What are investment projects? Purpose and efficiency of investment projects

Today the very term "investment" is very popular among the widest masses of the population. If earlier only wealthy and large capitalists were engaged in this, now everything has changed dramatically. What are investment projects? How to implement them to get a permanent and stable income?

Business plan implementation

In international practice, investment projects - which are associated with investment for subsequent profit. In a general sense, any new business idea is somehow related to the attraction of new capital. That is why, in the broadest sense, investment projects are activities related to the implementation of an enterprise's business plan to achieve the desired result. The process of implementation itself in a developed economy is a series of coordinated and interrelated actions: the purchase of equipment and machinery, consulting services for the preparation of estimate 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 an investment project is always a long time (with rare exceptions). In economics, they operate with such a concept as the "project cycle". What does it mean? This is the period of time between the initiation of the project and its liquidation. This is the starting point 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 life cycle stage is a period of time during which the dynamics of the main financial flows is monotonous, their structure is practically unchanged, and the activities for the implementation of the idea are practically constant. The length of the cycle means that the future value of income and expenses from the point of view of the present moment is different.

Birth of an idea

Investment projects are, first of all, an idea. The initiative for the implementation of the injection of funds can come from a legal or natural person who wishes to take part in the investment process. This can be a customer who is looking for a particular product, or a manufacturer of any product that needs new financial investments. The initiator can be an investor who wants to invest money and does not know what the probability of success and what kind of 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? An investment project business plan is a process of enterprise development. This is a standard document in which the concept of a real project for investment is described in maximum detail, and its characteristics are given. The approach to the presentation and direct development of the 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 in terms of quality and price level. A forecast is given for the period of the entire project and products (or services) in particular.

Financial plan

This is the most important part of the project. It is actually the main criterion for accepting (or not accepting) an investment project, since it answers the question in what form and for what period the return on the invested capital will be ensured. In the financial plan, justified income and expenses are calculated, and the main performance indicators are reflected. All investments in this project are also calculated.

First stage. Concepts

At the first stage, investment projects are also concepts. The viability of the project is assessed, requirements are created, sketches are selected, the required amount of financial resources is calculated. For this all, similar objects are selected, for which the calculation is carried out. This stage is characterized by an increase in expenses (rather rapid) and a complete absence of income and cash receipts. Alternative investment projects are also being developed. These are projects that provide for various deviations from the original goals and plans due to a combination of reasons (disasters, problems with implementation or financing, and so on).

Second stage. Required acquisitions

The acquisition of working capital and fixed assets begins, so cash costs grow even more. New tools are installed, the necessary patents and licenses are acquired. The efficiency of an investment project is a parameter that is based on a profitable and adequate implementation of fixed assets. Expenses are also spent on personnel training, an advertising campaign, legal registration of activities, detailed design, organization of supplies and purchases - that is, for everything that is needed for. Cash receipts, as in the first stage, are absent.

Third stage. Commissioning

At this stage, investment projects are already objects that are quite ready for full-fledged operation. It is at the third stage that they are gradually put into operation. A sharp reduction in spending and an increase in revenues are associated with the receipt of proceeds from the beginning of the sale. At the end of the third stage, financial income reaches its maximum. This stage includes insurance premiums, payment of salaries to employees, purchase of materials and raw materials, receipt of proceeds from sales, payment of taxes, changes in required assets.

Stage four. Stabilization

By this time, the project is already functioning stably and is characterized by the planned production of goods or services. Profit volume is stabilizing. In general, the fourth stage should rest on the business plan of the investment project. This is characterized by such parameters as the utilization of production capacities, the debugging of the process itself to full automatism, the achievement of the minimum level of the cost of goods or services.

Fifth stage. Results and perspectives

By this time, investment projects have already worked out their own. Depreciation of assets is observed, 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 also possible. What is it?

New life

The purpose of the investment project is, first of all, to make a profit. But what if the idea itself has not outlived its usefulness, but begins to bring a loss? Reinvestment is the way out. But what is it? This is the movement of financial flows from some assets to more efficient ones. This action binds free investment capital by redirecting it to the manufacture or acquisition of new funds to maintain fixed assets. There are several options for this development of events:

• replacement investments, as a result of which existing facilities are changed to new ones;
• rationalization, modernization of technological processes;
• change of release programs;
• diversification aimed at creating new products and organizing new markets for their sale.

When reinvesting, investors get a profit from the sale of assets, tax cuts, and the inflow of funds through the sale of parts of the working capital. In this case, the amount of expenses is significantly reduced.

Control and monitoring

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

• constant monitoring (supervision of the project implementation process);
• search for deviations from the goal using a number of restrictions and criteria that are recorded in budgets, schedules, and so on;
• forecasting the situation.

Objects of control - facts, events, verification of specific actions and decisions. General monitoring is carried out by the customer himself or the management of the enterprise on his behalf. Also, in accordance with the contract, the developer or contractor has the right to conduct inspections.