To solve the problem of selecting effective investment-construction projects, a multi-criterion expert method for ranking investment projects in information infrastructure is proposed, which should ensure the evaluation and comparison of all possible projects at the pre-investment stage, their sorting according to priorities, and finally the efficient analysis of the projects should be carried out and selected according to the company's development strategies. A qualitative system of indices for project (including IT-projects) evaluation, a quantitative evaluation scale, and a mechanism for determining the weights of indicators have been developed. The discounted methods of evaluating the efficiency of ranked investment projects in information infrastructure are analyzed.
Construction is one of the strongest branches of material production, which includes construction installation, design exploration, engineering organizations, scientific-research institutes with construction profiles, economic management bodies in construction, as well as small business companies. The role of construction in the system of the national economy branches is very big, as well as the impact of its features on the investment process.
Investment-construction activity is a complex
of organizational, economic, and industrial
measures, which is implemented by state or
construction business participants
(constructioninstallation, customer, design, scientific research
organizations), for the accumulation and
investment of financial resources in the main
funds, to obtain profit and positive social effect.
In this process, a special place should be occupied
by the processes of finding, justifying, processing,
and final realization of current and prospective
investment projects. The purpose of the article is
to evaluate construction investment projects with
qualitative indicators, rank them, and select the
most effective projects [
A construction-investment project is a set of organizational-technical measures implemented to create an investment object of different purposes (reconstruction, restoration) and its further exploitation, using own capital or capital raising from various sources. In the theory of investment management, as a rule, three blocks of investment decisions are considered for use with real investments: • Project ranking and selection. • Optimization of project exploitation. • Formation of the investment program.
It is important to solve relevant tasks in the process of analysis and research of constructioninvestment projects (Fig. 1).
Based on the goals of the article, we will stop only on the first block, which is important in the process of implementation, to put and solve the task of evaluating actualizing projects for the construction company and selecting more effective ranking projects.
It is advisable to carry out the project evaluation process in two stages: in the first stage, the preliminary evaluation of the projects with qualitative indicators (“express analysis”) is taking place, and in the second stage, the analysis of the efficiency of the ranked projects is carried out, using discounted methods.
It should be noted that the primary assessment of construction projects is no less important and responsible than the stage of efficient analysis. The expediency of construction-investment projects in the early, pre-project stage, is determined by: the large scale of the construction processes and the high rates of expenses; the possible lack of funds needed for the realization of individual stages of the project; the need to reduce project research and technical-economic risks; with the necessary compliance of the projects with the construction company’s activity strategies; with the possible existence of competing projects, etc. [5–7].
At the preliminary evaluation stage, a multicriteria expert method is proposed, which represents a certain kind of process and involves many evaluation indicators and many experts (more than two). One of the purposes of the mentioned model is to evaluate, rank projects, and select the best projects for their investment. [5, 7]. We think it is appropriate to implement it through the following algorithm: Step 1. Formation of an expert group.
Step 2. Gathering and analyzing the proposals of the members of the expert group to determine the project evaluation indicators, according to their characteristics and the appropriate evaluation scale.
Step 3. Revealing the individual opinion of group members on the relative importance of indicators and forming a compromise opinion. As a result, the rank of indicators and their weighting system can be determined.
Step 4. Formation of an evaluation questionnaire by experts and assessment of each project with qualitative indicators, by the chosen evaluation scale.
Step 5. Forming a total assessment for each indicator in the evaluation questionnaire.
Step 6. Using the total assessment of the indicators and the established weights, calculate the overall, integral evaluation for each project.
Step 7. Ranking of projects according to the obtained results.
Let’s discuss some of the items in more detail.
There is a wide list of qualitative indicators used to evaluate investment projects [5, 7]. The article uses a system of qualitative indicators, which is relatively important for the assessment of investment-construction projects at the preproject stage. These are compliance of the project with the current strategy and long-term plans of the construction company; scientific-technical characteristics; production indicators; environmental and technological indicators; financial indicators (criteria); level of marketing activity; level of uncertainty and risk, etc.
The evaluation is done on a logical scale, but for simplicity, we will fit a quantitative meaning to each logical term. In our case, the assessment is done with a maximum of five points.
