THE ROLE AND IMPORTANCE OF INVESTMENT PROJECT ASSESSMENT

Project appraisal is critical in considering whether to invest in the project.

Some investment projects, from preparation to implementation of investment and production, can have many different types of risks, which can be due to subjective reasons or due to objective reasons. Calculating the financial viability of a project is only correct in cases where the project is not affected by a variety of possible risks. Therefore, assessing, analyzing, and predicting possible risks is very important to increase the feasibility of the expected calculation plan and proactively take preventive and mitigation measures.

Here are some major risks:

• Risks of policy mechanisms:

This risk is considered to include all financial and policy uncertainties of the place or location of the project, including new taxes, restrictions and transfers, nationalization, privatization or Laws, resolutions, decrees, and other sanctions related to the projects cash flow.

• Risks regarding construction progress and completion:

This risk is considered to be completing the project not on time, and not by performance standards and parameters. This type of risk is beyond the banks ability to adjust and control.

• Market, collection, payment risks:

This risk includes: The market not accept or has insufficient demand for the projects output products and services; Due to competitive pressure, product selling prices are not enough to offset project costs;...

• Supply risks:

This is the risk when the project does not have raw materials (inputs) with the expected quantity, price, and quality to operate the project, create stable cash flow, and ensure the ability to repay loans to invest.

• Technical, operational, and maintenance risks:

These are the risks that the project cannot be operated and maintained at a level consistent with the original design parameters.

• Environmental and social risks:

This risk represents the negative impacts of the project on the environment and surrounding people.

• Macroeconomic risks:

These are risks arising from the macroeconomic environment, including exchange rates, inflation, interest rates...

IMPORTANCE OF INVESTMENT PROJECT APPRAISAL

• Help investors choose the best investment project;
• Helps investors evaluate the effectiveness of investment projects;
• Helps investors anticipate disadvantages that may affect project efficiency;
• Helps investors make decisions to invest or not;
• Helps state management agencies evaluate the necessity and appropriateness of projects on issues of economic and social development, capital technology, and environmental pollution;
• Helps financiers make accurate decisions about lending or repaying debt.

THE ROLE OF INVESTMENT PROJECT APPRAISAL ACTIVITIES

– Role of investment project appraisal for investors:

• See whether the projects contents are complete or missing or have any errors, from which there is a basis to fully edit or supplement;
• Determine financial feasibility, thereby knowing whether profitability is high or low;
• Knowing the risks that may occur in the future, investors can proactively have solutions to prevent or limit risks most practically and effectively.

– The role of investment project appraisal for investment partners and financial institutions:

• Is the basis for deciding whether to contribute capital or not?
• Know the attractive level of financial performance so you can feel secure or choose the best investment opportunity for the capital you spend;
• Knowing the projects profitability and debt repayment ability, thereby deciding on loan forms and loan levels for investors;
• Know the projects lifespan to flexibly apply interest rates and loan repayment terms.

– First project appraisal role for the state:

• Know the projects ability and level of contribution to achieving socio-economic development goals;
• Accurate and scientifically based assessment of the projects advantages and disadvantages so that there is a basis to prevent bad projects and protect good projects from being eliminated;
• There are grounds to apply preferential policies to support investors.

An investment project appraisal is an objective and comprehensive review of basic contents that directly affect the feasibility of the project to make investment decisions. Investment project appraisal requires meticulous and comprehensive implementation because it plays an important role in determining the success or failure of investment activities.

Above is the information about the importance of investment project appraisal that we send to customers. However, not all investors take the right steps, but to prevent unnecessary risks before deciding to invest.

WHAT IS THE SOLUTION TO AVOID PRICE RISKS IN PROJECT INVESTMENT?

There are many reliable appraisal addresses that customers can knock on their doors such as SunValue - Vietnams Leading Real Estate Appraisal, Vietnams leading brand 2023, strong Asian brand 2021, national brand with Actively contributing to the development of the valuation industry in Vietnam with a system of nearly 50 branches and transaction offices across the country. Is a reputable, independent price appraisal unit with more than 20 years of establishment and development, pioneering the application of technology in price appraisal, helping to monitor real estate price fluctuations, perfecting price data to support development. Developing Vietnamese and International real estate markets.

With a fast, quality implementation process, free consulting services, reasonable appraisal costs, confidential information, along with a reliable source of price data, it will bring the best experience to Customers.

Contact SunValue now to get your questions answered and get a fee quote!

SunValue - A national brand that has actively contributed to the development of the valuation industry in Vietnam.