การบริหารการเงิน และงบประมาณโครงการ Financial and Budget Management for Project Thanapat Pisutsin 1

“Sharing our project experience” 2

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 “The study of Brand evaluation for Transport Co.,ltd.”  “Increasing the customer satisfaction for OSS, Ministry of Energy”  “The study of Marketing and Financial feasibility for King Power Complex”  “Satisfaction & Effect Evaluation of Motorway Route”  “The study of Distribution Center in Mukdahan as the effect of EWEC (East West Economic Corridor) Route  “The study of Expectation to Waste Water Management Authority”  “The Master Plan of Industry Estate in Northeastern Region”  Etc... 4

 The experience about basic financial indicators for the project work.  Cost & budget control for the project. 5

To help manager identify those projects that add value to the firm’s value… (The Financial Management: Theory and Practice; Eugene F. Brigham, Michael C.Ehrhardt) 6 Most of the project are mutually exclusive projects.

 Replacement Projects: maintenance of business, cost reduction  Expansion of existing products or markets  Expansion into new products or markets  Safety and/or environment projects  Research and Development  Long-term Contracts 7

 Payback Period  Discounted Payback Period  NPV  IRR  Profitable Ratio (B/C Ratio) 8

9 PV = Present Value Present value is the value on a given date of a future payment or series of future payments, discounted to reflect the time value of money and other factors such as investment risk. Future value measures the nominal future sum of money that a given sum of money is "worth" at a specified time in the future assuming a certain interest rate; this value does not include corrections for inflation or other factors that affect the true value of money in the future. FV = Future Value

Baht ??? Baht Interest Rate at 5% per year What will be the value of 100 Baht in next 5 years? 5% Year

Discount Rate at 5% per year What is the present value of 100 Baht in year 5? 5% 100 Baht ??? Baht Year

The expected number of years required to recover the original investment Year -1, , Payback Period = 2.33 years

Similar to regular payback period except that the expected cash flows are discounted by the project’s cost of capital Year -1, , Payback Period = 2.95 years -1, Discount at 10%

Where t - the time of the cash flow n - the total time of the project r - the discount rate Ct - the net cash flow (the amount of cash) at time t. C0 - the capital outlay at the beginning of the investment time ( t = 0 ) Net present value (NPV) is one of standard methods for the financial appraisal for long- term projects.

The method that relies on discounted cash flow (DCR) techniques C 5 Baht C 0 Baht Discount Rate at r % per year r % Year C 4 Baht C 3 Baht C 2 Baht C 1 Baht

Internal Rate of Return (IRR) is the discount rate that equates the present value of a project’s expected cash inflows to the present value of the project’s cost IRR Year PV (Inflows) = PV (Investment Costs), Or, equivalently, The IRR is the rate that forces the NPV equal to zero Cash Flows -1,

PV = PV of future cash flow/Initial cost or The present value of all inflow divided by the total initial cost at year 0 If B/C ratio > 1, can invest But B/C ratio < 1, should not…. 17

The method of financial management for the project which include loans, incomes, interests, taxes, expenses and others. Cost and budget control will also be included liquidity, cash flow, debt and assets. (Mostly use in construction project) 18

 Estimation: By using historical data, survey data, experience judgment and risk/contingency.  Controlling: Updating cash flow table and Cost Centre account form B.O.Q documents (Bill of Quantity)  Variation Order (By negotiation skill or reducing the risk by using estimating plan) 19

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