Use of scoring methods to evaluate investment projects

Rodion Sevastyanov and Oleksandr Hoidenko

Management and Business Articles, 2024, vol. 2, issue 1, 15-24

Abstract: The purpose of this publication was to develop a scoring methodology for evaluating and ranking investment projects by their attractiveness and potential success, as well as to use this evaluation to identify more effective projects. The article provided a methodology for calculating possible risks for further use in project ranking. The article presented a simplified mathematical model for comparing investment projects and ranking them. The model can be used in the development of own evaluation methods. In this article, methods such as discounted cash flow, real options method, expert judgment, hierarchy analysis and Bill Payne’s method were considered for start-up valuation. The key elements of the evaluation process were the determination of criteria and weighting factors. Criteria included important evaluation criteria (e.g., profitability, risk, strategic importance, social impact). Each criterion had a percentage weight based on relative importance, with weights summarised up to 100%. The article considered key aspects of effective investment with a focus on the need to minimise risks and strive for profit maximisation. The authors analysed various types of risks, which may include loss of funds due to project inefficiency or underestimation of the potential of promising investment opportunities. Attention was also paid to the investment environment in Ukraine, which has undergone significant changes as a result of the war in 2022-2024. The authors highlighted the shift in investment focus from traditional sectors, such as business centres and infrastructure, to the defence industry, and predict the economic recovery after the conflict ends. Scoring methodologies, quantitative and qualitative methods of investment project evaluation were considered

Keywords: risk minimisation; financial scoring; investment efficiency; market conditions; risk assessment (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:bdw:emsesd:v:2:y:2024:i:1:p:15-24

DOI: 10.59214/mb/3.2024.15

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