One area that did not change was the cost of capital calculation. Operating expense (Opex) projects differ from capital expense (Capex) projects in dollar size, project duration, and the choice of evaluation metrics.38% of companies have adopted agile methodologies, but have not put in place all the mechanisms to become truly agile.60% of companies use five or more financial metrics to evaluate projects, and 27% use 10 or more."The pace of change in the market is so fast-for companies and for products-that FP&A practitioners have changed their evaluation methods to adapt and be more responsive," said Jim Kaitz, president and CEO of AFP. Only 49% reported that they use terminal value (TV) as part of their evaluation, a decrease from 82% in 2013, and 51% of all projects evaluated are 12 months or less in duration. The survey focuses on the process of project decision-making and how FP&A departments are savvy business partners that deploy corporate capital effectively.Ĭomparing data from 2019 with that of 2013, the survey revealed that 41% of respondents analyzed less than three years of project investment cash flows, an increase from 11% in 2013. 21, 2020 /PRNewswire/ - Increasing volatility in product lifecycles is causing finance to shorten the time period analyzed for cash flows and demonstrate a preference for non-valuation metrics, according to the 2019 Association for Financial Professionals (AFP) Project Investment Decisions Survey.
0 Comments
Leave a Reply. |