Calculating weights for the evaluation of indicators is a very important and meaningful stage [5, 7, 8]. At this time, the expert must decide which indicator is more important (prioritized) compared to other indicators, which also determines the final form of the result. There are different methods of determining weights for estimated figures [5–7], among the standard methods there is the analytic hierarchy process proposed by Saat [8]. The article uses a relatively simple method of calculating weights for estimated figures, which is as follows: a group of experts manages to rank the indicators according to certain rules, according to their priority and importance, after which the weights are calculated using the following formula (Fishbern’s rule):
Wi = 2(N − i +1)
N (N +1) (1) where, Wi is the specific weight of the indicator: m Wi = 1 , and M is the number of indicators. i=1
The presented algorithm pertains to evaluating the state of projects and calculating the integral expert indicator of evaluation. The following formula is used to calculate the integral assessment:
m I = WiCi (2)
i=1 where i is integral assessment, Wi is indicator weight, 0<Wi <1 Ci is project assessment with i criteria, and m is the number of indicators.
The use of this model allows experts to accurately express their opinion about each project, about the i-indicator and its characteristics, to discuss and evaluate the viability (state) of the project in a quantitative form.
The initial assessment of projects with qualitative indicators is a certain filter for the construction company, the main purpose of which is to prevent unpromising projects and give a way for further processing of relatively interesting and effective projects. Projects with the highest integral value.
In world practice, methods of evaluating the efficiency of investment projects are mainly used, which are based on discounted estimates (Fig. 2).
These methods are more accurate because they take into account the types of inflation, changes in rates of interest, profitability rates, etc. These methods include the current net value method, profitability index method, internal rate of earnings yield method, and redemption period method [9].
The Net Present Value (NPV) is the difference
between the
finances and
expenses
of the
reporting period, reduced to the initial year, that
is, usually taking into account the discounting of
the results and expenses. The point is that over
time,
under the
influence
of inflation
and
competition, the real purchasing ability of money
changes for both: the investor and the innovator,
“today’s” and “tomorrow’s”
money are not
equivalent. At this time, the corresponding rate is
considered as the discount factor—αt in different
periods by the means of which the financial
indicators of different periods are calculated,
reduced to the corresponding meaning of the
initial period. For example, if t is the period
discounted income [
= 1 × 1 + 2 × 2 + 2 × 2 + ⋯ ×
and discounted capital expenses [
As we have already mentioned, the discounting coefficient takes into account: different forms of inflation, changes in the interest rate, rate of income, etc. It is calculated for each financial year as follows [17]: = 1
⁄(1 + ) where E is the discount rate, equal to the banking norms (by reckoning a more reliable bank for choosing, for example, the state loan norm), the inflation level, and the sum of project risk [18–
The project is efficient at any positive value of NPV, and the larger its value, the more efficient the project (Fig. 3) [23]. (4) the project [25].
The
method of Profitability Index (PI) represents the ratio of discounted income PVk to the reduced innovative costs PVPVk, that is, two streams of payments are compared to each other: income and investment. In its essence, the profitability index shows the amount of income received for each unit of investment. From this, it can be seen that the project will be efficient when PI > 1. Obviously (PI) allows us to rank different projects according to decreasing profitability [24].
Internal Rate of Return method (IRR) This indicator is mainly used when there is a need to make a choice
between different alternative projects, the higher the IRR, the more profitable
Payback Period (PP) is one of the most widespread indicators of the assessed value of investment efficiency. It is the time interval beyond which the net present value NPV becomes a positive value, i.e. redemption occurs during the period when the accumulated present value equals the negative present value of all investments.
In other words, the payback period is the number of years required to pay back the investment. None of the listed methods alone are sufficient for project acceptance. Each method of analysis of innovative projects allows us to consider only one of the characteristics of the reporting period, to identify important moments and details. Therefore, for the complex evaluation discussed by our project, these methods should be used jointly.
The task of ranking and selecting projects, on the one hand, is relatively simple, and on the other hand, it is the basis for other tasks related to the management of investment projects in information infrastructure. It should be noted that there is no universal model for project ranking and selection, which would apply to every specific situation. There is no good or bad model. No model can fully reflect the existing reality of projects but should be as close as possible to it. Projects should be evaluated in compliance with the company’s goals. The model should be wellthought-out, flexible, easy to use, cheap, and easy to use about computer technology (IT projects).
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