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S.Roodchenko, software designer and project director

Project management: Investment planning

Investment project planning

Let's explore how MindDecider's project management tools can be used in planning of corporate investment projects.

Realization of investment projects pursues the ultimate goal of increasing corporate profits by enhancing company's presence on the market and boosting regional sales. The process, however, is quite time/resource-consuming and requires a great deal of planning work. After the decision to invest is taken a project should be planned for the following stages or phases:

  1. Preliminary stage

    1.1. Choice of location for the future project. Investors analyse and compare several regions or territories by several criteria: resource base, labour supply, market capacity, transportation facilities, engineering and business infrastructure, etc.

    1.2. Market analysis. The selected territory is analysed for its marketing potential (demand and supply, local competition, etc).

    1.3. Brief feasibility study. Goal of such a study is to make sure that the investment project is feasible (profitable) on the planned market.

  2. Project preparation stage

    2.1. Negotiations with resource suppliers, government officials, money lenders (banks, corporate co-investors, etc), investment advisors/agencies, design and construction companies, etc. Although this phase follows preliminary stage, some communication activities should start in the process of market analysis (with resource suppliers, government officials and investment consultants) as a part of gathering decision-making information. The result of negotiation with financial companies is obtaining a loan for project implementation stage.

    2.2. Documents preparation.

    2.2.1. Main document that describes investment project in all its financial and organizational aspects is a business plan. It is based on feasibility study, market analysis and preliminary information from resource suppliers, potential clients, government bodies and investment advisors. The plan basically covers issues of company's organization, production, marketing, financing, investors relations and risks of the project.

    2.2.2. Design estimates usually contains work drawings of production and administration facilities, technology description, equipment specification and other planning documents.

    2.2.3. Business plan, design estimates along with supporting ducumentation should undergo an expertise by investment advisors, government bodies and co-investors (or money lenders).

  3. Project implementation stage

    3.1. Engineering: plant layout, specifications and operations, equipment arrangements, transport and installation plan, communications design, manufacturing schedule, etc.

    3.2. Construction works: site preparation, erection, construction, extension or structural alteration of a future production facility. The stage requires constant negotiations and approvals with area administrators, public service providers and design and contractor companies.

    3.3. Company registration. It is advisable to register a new company as early as possible, but often the procedure starts along with construction works and before equipment supply. The company may be registered as a joint stock company, limited liability company or as a branch of a foreign company.

    3.4. Equipment supply. This phase follows a period of negotiations with equipment suppliers and starts when the construction works are at least 85% complete.

    3.5. Start up: equipment testing, resource supply, hiring of workers and their training, checkout and adjustment of technology process, etc.

How MindDecider can facilitate investment planning process?

  1. Draw a Gantt diagram to structure investment process and set a sequence of phases. It is done on a TimeLine that appears in Time Analysis mode (F7):
    Project timeline layout

  2. Estimate each stage (substage) by several criteria that can be applied to investments:
    • financing: an amount of financial resources owned or received by investor company for a specific phase of project realization.
    • expenses: an amount of money spent by an investor company for a specific phase.
    • people: number of workers or specialists engaged into a process on the given stage.
    • risks: financial, organizational, material, legal or other risks accompanied with the given stage.
    • readiness: per cent figure showing how much is done by the given moment of time. This criterion is used to track the state of several phases and to compare the planned and factual completeness of a phase.

    In Time Analysis mode you may set the time parameters of a criterion/resource on a Time Curve. For example, if you plan to recieve tranches from banks according to an agreed schedule, a time-money graph will be of great help:
    Project management tool - Time Curve

  3. Invite your colleagues or project experts into a Teamwork mode to generate consensuses or group estimates taking into account authors' significances (position or experience).
  4. Apply different data processing methods and options for criteria:
    • Summing: for financial resources, expenses and people. Thus you may track the total amount of resources received, spent or used on the given stage of project realization.
    • Risks: special criterion for risk calculation.
    • Readiness: special criterion option.

    Moving a green pointer line along a Timeline you may track the changes of criteria estimates in the given moment of time:
    Tracking project readiness

  5. Perform time optimization of project stages: The option finds optimal time sequence of phases by a selected criteria (e.g. risks), so that the estimates were the highest/lowest during all the period in question. Here you may apply conditions or constraints for items (start after, end before, green time). This option is often used for the purposes of risk minimization or profit maximization strategies.
    Time optimization function - minimize risks, maximize financial resources

  6. Apply sensitivity analysis: draw a Tornado diagram showing the influence of different factors on a root item rate:
    Tornado diagram - influence of factors

  7. Generate analytic report (F8) showing brief statistics for all stages of investment process, time-rate graphs that can be copied into your presentation or strategic planning report.
Here you may download MindDecider project template for its further application to your specific requirements and plans.
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