Investment design is carried out in order to determine the object of investing financial resources, which will allow in future to receive dividends. The document drawn up at the same time has some similarities with the business plan, but at the same time, the project allows the most complete coverage of information and a solution to a particular economic problem.
The concept of investment and investing
What these terms mean is generally understood by everyone. However, knowing the true meaning of investment will allow you to get good financial results. This will happen due to the activation of the asset growth process.
The term "investment" is understood as a certain way of allocating capital, which ensures its safety, as well as an increase in value and the receipt of a positive amount of income. Sometimes people don’t know where to invest a little money. This leads to the fact that they put them in a “stocking”. However, such actions cannot be called investments, because in this case the money is not protected from the inflation process. At the same time, banknotes stored at home are not able to bring income to the owner. Where to invest a little money? The most common way is to deposit them in a bank account opened with a bank. This can already be called an investment, since after a certain period the invested capital will increase in size.
Earnings on investments
This process can be carried out with the transfer of capital to bank deposits and securities, as well as real estate. All of them are called financial instruments.
What is understood as investment activity? This is a set of measures aimed at achieving investment goals and creating an investment portfolio. Included here is the adoption of decisions on investing in specific objects.
Investments in securities and property may be directed. In the first case, the object of capital allocation are various financial instruments that either confirm debt obligations or certify the right to participate in the activities of the company. One of the most common securities are options, bonds and stocks.
Property investment is understood as an investment of capital in real materialized values, real estate (structures, buildings and land), in gold, precious metals, antiques, works of art and other objects that are collectibles.
Special activity
To solve the complex tasks of the socio-economic plan in industrial production and in the case of experimental design work, it is impossible to do without investment design. What is meant by this concept?
Investment design is a special type of activity. During its implementation, tools and methods are found that can significantly improve the organization of data and detail the structure of the investment project itself. This makes it more understandable. In addition, an important factor is to trace the close relationship of the components of such a project, its functions and technologies. Ultimately, the effectiveness of all the actions taken is significantly increased.
Main goals
Investment design is widespread in the business sector. It is here that business operations are often carried out related to the investment of free capital, which will make it possible to have additional profit in the future.
The most important task of investment design is getting an entrepreneur to answer the question about the attractiveness of an object for investing in the existing economic conditions. At the same time, such work should:
- to provide a comprehensive analysis of real demand, as well as the potential that the market possesses;
- use the most successful strategies that will allow you to reach your goal;
- give a detailed and high-quality description of the results of solving production problems from the position of their ability to satisfy the needs of the consumer to the maximum.
Determining the amount of cash investment
One of the important tasks of investment design is to determine the amount of financial resources that are required to carry out the plan. At each stage of such work, the necessary calculations are made. The creation of an investment project is also important to eliminate an unforeseen capital shortage. The data obtained will allow us to give recommendations on choosing the most effective ways to attract finance, expressed in lending, loans, corporatization, etc.
As a result of the successful implementation of investment design, a high-quality financial plan is formed containing coefficients and indicators that will ensure the sustainability of the entire event.
Applicable Methods
New investment projects are currently being created based on a scientific approach. In this case, certain methods are used. Among them:
- analysis of the available source data;
- tests conducted experimentally;
- production of analytical calculations and technical examinations;
- forecasting production and sales;
- testing the project.
In addition, analytical and simulation (dynamic) models are distinguished. What is their difference? Dynamic models in investment design, in contrast to analytical ones, do not provide a description of the relationships that exist in the system under study. Their use allows you to build an algorithm that displays the sequence of stages of development of processes occurring inside the object of study. After this, a preliminary “playing out” of possible situations on the computer is carried out.
Simulation models in investment design are used in cases where the object of study is extremely complex, and its behavior cannot be described by mathematical equations.
Investment project
Such a document is an economic justification for the feasibility of investing in a particular object. From it you can understand how profitable the investment will be, what actions will need to be taken to get the desired profit.
The preparation of such a project is caused by the need to attract investors. No one will ever begin to invest in their capital in any object without first studying all the existing conditions. Investors are primarily interested in specific numbers. He needs to know the amount of profit and during what time the money invested by him will pay off. Also, investors are interested in existing risks that may arise in the course of the work. That is why investment analytics should convince the entrepreneur that this proposal will be beneficial for him.
