Translation of "efficiency, including financial efficiency, in" in English. Methodology for calculating the values of target indicators in the field of energy saving and increasing energy efficiency, including in comparable conditions of its efficiency
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Translation of "efficiency, including financial efficiency, in" in Russian
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He added that small States should work towards streamlining United Nations processes in order to improve its efficiency, including by reforming the Security Council.
He added that small States should work to ensure better streamlining of United Nations processes to improve the Organization "s efficiency, including through reform of the Security Council.
Efficiency, including through reform of the Security Council. ">
The study of the possibility of increasing efficiency, including through a global field support strategy and inter-mission collaboration mechanisms.
Efficiency will continue to be explored , including through the global field support strategy and inter-mission cooperation arrangements. ">
Working group discussed the usefulness of such activities, as well as ways to improve their efficiency, including procedures for selecting candidates for international expert groups.
The Working Party discussed the usefulness of such activities, and ways to make them more effective, including procedures for selecting candidates for the international expert teams.
More effective, including procedures for selecting candidates for the international expert teams. ">
Headquarters and country offices suggested that action be taken to improve efficiency, including to streamline the programming process and the system of administrative and financial management.
Efficiency measures , involving streamlined programming and administrative and financial management. ">
The impact of budget cuts on program delivery will be offset by the implementation of five improvement projects in the Office. efficiency, including simplification of protocol procedures and the procedure for accrediting non-governmental organizations.
The impact of budget reductions on program delivery will be compensated for by the results of five efficiency projects in the Office , including the streamlining of protocol procedures; and procedures for accreditation of non-governmental organizations.
Efficiency projects in the Office , including the streamlining of protocol procedures; and procedures for accreditation of non-governmental organizations. ">
She also noted that UNFPA is aware of the need to ensure efficiency, including in terms of travel.
Efficiencies, including as regards travel. ">
Reducing costs and increasing efficiency, including through the use of premises and services of regional service centers;
To reduce costs and improve efficiency, including by drawing on the facilities and services of Regional Service Centers
Efficiency, including by drawing on the facilities and services of Regional Service Centers ">
A) there are appropriate opportunities for improvement efficiency, including cost-effectiveness, major industrial accident prevention activities;
Effectiveness, including cost-effectiveness, for major accident prevention; ">
A number of measures have been identified to improve efficiency, including several actions taken since the previous workshop.
Efficiency measures were identified , including several that had been carried out since the previous workshop. ">
A) if necessary, energy market reforms aimed at increasing efficiency, including by increasing competition;
Efficiency including by increasing competition; ">
These efforts should be carefully analyzed in order to better understand their impact and efficiency, including where they are part of a comprehensive approach to addressing violence against women.
These efforts should be rigorously evaluated to gain a better understanding of their impact and effectiveness, including when they form part of a comprehensive approach to addressing violence against women.
Effectiveness, including when they form part of a comprehensive approach to addressing violence against women. ">
Several representatives said that the required significant reductions in mercury emissions could only be achieved by a legally binding instrument and that coherence among States was necessary to achieve efficiency, including in relation to measures related to trade.
Several representatives said that only a legally binding instrument would deliver the substantial reduction in mercury emissions that was required and that harmonization between States was necessary for effectiveness, including on trade-related measures.
Effectiveness, including on trade-related measures. ">
Countries are conducting benchmarking to improve service quality, strengthen accountability and improve overall efficiency, including state enterprises and public-private partnerships.
Countries had turned to benchmarking to improve service quality, enhance accountability and improve overall efficiency, including State-owned enterprises and public - private partnerships.
Efficiency, including State-owned enterprises and public - private partnerships. ">
The Committee recommends that the General Assembly request the Secretary-General to find and provide more complete information on reported savings from increased efficiency, including the initial investment and the overall costs and benefits observed in missions as a result of these measures.
The Committee recommends that the General Assembly request the Secretary-General to seek more comprehensive information concerning reported efficiency gains , including the initial capital investment and the overall costs and benefits accruing to missions as a result of the implementation of these measures.
Efficiency gains , including the initial capital investment and the overall costs and benefits accruing to missions as a result of the implementation of these measures. ">
E) the possibilities of increasing efficiency, including through new ways of attracting external partners to participate.
