. The company may be specially set up for the project;

  • collaborating with other companies to set up a consortium or a joint venture company in which skills, resources and risk are all shared;

  • government sources at international, national or local level, through direct grants or iscal incentives;

  • for export projects it might be possible to borrow from a bank against security provided by a government’s export credit guarantee scheme.


Project Funding From the Contractor’s Viewpoint

Project funding considerations are not the sole concern of the purchaser. Contractors often need to take a serious interest in the financing of projects for several reasons:

  • In some cases the contractor might offer to help or advise the customer to arrange finance. Financing proposals may even feature in the contractor’s project tender.

  • The contractor must be assured that the customer is financially viable, and has access to sufficient funds to meet all project costs. Will the customer be able to pay the bills? Financial viability is considered further in Chapter 20.

  • The contractor may need finance to invest in new plant or to expand other facilities in order to be able to carry out the project.

  • If the project size is significant compared to the contractor’s other work, cash flow will have to be considered. The contractor may have to fund costly work-in-progress until payment is eventually received from the customer. This dificulty can be made worse if invoices are disputed, delaying revenue receipts. Some customers pay late, not just through innocent tardiness but because of a deliberate policy to delay payment of every bill for as long as possible. The experienced contractor will attempt to minimize these effects by insisting on a contract that allows for progress payments, and by eficient invoicing and credit control methods.

  • Money due from overseas customers can be particularly dificult to collect, with risk of serious delays or non-payment. It is easy for the inexperienced contractor to cause delay in payment through any failure (however trivial) to observe the complex documentation formalities imposed by some governments. The big banks are excellent sources of advice for those new to exporting.


A contracting company will be able to reduce its borrowing requirement if it can improve its cash low. The following are some of the methods that might be considered:

  • reducing inventory (stocks and work-in-progress);

  • using trade creditors to advantage, negotiating longest possible credit terms for the payment of suppliers’ and subcontractors’ invoices;

  • keeping trade debtors to a minimum through prompt and accurate invoicing, asking for progress payments where appropriate, and applying rigorous credit control.


References and Further Reading


Dayananda, D. , Irons, R. , Harrison, S. and Herbohn, J. , (2002), Capital Budgeting: Financial Appraisal of Investment Projects, Cambridge, Cambridge University Press.


Gambles, I. , (2009), Making the Business Case: Proposals that Succeed for Projects that Work, Farnham, Gower.


Lumby, S. and Jones, C. , (1991), Investment Appraisal and Financial Decisions, 6th edn, London, Thomson Learning.


Lumby, S. and Jones, C. , (2003), Corporate Finance: Theory and Practice, 7th edn, London, Thomson Learning.

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