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Net Present Value (NPV) - Aberdeen Group event 18th January 2018

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Posted by Colin Baker on 25th Jan 2018

The Aberdeen Chapter of the Scotland branch were entertained by an avid speaker on the topic of Net Present Value (NPV) to gain project approval.  After a brief introduction, the audience was asked what experience they had of NPV which resulted in a varied response with the majority finding that this was a totally new concept to them. 

The guest speaker, Alan Stokes involved the delegates with a lot of interesting discussions and questions. For example, a discussion on the use of NVP to approve a decommissioning project. If NVP was applied in this scenario it would calculate a negative number which would not allow this type of project to be approved. So what was the answer…well it depends! It is not such a straight forward topic and factors such as project drivers, legislation, project lifecycle context etc. all influence how the NVP is calculated. 

The list of other factors that could, in the future influence, how the NVP is endless and includes the impact of carbon capture/greenhouse gases, the community, biodiversity just to name a few. NPV can be extended to include these elements thereby encompassing a much wider scope requirement when applying the NPV tool.

A copy of the presentation can be viewed below or on the APM SlideShare page. 

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