JRC

Because we do not want to gamble with investors' money. In large capital projects we need 100% confidence that the Net Present Value will not be negative, 100% confidence that the Internal Rate of Return will not be less than our desired minimum, 100% confidence that the benefits will be larger than costs….., and, or 100% confidence that the project will not run out of money during the construction stage.
Accounting for risk increases the project transparency and may reduce the cost of project funding.

The most common decision criteria are; Internal Rate of Return, Net Present Value, Project Value, Profitability Index, Discounted Pay Back Period, and Investment Required. Considering uncertainty associated with all inputs to project financial model, none of these criteria represent deterministic values.
Typically ‘what if’ scenarios are run with focus on the ‘worst case’. However these efforts are subjective and do not provide information on probabilities associated with each scenario leaving the decision makers in limbo.
Project financial models built by JR Consulting will deliver comprehensive information for each decision criteria in form of probability distribution.
To enable making informed decisions, the decision maker will see all possible outcomes and probabilities associated with each of them. Why is that important?