Opportunities for efficiency gains, including through innovative ways to mobilize engagement by external partners, will be investigated.
Efficiency gains, including through innovative ways to mobilize engagement by external partners, will be investigated. ">
In addition, initiatives have been taken to ensure that the Mission is managed in the most economical and efficiency, including based on the use of a number of services provided by the outside.
In addition, initiatives had been taken to ensure that the Mission was managed with a maximum of economy and efficiency, including the outsourcing of a number of services.
Efficiency, including the outsourcing of a number of services. ">
The Secretary-General recognizes that the main objective of procurement reform is to improve efficiency, including financial efficiency, procurement.
Effectiveness, including by means of non-military response, mechanisms of public diplomacy and peacekeeping, and international military cooperation. ">
In an effort to strengthen the system of checks and balances in the country, UNDP continued to support the Office of the President with an increase in its efficiency, including by developing processes to optimize the way he does his business and improve his coordination and communication capabilities.
With the aim of strengthening the country "s system of checks and balances, UNDP continued to provide support to the Office of the President to increase its effectiveness, including through the development of processes to improve its agenda management and coordination and communications capacities.
Effectiveness, including through the development of processes to improve its agenda management and coordination and communications capacities. ">
The post-conflict government must create a foundation of state capacity that will help restore its legitimacy and efficiency, including capacity to provide basic services and ensuring the minimum required level public safety, strengthen the rule of law, and protect and promote human rights.
The post-conflict government needs to build core State capacities that will help to restore its legitimacy and effectiveness, including the capacity to provide basic services and essential public safety, to strengthen the rule of law, and to protect and promote human rights.
Effectiveness, including the capacity to provide basic services and essential public safety, to strengthen the rule of law, and to protect and promote human rights. ">
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Establishing clear performance criteria in effective contracts, on the basis of which it is possible to realistically assess the performance of an employee and assign him incentive payments of the appropriate amount, in practice continues to cause difficulties. The Ministry of Culture suggested its own approach to solving this problem. Federal ministry issued guidelines, in which he clearly showed what the interconnection of indicators from the federal level to specific employee.
About Introduction to Industries social sphere interconnected systems of performance indicators from the federal level to a specific institution and employee have been talked about for a long time. In particular, the need for such a step in order to improve the system of incentive payments in institutions was indicated in sect.IV Programs approved by By order of the Government of the Russian Federation of November 26, 2012 No. 2190-r(Further - Program number 2190-r).
However, how exactly the general targets set for federal level, can be transformed into specific indicators applicable in the work of institutions and their employees, was not further explained. This gap was filled by the Ministry of Culture, proposing a method of "transferring" indicators "from general to specific". And although the recommendations are intended for use by cultural institutions and their founders, they can also be useful to institutions with a different profile of activity. Let us dwell on the main provisions of this methodology and support them with a regulatory framework related to different industries.
Where to find indicators?
The main targets that determine the development of a particular industry are approved in state and federal target programs ... So, in the state program "Development of culture and tourism" the following indicators are given:- the number of visits to cultural organizations in relation to the level of 2010 (reflects the demand among the population for state and municipal services in the field of culture);
- an increase in the number of cultural and educational events held by cultural organizations in educational institutions, compared to 2012 (demonstrates the success of involving students and pupils educational institutions in cultural activities);
- increase in the number of Russian laureates international competitions and festivals in the field of culture in relation to 2012 (indicates an increase in the level of professional excellence Russian participants of these competitions and festivals); and etc.
- availability of preschool education;
- the ratio of the average USE score in 10% of schools with the best results to the average USE score in 10% of schools with the worst results;
- proportion of graduates of organizations vocational education last year of graduation, employed in the received specialty;
- coverage of the population with programs of additional professional education.
Next level - departmental lists of state (municipal) services (works) formed by the founders. These lists contain the names of services, categories of consumers, units of measurement of services and indicators characterizing their quality. These points correspond to the targets set in the state programs, and are the main indicators of the efficiency of the institutions. It is important that the indicators given in the lists are quantifiable and can be compared for similar reporting periods (month, quarter, half year, year).
Then comes an even closer level to institutions - the establishment by the founder state (municipal) assignment ... It defines “targeted” performance targets for each specific institution.
