Development of conceptual model of project value dynamics analysis in conditions of uncertainty

Authors

DOI:

https://doi.org/10.15587/1729-4061.2021.239195

Keywords:

cost-benefit ratio, risk assessment, value engineering, resource consumption, innovation management

Abstract

A conceptual model for analyzing the dynamics of the value of the project, achieved as a result of engineering, under conditions of uncertainty has been developed. In the methodological context, the proposed approach is based on an array of isovalues, each of which corresponds to its own level of optimism in forecasting the cash flow for the project. With the increase in the efficiency of the project due to engineering, the entire array of iso-value lines’ changes its geometrical position, moving further from the origin (in the four-dimensional space "time-benefit-cost-risk"). The proposed model includes three stages. At the first stage, input information is collected and the corresponding analysis is initiated. The result of the second stage is a multivariate cash flow forecast and calculation of the benefit-cost ratio (BCR) and its changes for each scenario. The third stage provides the calculation of the expected BCR and its change, an assessment of the risk of making an erroneous decision and changing this risk as a result of the engineering session. The model makes it possible to calculate the achieved proportion of the static and dynamic vectors of change in the value of the project, which is one of the key manifestations of the scientific novelty of the work. In the example considered, the share of the dynamic vector of growth in the value of the project was found to be 35.47 %. The model has an environmental property - the assessment of the success of value engineering under conditions of uncertainty is carried out on the basis of the annual total benefits and the annual total costs throughout the project cycle. Thus, the analysis takes into account the impact of the project on the environment, which is reflected in the risk assessment. The given case testifies to the feasibility of applying the model in the practice of engineering the value of construction projects.

Author Biographies

Olexander Bugrov, Kyiv National University of Construction and Architecture

PhD, Associate Professor

Department of Project Management

Olena Bugrova, National University of Kyiv-Mohyla Academy

PhD, Associate Professor

Department of Economic Theory

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Published

2021-08-31

How to Cite

Bugrov, O., & Bugrova, O. (2021). Development of conceptual model of project value dynamics analysis in conditions of uncertainty . Eastern-European Journal of Enterprise Technologies, 4(13(112), 101–112. https://doi.org/10.15587/1729-4061.2021.239195

Issue

Vol. 4 No. 13(112) (2021): Transfer of technologies: industry, energy, nanotechnology

Section

Transfer of technologies: industry, energy, nanotechnology

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Copyright (c) 2021 Olena Bugrova, Olexander Bugrov

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