Investment Project Evaluation Guide
Translated by
ScribdTranslationsInvestment Project Evaluation Guide
Translated by
ScribdTranslationsSTRUCTURE FORMAT FOR FORMULATING AN INVESTMENT PROJECT
I.- EXTERNAL EVALUATION OF THE PROJECT
1. PROJECT NAME (give it a commercial name, it is not a matter of
research, therefore it is suggested that the name conveys a message of the project in
yes)
2. DESCRIPTION OF THE TECHNICAL TEAM FORMULATING THE PROJECT (details of the
professionals and specialties involved in the formulation
3. PROJECT DESCRIPTION (Brief summary of what the project is about, whether it is)
this commercial, extractive, industrial, service, etc.)
4. DEVELOP A LOGICAL FRAMEWORK OF THE PROJECT
5. LOCATION OF THE PRODUCTIVE ECONOMIC SECTOR OF THE PROJECT IN THE GDP (can
being construction, agriculture, services, tourism, hydrocarbons, etc.
6. EVALUATION OF THE IDENTIFIED SECTOR IN THE LAST 5 YEARS AND PROJECTION FOR
THE NEXT 5 YEARS. (economic analysis of the sector to consider how it was
its behavior and what the future holds based on national economic policy, if
it is accompanied by figures would be ideal)
7. LEGAL EVALUATION OF THE PROJECT (legal or illegal business, both of the activity
main as well as secondary activities involving the project
8. ENVIRONMENTAL EVALUATION OF THE PROJECT (both of the main activity as well as
of the secondary activities involving the project
9. EVALUATION OF POLITICAL FACTORS (if applicable and related to the
project, directly and indirectly)
10. EVALUATION OF SOCIAL FACTORS (if applicable and related to the
project, directly and indirectly
11. DEFINITION OF THE EXACT GEOGRAPHICAL LOCATION OF THE PROJECT
12. SUPPORT FOR THE LOCATION OF THE PROJECT (detail the advantages, depending on the
project turn, of being located in the assigned place regarding accesses,
forecasts, benefits and/or comparative and competitive advantages, etc.
13. EVALUATION OF THE PROJECT'S OWN AREA (if it has a commercial nature,
industrial, according to what is required in accordance with the zoning provided
the municipality
14. SITUATION OF ADMINISTRATIVE, LEGAL, AND PROPERTY PROCEDURES IN
REGARDING THE PROCEDURES FOR THE DIFFERENT PERMITS (specify amount and
rating of those procedures and average delay time
II.- INTERNAL EVALUATION OF THE PROJECT
1. PRODUCT DESCRIPTION ITSELF (details, scope, and benefits of the product to
develop and establish possible substitute products
2. MARKET STUDY.
2.1.- DEMAND ANALYSIS (of the good or service to be offered, supported by figures
according to a certain study period and determine if it is a demand
satisfied or dissatisfied, and other data related to demand
2.2.- CONSUMER ANALYSIS (establish who we are going to sell to and what it is)
the behavior of that consumer and their purchasing habits, etc.)
2.3.- MARKET ANALYSIS (type of market and how the mechanisms work)
of transaction)
2.4.- COMPETITOR ANALYSIS (what is the behavior of the competition,
there is, there is not, whether it is local or from another place, it is of similar or substitute products, etc.
2.5.- SUPPLIER ANALYSIS (detail of the situation of potential ones)
suppliers of inputs for the product and/or service, etc.
2.6.- ANALYSIS OF THE DISTRIBUTOR (details of the situation of the distributors and/or
of the product distribution channels, etc.)
3. ANALYSIS OF THE PRODUCT OFFER (description of competitive advantages)
and/or comparisons of the good or service in relation to the information obtained from the
competitor market, as well as the technology to be used, the production system,
sales strategy, etc.)
4. PROJECT LIFESPAN (indicate the probable useful life of the project and
sustain that horizon)
5. SALES PROJECTIONS (determine whether it is by units or quantification in
relation to plant capacity, technology, market share to satisfy, etc.)
