# SAB5#22_Methods of selection project

Mind Map by Eric Martinez, updated more than 1 year ago
 Created by Eric Martinez about 5 years ago
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0

### Description

Una empresa utiliza distintos metodos de evaluacion de proyectos para seleccionar un proyecto.

## Resource summary

SAB5#22_Methods of selection project
1 Benefit measurement methods
1.1 Murder board
1.2 Peer review
1.3 Scoring models
1.4 Economic models

Annotations:

• You can choose one or more of these.
1.4.1 Present Value

Annotations:

• The value today of future cash flows. Avoid confusing Present value and Planned value
1.4.2 Net present value
1.4.2.1 Present value minus cost over many periods
1.4.2.1.1 The project with the greatest NPV is selected
1.4.3 Internat rate of return (IRR)
1.4.3.1 The higher is the better
1.4.4 Payback period
1.4.4.1 Select one with the shorter payback period
1.4.5 Cost - benefit analysis
1.4.5.1 Benefit/cost Benefit cost ratio should be greather than 1

Annotations:

• Revenue is not the same as profit. If benefit cost radio &gt; 1 then  benefits &gt; costs. if benefit cost radio &lt; 1 then benefits &lt; costs. if benefit cost radio = 1 then benefits = costs.
1.4.6 Economic value added (EVA)

Annotations:

• The project returns to the project more value than the initiative cost? Is not the same as Earn Value Analisys
1.4.6.1 The project returns more value than the initiative cost?
1.4.7 Opportunity cost
1.4.7.1 Is the value of the project not selected

Annotations:

• Project A \$45000 Project B \$85000 Project Selectd = Project B Opportunity cost = \$45000
1.4.8 Sunk cost
1.4.8.1 Expended cost

Annotations:

• Is the over cost of the project and not should be considered when deciding whether to continue a troubled project
1.4.9 Law of Dimishing returns
1.4.9.1 A certain point, adding more inputs will not increase productivity
1.4.10 working capital
1.4.10.1 Is the amount of money the company has available to invest
1.4.11 Depreciation
1.4.11.1 Straight line depreciation

Annotations:

• The same amount of depreciation is taken each year
1.4.11.2 Accelerated depreciation

Annotations:

• is faster than straight line depreciation
1.4.11.2.1 Double declining balance
1.4.11.2.2 Sum of the year digits
2 Constrained optimization methods
2.1 Linear programming
2.2 Integer programming
2.3 Dynamic programming
2.4 Multi - objective programming

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