Develop investment appraisal

The purpose of this competency is to achieve the goals of investment appraisal, i.e. to:

  • assess the viability of achieving the objectives;
  • support the production of a business case.

Performance criteria

You must be able to:

  1. determine factors affecting the appraisal
  2. identify suitable appraisal techniques
  3. perform an investment appraisal
  4. present investment appraisal information as part of a business case
  5. maintain investment appraisal documentation
  6. assure the quality of investment appraisal

Investment appraisal approaches are closely linked to complexity and environment.

It may be that investment appraisal is normally performed before the management team is formed. They then only need to understand and review the appraisal.

In some environments the investment appraisal may have regulatory or statutory implications that are significant enough to need specific reference in the performance criteria.

Additional knowledge requirements may be added to cover specific techniques, particularly where more sophisticated appraisal (e.g. Environmental Impact Analysis) or industry specific approaches are required.

Knowledge and understanding

You need to know and understand:

  1. the principles and goals of investment appraisal
  2. responsibilities for investment appraisal
  3. the context of the work and its impact on the investment appraisal
  4. objective appraisal techniques
  5. subjective appraisal techniques
  6. the importance of maintaining and updating the appraisal
  7. methods for presenting investment appraisal information
  8. how assurance applies to investment appraisal

 

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