What is investment appraisal and project funding?
Investment appraisal is the analysis done to consider the profitability of an investment over the life of an asset alongside considerations of affordability and strategic fit.
Project funding is the means by which the money required to undertake a project, programme or portfolio is secured and then made available as required. Funding for standalone projects may be via a single source or through multiple investors.
Investment appraisal is an input to the investment decision which is the decision made by the sponsor and governance board that justifies the investment in a project, programme or portfolio. It provides the rationale and justification for spending limited resources and relies on a robust investment appraisal.
The investment appraisal and business case for the project or programme depends on attribution of benefits at the right level. The business case brings together the investment appraisal for the project, programme or portfolio, with a wider evidence-based narrative of how the investment is intended to lead to realisation of the intended qualitative and quantitative benefits.
Investment decisions balance a number of elements including:
- Affordability: Can the benefits be delivered within the available funds of the organisation when viewed as part of the wider portfolio of operational and change activities?
- Return on investment (ROI): Does the investment deliver a suitable return, given the forecasted capital and operational costs and benefits over the economic life of the product. Is this the best way to get a return on the investment of funds?
- Portfolio effect: Does the investment fit alongside the wider set of investments in operational and change activities?
APM Body of Knowledge 7th edition
You can learn more about configuration management in chapter four of the APM Body of Knowledge 7th edition.
The APM Body of Knowledge 7th edition is a foundational resource providing the concepts, functions and activities that make up professional project management. It reflects the developing profession, recognising project-based working at all levels, and across all sectors for influencers, decision makers, project professionals and their teams.
The seventh edition continues in the spirit of previous editions, collaborating with the project community to create a foundation for the successful delivery of projects, programmes and portfolios.
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