The main outputs of this process are obtained from steps 3, 4 and 5.
• From step 3, the financial net present value (FNPV) is obtained as an indicator of
the project profitability. Also, the financial rate of return (FRR) is calculated as a
complementary indicator.
• From step 4, the list of the critical parameters of each project is obtained. These
parameters are defined as those whose variations, be they positive or negative,
have the largest impact on the project’s financial performance.
• From step 5, a probabilistic distribution of the FNPV is obtained by assigning a
probability distribution to each of the critical variables of the sensitivity analysis.
For the calculation of FNPV and even the sensitivity analysis, Excel is the
broadest and commonly tool used. Nevertheless, for the risk assessment, the employment of Monte Carlo simulations is recurrent. For this process, R language programming has been used. The use of an open language makes it easy to completely
reproduce an analysis (starting from the same data, we can achieve the same results),
so that different researchers will obtain the same results and so that analyses can be
audited (Hopper 2016).
The five steps of the methodology are described in detail next.
3.2.1 Review Available Information from Projects’ Plans
In this first step, all available information from Ocean of Tomorrow projects is
gathered so as to obtain the financial and economic data necessary for the assessment. Public deliverables and scientific publications are reviewed looking for this
data. When the financial parameters of interest could not be found, or there is
evidence that some necessary information is available from not public deliverables,
contact with the person responsible of the project has been made asking for their
cooperation and collaboration.
3.2.2 Homogenise Available Information
This step is necessary due to the different level of detail of information in the
different projects. The available information is classified according to the maximum
possible detail, and it is grouped in a manner that allows performing the later
assessment between projects in time. The use of homogeneous classification of
costs and incomes allows to use a common methodology and to compare the
obtained results for each project.
3 Comparative Financial Analysis of Marine Multipurpose Platforms Projects. . .
41
• From step 3, the financial net present value (FNPV) is obtained as an indicator of
the project profitability. Also, the financial rate of return (FRR) is calculated as a
complementary indicator.
• From step 4, the list of the critical parameters of each project is obtained. These
parameters are defined as those whose variations, be they positive or negative,
have the largest impact on the project’s financial performance.
• From step 5, a probabilistic distribution of the FNPV is obtained by assigning a
probability distribution to each of the critical variables of the sensitivity analysis.
For the calculation of FNPV and even the sensitivity analysis, Excel is the
broadest and commonly tool used. Nevertheless, for the risk assessment, the employment of Monte Carlo simulations is recurrent. For this process, R language programming has been used. The use of an open language makes it easy to completely
reproduce an analysis (starting from the same data, we can achieve the same results),
so that different researchers will obtain the same results and so that analyses can be
audited (Hopper 2016).
The five steps of the methodology are described in detail next.
3.2.1 Review Available Information from Projects’ Plans
In this first step, all available information from Ocean of Tomorrow projects is
gathered so as to obtain the financial and economic data necessary for the assessment. Public deliverables and scientific publications are reviewed looking for this
data. When the financial parameters of interest could not be found, or there is
evidence that some necessary information is available from not public deliverables,
contact with the person responsible of the project has been made asking for their
cooperation and collaboration.
3.2.2 Homogenise Available Information
This step is necessary due to the different level of detail of information in the
different projects. The available information is classified according to the maximum
possible detail, and it is grouped in a manner that allows performing the later
assessment between projects in time. The use of homogeneous classification of
costs and incomes allows to use a common methodology and to compare the
obtained results for each project.
3 Comparative Financial Analysis of Marine Multipurpose Platforms Projects. . .
41