Investment projects are what? Purpose and efficiency of investment projects

Today the very term "investment" is very popular among the broadest masses of the population. If previously only the well-to-do and large capitalists were engaged in this, now everything has changed dramatically. Investment projects are what? How to implement them for a permanent and stable income?

Implementation of the business plan

In international practice, investment projects are plans that involve investing for subsequent profit. In a general sense, any new business idea in one way or another has to do with attracting new capital. That is why, in the broadest sense, investment projects are activities related to the implementation of the enterprise's business plan to achieve the desired result. The very process of implementation in a developed economy is a series of coordinated and interrelated actions: the purchase of equipment and machinery, consulting services for the preparation of budget and project documentation, bidding, supervision of work, personnel training, purchase of licenses, construction and installation work and the like.

Project Life Cycle

The implementation of the investment project is always a long time (with rare exceptions). In economics they operate with such a notion as a "project cycle". What does it mean? This is the time interval between initiation of the project and its liquidation. This is the initial concept for solving all financial work and making the right decisions. The states through which investment projects pass are the so-called phases or stages. The stage of the life cycle is a period of time during which the dynamics of the main financial flows are monotonous, their structure is practically unchanged, and the measures for realizing the idea are practically constant. The length of the cycle means that the future value of income and expenditure is different from the current point of view.

Birth of the idea

Investment projects are, first of all, an idea. The initiative for an infusion of funds may come from a legal or natural person who wishes to participate in the investment process. It can be a customer who is looking for a particular product, or a manufacturer of a product that needs new financial injections. The initiator may be an investor who wants to invest money and does not know what probability of success and what return can be obtained in the end.

The Importance of a Business Plan

Financing investment projects is a process that always begins with the preliminary development of business plans and the necessary calculations. What it is? The business plan of the investment project is the process of the enterprise development. This is a standard document, which describes in as much detail the concept of a real project for investment, its characteristics are given. The approach to the presentation and the immediate development of a plan depends on the nature of the investment project. The business plan contains a clear and definite logical structure, unified in advanced economies. Particular attention is paid to the competitiveness of products on quality characteristics and price level. A forecast is given for the life-cycle period of the whole project and products (or services) in particular.

Financial plan

This is the most important part of the project development phase . It is actually the main criterion for the acceptance (or non-acceptance) of the investment project, as it answers the question of in what form and for how long the return of the invested capital will be ensured. In the financial plan, the calculation of reasonable incomes and expenses is carried out, the main performance indicators are reflected. The payback period of all investments in this project is also calculated.

The first stage. Concepts

At the first stage, investment projects are still concepts. Viability of the project is assessed, technical requirements plans are created, sketches are selected, and the necessary amount of financial resources is calculated. For this purpose, all the similar objects are selected for which the calculation is carried out. This phase is characterized by an increase in expenditure (quite rapid) and a complete lack of income and cash flow. Alternative investment projects are also being developed. These are projects in which various deviations from the initial goals and plans are provided in view of the set of causes (catastrophe, problems with implementation or financing, etc.).

The second stage. Necessary acquisitions

The acquisition of working capital and fixed assets begins, so money costs grow even more. New funds are being installed, necessary patents and licenses are being acquired. The effectiveness of an investment project is a parameter that is based on a profitable and adequate implementation of fixed assets. Expenses also go to staff training, advertising campaign, legal registration of activities, working design, organization of supplies and purchases - that is, everything that is needed to implement the project. Cash receipts, as in the first stage, are absent.

The third stage. Commissioning

At this stage, investment projects are already completely ready for a full-fledged work. It is at the third stage that they are phased in. A sharp reduction in spending and an increase in revenue are associated with revenue from the beginning of the sale. At the end of the third stage, financial revenues reach their maximum. This stage includes insurance contributions, payment of salaries to employees, purchase of materials and raw materials, receipt of proceeds from sales, payment of taxes, changes in required assets.

The fourth stage. Stabilization

By this time the project is already functioning and is characterized by planned production of goods or services. The profit margin is stabilizing. In general, the fourth stage should be based on the business plan of the investment project. This is characterized by such parameters as the load of production capacities, the debugging of the process itself to full automaticity, the achievement of a minimum level of the cost price of a product or service.

Fifth stage. Results and prospects

By this time, investment projects have already worked their way. There is a wear of the funds, expenses to support production are increasing, and cash receipts are decreasing. By and large, in nine cases out of ten, the project is awaiting liquidation. However, another scenario is possible. Which one?

New life

The purpose of the investment project is, first of all, making a profit. But what if the idea itself has not outlived itself, but begins to bear a loss? Reinvestment is the solution. But what is this? This is the movement of financial flows from one asset to more efficient. This action connects free investment capitals by redirecting them to manufacturing or acquiring new funds to maintain fixed assets. There are several options for this development:

• Investment for replacement, as a result of which existing facilities change to new ones;
• Rationalization, modernization of technological processes;
• Change in release programs;
• Diversification aimed at creating new products and organizing new markets for its sale.

With reinvestment, investors receive profit from the sale of assets, tax cuts, the inflow of funds through the sale of parts of working capital. The amount of expenditure in this case is significantly reduced.

Monitoring and Monitoring

Control - an opportunity for the head of an investment project to determine and revise plans and estimates, to adjust the fulfillment of tasks. Control provides:

• Continuous monitoring (monitoring of the project implementation process);
• The search for deviations from the goal by means of a number of restrictions and criteria that are fixed in budgets, calendar plans, and so on;
• Prediction of the situation.

The subjects of control are facts, events, verification of concrete actions and decisions. The general monitoring is carried out by the customer himself or by the directorate of the enterprise on his behalf. Also, in accordance with the contract, the developer or contractor has the right to conduct inspections.