Unit of study_

# CIVL2812: Project Appraisal

This unit aims to introduce students to project valuations using present-value cash flow theory, taxation and probabilities, and the role of these valuations in the decision-making process. Students are taught techniques for making an analysis of issues involved in project appraisal by various methods and these are applied to businesses, non-profit organisations, and governments. At the end of this unit, students should be able to comprehend and relate to real-life examples the fundamental concepts in project appraisal (e. g. the meaning of time value for money, equivalence); calculate common financial indicators for a given project and explain the relevance of each to the appraisal of the project; rank projects by combining both financial and non-financial indicators (e. g. environmental and social); understand how risks and uncertainties affect evaluation outcomes and be able to deal with uncertainties and risks in analysis; apply techniques to account for the effects of inflation/deflation and exchange rates in analysis; understand the concept and mechanisms for depreciation and carry out pre-tax as well as post-tax analysis; understand the assumptions, pros and cons of each evaluation method and be able to explain why a particular method is appropriate/not appropriate for a given project. The syllabus covers the following concepts: time value of money, cost of capital, simple/compound interest, nominal/effective interest, cost/benefit analysis of projects; equivalence, net present worth (value), future worth (value), annual worth (value), internal rate of return, external rate of return, payback period; cost-benefit analysis, cost-utility analysis, identifying and quantifying non-financial benefits/externalities; Other influencing factors: price changes and exchange rates, depreciation, taxation; Capitalisation and valuation studies, replacement of assets, real option, project risk analysis, decision-tree analysis, WACC, MARR, equity capital, debt. This unit of study is a second-year core unit for students enrolled in Civil Engineering (any major), and is a possible elective in other schools of engineering.

Code CIVL2812 Civil Engineering 6
 Prerequisites: ? None None CIVL3812 MATH1005

At the completion of this unit, you should be able to:

• LO1. rank projects by combining both financial and non-financial indicators (e.g. environmental and social)
• LO2. comprehend and relate to real-life examples the fundamental concepts in project appraisal (e.g. the meaning of time value for money, equivalence)
• LO3. calculate common financial indicators for a given project and explain the relevance of each to the appraisal of the project
• LO4. understand how risks and uncertainties affect evaluation outcomes and able to deal with uncertainties and risks in analysis
• LO5. apply techniques to account for the effects of inflation/deflation and exchange rates in analysis
• LO6. understand the concept and mechanisms for depreciation and carry out pre-tax as well as post-tax analysis
• LO7. understand the basic concepts in financing and be able to carry out basic financing analysis
• LO8. understand the assumptions, pros and cons of each cash flow evaluation method and able to explain why a particular method is appropriate/not appropriate for a given project
• LO9. understand the challenges of multiattributed decision-making and able to apply an appropriate model to a given project for effective decision making.

## Unit outlines

Unit outlines will be available 2 weeks before the first day of teaching for the relevant session.