On this basis, an effective contract is based, concluded with the head and employees of institutions. Targets from the state assignment are either directly reflected in the specified contract (this is possible in the case of a manager, whose performance is often equated to the effectiveness of the institution's activities), or are split into more specific indicators (for employees).
The relationship between performance indicators established in federal regulations and descending to the level of a specific employee of the institution, we will represent in the form of a diagram.
In this way, lined up one system performance indicators ... It defines the goals, objectives and indicators of the development of a particular industry, measures to achieve them at the level of institutions and a mechanism for communicating performance indicators to each employee. In turn, the fulfillment of the parameters set for the employee and the institution contributes to the achievement of the general goals specified in state programs and road maps.
Leadership Criteria
The setting of indicators at the top four levels depicted in the chart is the responsibility of the authorities and founders. As a rule, the efficiency indicators are communicated to the institutions in the corresponding columns of the state (municipal) assignment (or in the agreement on the provision of subsidies for financial support of the state assignment). However, difficulties often arise precisely when "transferring" indicators to a lower level, that is, when establishing criteria in effective contracts.For top officials of institutions, the criteria for effectiveness are also determined by the founder. These positions directly affect the amount of incentive payments, the conditions for receiving which must be reflected in the employment contract with the manager (the standard form of the contract has been approved Decree of the Government of the Russian Federation of 12.04.2013 No. 329). Such a relationship will help to improve the efficiency of the head, and therefore, the implementation of the goals and objectives set for the institution.
The Ministry of Culture in the recommendations under consideration notes that the performance indicators of institutions, provided by statistical accounting, serve as the basis for the development of appropriate criteria for managers and are disaggregated into performance indicators for the main category of workers. Converting the aggregated indicator to the original components (that is, disaggregation) is the essence of the methodology proposed by the ministry.
However, the performance of the manager is still determined based on the achievement of the indicators set for the institution for the corresponding period, as well as on the basis of the use of material resources and labor capital of the institution (in other words, performance indicators in this case are usually not disaggregated). And here it is important to take into account the indicators in two planes:
- compulsory achievement of volumetric indicators due to financial capacity institutions (budgetary allocations, funds received from optimization measures, funds from income-generating activities);
- mandatory achievement of quality indicators due to the more efficient use of all resources of the institution (material, financial capabilities, as well as labor capital and the human factor).
In addition, in order to objectively assess the work of the top officials of institutions, the founders, according to the Ministry of Culture, when developing regulations on the remuneration of the heads of subordinate institutions, it is advisable to provide:
Criteria for deputies and heads of departments
The development of performance indicators for specific employees, linked to the performance indicators of the institution, is the prerogative of the head of the institution. According to the provisions sect.IVProgram number 2190-r such indicators are set by local regulations institutions, collective agreements, agreements and labor contracts.When developing these criteria, the head needs to take into account that the performance indicators of the institution are achieved through the individual work of each employee, as well as through their joint activities. Therefore, it becomes necessary to disaggregate some indicators into others.
In particular, when determining the criteria for deputy managers and heads of structural divisions, it is proposed to take into account the distribution of areas of activity between executives. And since in this case the results of collective work should be assessed , for the management level, both aggregated (determined by an institution in a state or municipal assignment) and disaggregated indicators should be established. If necessary, you can summarize the disaggregated performance indicators of the employees of the relevant department.
For example, if in the state assignment to the theater the indicator "Average occupancy of the hall in the hospital (main stage), excluding experimental performances (%)" is set, the head of the department for work with the audience, the head of the sales department, the head press service. For these employees, this indicator can be transformed into the following: "The number of spectators according to the tickets sold (according to the plan / actual)", "The number of events on information work with the audience (according to the plan / actual)".
Criteria for workers
In relation to the performance indicators of employees of the Ministry of Culture, it also proposes to apply two levels of their calculation and, accordingly, assessments when paying for labor:- normative (included in the terms of payment for the official salary);
- stimulating (provides for various incentive payments for achieving parameters that exceed the standard levels of performance of labor duties).
In addition, can be used additional criteria (in the case when the degree of their manifestation in the employee exceeds the average):
- initiative;
- reduction of terms of performance of work against the established terms;
- contributing to the achievement of the overall performance of the unit in which the employee works;
- transfer of work experience to other team members;
- commendable reviews of the employee from consumers of the institution's services; and etc.