Investment projects are very diverse. They are divided according to their goals, scope, life cycle and scope of implementation. Let's consider each of these elements in more detail.
Goals
Any investment project is created to find out the directions of maximizing the income from investments in the selected object.
But besides this common goal, there are also subgoals. They allow you to give the project special characteristics. Among such subgoals:
- solving an environmental or economic problem;
- increase in production or the number of services;
- release of new products.
Scale
Evaluate investment projects and this characteristic. The scale indicates the size of the funds that are planned to be invested in the event, as well as the impact of the final results on the environment.
So, there are:
- Megaprojects. Such investments require significant amounts of funding equal to more than one hundred billion rubles. These are large programs considering the construction of large industrial facilities. An example of this is the regional investment project for the construction of a plant for liquefying natural gas in the Primorsky Territory.
- Large. Such projects by their investments amount to several tens of billions of rubles. Such amounts will require, for example, the reconstruction of the plastics processing section, which is part of the chemical plant.
- Medium. When developing such projects, the planned capital investments approach a billion or slightly exceed it. Money, as a rule, in such cases goes to the construction of new production facilities or modernization, as well as the reconstruction of existing ones.
- Small. The amount of capital to invest in investment projects of this category ranges from tens of millions of rubles to one billion.
According to the impact of projects, their scale is divided into:
- National economic. These investment projects affect and influence the economy of the entire state. An example of this is the development of a national payment system using plastic cards.
- Regional Such programs are similar to the previous ones, but concern only a limited territory. An example of a regional investment project is the construction of a bridge in the Crimea.
- Industry. Such investment projects are intended for implementation only in a single sphere of the national economy. For example, oil production in the offshore area.
- Local. The purpose of such projects is directly related to a specific locality. An example of this is the construction of a small-sized power plant that runs on local fuel.
Life cycle
Each investment project has to go through a certain time stage. The beginning of such a life cycle is the birth of an idea. Then follows its design on paper, which involves work on investment design. The life cycle of such an activity ends with the exhaustion of all the possibilities of an already implemented idea in the process of its application in a specific production.
Investment projects based on the time of their implementation
They may be as follows:
- short-term (up to 5 years);
- medium-term (5-15 years);
- long-term (over 15 years).
The life cycle of investment projects related to new construction is always larger than those considering expansion of production on the existing technical and technological base. In addition, the time period for performing large-scale work always exceeds the same period of local activity. In addition to these indicators, the duration of the life cycle is also determined by the conditions in which the object is located, in whose development capital investments are provided, as well as its environment.
In a favorable investment climate, the duration of the time period for performing work is significantly reduced. Such conditions are quite attractive for entrepreneurs. In this case, the efficiency of the investment project is increased, that is, return on investment per unit of time.
Scope of implementation
For this indicator, all investment projects are divided into:
- Production. These are investment projects aimed at creating real products necessary for the development of the country's economy.
- Social. Such investments include investments in education, healthcare and other similar areas of public life.
- Ecological. These projects are aimed at developing ways and methods of protecting the atmosphere from harmful emissions, preserving natural resources, etc.
- Scientific and technical. Such investments are necessary to support basic and applied science. In this case, money is invested in the most promising research areas.
- In the financial system. Such investments are directed to the development of methods for managing banks, the development of stock exchanges and the stock market, the insurance system, etc.
- Organizational. Such investments are necessary to improve the management of product quality and production, as well as to create normal working and leisure conditions for working people.
Efficiency mark
Each of the stages of the implementation of the investment project is subject to careful consideration. In this case, an economic assessment of the return on capital investment is made. In the first stages, the findings are predictive. Subsequently, based on the available actual indicators, the assessment of project effectiveness acquires a calculated character.
Considering that any forecasts cannot have absolute certainty, some assumptions are not excluded in their description. This is reflected in the accuracy of the assessment. But investors are most interested in the moment of the transition of funds from costly to profitable. To determine it, there are dynamic and static estimates. Which type will be chosen depends largely on the stage of the investment process.