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ECONOMIC EVALUATION AND PROJECT ADMINISTRATION - Coggle Diagram

- - - - Internal Rate of Return (IRR) method
        This method consists of finding an interest rate at which the conditions sought are met at the time of initiating or accepting an investment project. It has the advantage over other methodologies such as the Net Present Value (NPV) or the Incremental Net Present Value (NPV) because in this the calculation of the Opportunity Interest Rate (TIO) is eliminated, this gives it a favorable characteristic in its use by financial managers.
        The Internal Rate of Return is the rate that is earning an interest on the unrecovered balance of the investment at any time during the duration of the project. To the extent of the conditions and scope of the project, these should be evaluated according to their characteristics, with a few simple examples its foundations will be exposed. This is a very useful tool for making financial decisions within organizations.
        
        Annual Uniform Equivalent Cost (CAUE)
        The CAUE method consists of converting all income and expenses into a uniform series of payments. Obviously, if the CAUE is positive, it is because the income is greater than the expenses and therefore, the project can be carried out; But, if the CAUE is negative, it is because the income is less than the expenses and consequently the project must be rejected.
        
        Evaluation methods that do not take into account the value of money over time
        Financial ratios are essential in financial analysis. These result from establishing a numerical relationship between two amounts: the related amounts correspond to different accounts of the financial statements of a company.
        The analysis for reasons or indicators allows to observe strong or weak points of a company, also indicating probabilities and trends, thus being able to determine which accounts of the financial statements require more attention in the analysis. The proper analysis of these indicators allows finding information that is not found in the financial statement figures.
        Financial ratios by themselves do not have much meaning, so they must be compared to something to determine whether they indicate favorable or unfavorable situations.
- - - - For example, if you want to know the activities that have to be completed to start the execution of activity L, you will search for it in the first row and then you will go from top to bottom looking for the Xs. Once determined, you will search to the left to identify which activity they correspond to. In the example, activity L is preceded by E and K. In other words, to start the execution of L both E and K must be finished. If only one had finished, the completion of the other must be awaited to continue.
        Note that activity A has no precedence. This means that the project should be started with only this activity. If there is more than one activity without precedence, the project can be started by executing all of them simultaneously in parallel.
        
        As will be seen below, graphical methods constitute clear mechanisms that will facilitate decision-making in programming.
        In this section, two optional graphic methods that lead to the same result will be analyzed: the arrow diagram and the block diagram.
        The diagramming is intended to graphically represent the relationship between the different activities of a project.
        In this sense, the layout is not an end, but only an instrument that will facilitate the comprehensive understanding of the project and the allocation of resources to each of its activities.