Financial Valuation of projects and project portfolios in uncertainty

<p>This research is devoted to the financial evaluation of projects and project portfolio in modern Russian conditions. The aim of this work is to develop practical recommendations for the evaluation of projects for existing Russian fund. Objectives of the work required to perform the following tasks:</p><p style="margin-left:81.15pt;">&middot;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; analysis of the cutting-edge researches on methods of project and portfolio evaluation;</p><p style="margin-left:81.15pt;">&middot;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; analysis of the current practice in Russia, which included:</p><p style="margin-left:89.4pt;">o&nbsp;&nbsp; interviewing several professionals to identify the features of assessment practices in Russia</p><p style="margin-left:89.4pt;">o&nbsp;&nbsp; Questionnaire survey of the project evaluators</p><p style="margin-left:81.15pt;">&middot;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; analysis of the fund&#39;s portfolio and developing recommendations on how to evaluate projects and portfolio</p><p>Contextual analysis of Russian and foreign scientific publications was selected as a method of the theoretical part of research. Current practice in Russia was analyzed by the questionnaire survey among professionals directly involved in project evaluation, and as interviews with experts.</p><p>The method of real options was analyzed in detail in this work. Despite the mixed reviews of this method among practitioners were identified conditions under which the use of real options is warranted.&nbsp; Specific examples of project evaluation using real options were showed.</p><p>As a result of the study two sets of recommendations were developed: recommendations for the evaluation of projects and project portfolio in modern Russian conditions, and recommendations for formalization of evaluation procedures in Russian companies.</p><p>The first set of recommendations includes recommendation for the evaluation of projects of the Russian Fund, in particular:</p><p>&bull; recommendations for the evaluation of internal projects, whose activities are difficult to separate from other processes within the company</p><p>&bull; recommendations for the evaluation of unprofitable projects and cyclical projects,</p><p>&bull; recommendations for the evaluation of projects during early growth stage &nbsp;and implementation of real options for evaluation</p><p>&bull; features of project evaluation before sale to strategic investors</p><p>&bull; features of project evaluation on the seed stage and start-up stage</p><p>&nbsp;</p><p>Second set of recommendations devoted to the formalization of the process evaluation. Second set includes recommendations for:</p><p>&bull; Formalization of project evaluation</p><p>&bull; Formalization of portfolio evaluation</p><p>&bull; Formalization of evaluation methods</p><p>&bull; Formalization of risk management</p><p>Recommendations were submitted to the management of the Russian fund and in part will be implemented in the evaluation of projects and formalization of procedures. It is expected that these recommendations will improve project selection procedures, as well as increase the value of projects.</p>