III.- INVERSION
1. PROJECT ENGINEERING (what is going to be done constructively,
local, factory, hangar, etc.)
2. QUANTIFICATION OF REAL ESTATE MACHINERY AND EQUIPMENT (consider
everything necessarily useful to get the project started, including
emergency mechanisms
3. SCHEDULE FOR ACQUISITION OF EQUIPMENT AND PROJECT DEVELOPMENT
4. QUANTIFICATION OF PERSONNEL AND ITS COSTS (include from the
training period in case until the project's operability
5. QUANTIFICATION OF OPERATING EXPENSES – WORKING CAPITAL
How much is needed to start operating and generating income from the project?
6. FINANCIAL OFFER (detail the information of the financial system and the
products according to the need, it can be working capital,
acquisition of movable and immovable property and their respective costs
IV.- CASH FLOWS OF THE PROJECT AND RETURN ON INVESTMENT EVALUATION
1. DEVELOP A CASH FLOW ACCORDING TO THE YEARS OF USEFUL LIFE OF
PROJECT (consider projected revenues and operating expenses for
obtain the positive and/or negative flows according to behavior
of the sales according to what was projected in the supply analysis
2. FINANCIAL EVALUATION NPV –IRR
CONCLUSIONS
VIABLE PROJECT OR NOT?
NOTE: Do not forget to include the source name of the information and/or data.
Common questions
Powered by AIThe financial offer section outlines the costs related to working capital, asset acquisition, and identifies financial products and services available to support the project. Detailed analysis of financial needs and repayment capabilities influences investment decisions by showcasing potential returns, profitability, and alignment with financial goals .
Cash flow development based on projected revenues is essential for evaluating ROI as it provides a basis for understanding liquidity, operational efficiency, and financial health over the project’s lifespan. It helps in forecasting future cash inflows and outflows, identifying potential shortfalls, and allows for the calculation of financial metrics like NPV and IRR to determine investment viability and profitability .
The evaluation of social factors influences an investment project by considering community impact, stakeholder interests, and potential socio-economic benefits or disruptions. It assesses how the project aligns with societal goals, analyzes labor implications, and anticipates social acceptance or resistance, crucial for mitigating risks and enhancing project success .
Legal evaluation determines whether a business activity is lawful and complies with regulatory requirements. It includes examining applicable laws, licenses, and permits necessary for the main and secondary activities of the project, and assesses any legal risks or restrictions that could affect operational success and viability .
Conducting a competitor analysis is significant for identifying market position, understanding competitive dynamics, and pinpointing differentiation opportunities. It assesses the competitive landscape, informs strategy by analyzing competitor strengths and weaknesses, and aids in adapting approaches to gain market share .
Evaluating the geographical location helps identify advantages such as accessibility, economic incentives, and logistical benefits which can enhance a project’s efficiency and reduce costs. It also considers the strategic importance in terms of market proximity, resource availability, and connection to distribution networks, thus contributing to the project's competitive edge in its industry .
The analysis of political factors is crucial as it assesses how governmental policies, regulations, and potential political instability can affect the feasibility and sustainability of an investment project. It evaluates both direct and indirect political influences, helping in understanding the risk profile and aligning the project with any potential political shifts, which can impact operations, legal compliance, and even market conditions .
A project's lifespan determines the duration over which it can generate returns and informs long-term planning. It influences investment timelines, resource allocation, maintenance planning, and exit strategies. Evaluating lifespan helps assess financial viability and sustainability, aligning project objectives with stakeholder expectations .
Developing a logical framework is essential for structuring the planning and implementation stages, providing clarity on goals, objectives, outputs, and outcomes. It aligns resources with anticipated impacts, identifies critical risks, and facilitates monitoring and evaluation, thereby ensuring coherence and strategic alignment in achieving the project's aims .
The environmental evaluation should consider the potential impacts on natural resources, biodiversity, ecosystem services, and regulatory compliance. It should assess both the main and secondary activities of the project, evaluating waste management, emissions, resource use efficiency, and sustainability measures to mitigate negative environmental impacts .