Disaggregation method
The essence this method, used primarily in the establishment of performance indicators for employees, is to identify in the composition job description specific employee types of work or labor function directly affecting the performance of the corresponding indicator. The quantitative and qualitative characteristics of work that determine the productivity of a specialist's work are taken as disaggregated indicators of his effectiveness.The Ministry of Culture gives an example of disaggregation. One of the indicators established for assessing the activities of cultural and leisure institutions is the number of cultural and leisure activities carried out by the institution (units). The implementation of this indicator depends on the employees of the following positions: methodology specialist club work, director of mass performances, manager of cultural leisure, cultural organizer, leaders of club formations, manager of a dance evening, host of a disco, head of the music part of a disco. For these workers, the following indicator of their activity can be established: "The number (share) of cultural and leisure activities prepared or carried out with the participation of the employee (according to the plan / actually)". This criterion, like the indicator for an institution, has a quantitative measurement.
Several disaggregated indicators can be established for a particular employee at once. For example, for club leaders the criteria can be as follows.
| Disaggregated indicator | Performance indicator for an employee |
| Number of members of club formations compared to the previous year (%) | The number of regular visitors served by a specialist, including on a paid basis (according to plan / actual) |
| Number of cultural and leisure activities carried out by the institution (units) | Number (share) of cultural and leisure activities prepared or conducted with the participation of the employee (according to plan / actual) |
| The share of activities aimed at developing the creative potential of children and youth in the total volume of activities of the institution (%) | The number of regular visitors served by a specialist - children, including on a paid basis (according to plan / actually) |
| Number of laureates of international, all-Russian, interregional and regional competitions and festivals (people) | The number of members of the corresponding club formations that participated in international, all-Russian, interregional and regional competitions and festivals (people) |
Incentive conditions
Employees are assigned incentive payments based on information on the performance of performance indicators. For this, the institution should adopt an appropriate regulation, which spells out the procedure and conditions for making such payments.In the regulation, for example, it can be specified that premiums are paid on the basis of:
- provided reporting data on the performance of employee performance indicators for reporting period(month, quarter, year);
- deadlines for submission of reports;
- an explanatory note, which describes the work performed to achieve each indicator and indicates the reasons for the decrease (increase) in the performance of indicators.
Conclusion
Let us summarize what has been said. To switch to effective contracts with employees, an institution must have:- state (municipal) task and performance targets approved by the founder;
- a system for assessing the effectiveness of employees' activities (a set of indicators and criteria that allow assessing the quantity and quality of labor expended). When developing such a system, a disaggregation method can be used;
- a remuneration system that takes into account differences in the complexity of the work performed, as well as the quantity and quality of labor expended.
Methodological recommendations on the interconnection of the system of sectoral indicators of the effectiveness of activities in the field of culture from the federal level to a specific institution and employee approved. Circular letter of the Ministry of Culture of the Russian Federation of 08/05/2014 (published on the official website of the department mkrf.ru).
"The program for the gradual improvement of the remuneration system in state (municipal) institutions for 2012 - 2018".
See, for example, government programs for the development of culture and tourism, education, health care, sports, approved. respectively, by decrees of the Government of the Russian Federation of 15.04.2014 No. 317, No. 295, No. 294, No. 302.
For example, at the federal level, by orders of the Government of the Russian Federation approved. “Road maps” in the field of culture (dated 28.12.2012 No. 2606-r), education and science (dated 30.04.2014 No. 722-r), healthcare (dated 28.12.2012 No. 2599-r).
For federal state institutions, departmental lists approved, for example, by orders of the Ministry of Culture of the Russian Federation dated December 15, 2010 No. 781, the Ministry of Health of the Russian Federation dated December 24, 2013 No. 1058n, the Ministry of Sports of the Russian Federation dated October 14, 2013 No. 801, and the Ministry of Education and Science of the Russian Federation dated July 18, 2014 No. AP- 47/18.
This requirement complies with the provisions of clause 9 of the Regulation on the establishment of wage systems for employees of federal budgetary, autonomous and state institutions, approved. Decree of the Government of the Russian Federation dated 05.08.2008 No. 583.
Sample form employment contract with an employee of the institution, taking into account the principles of an effective contract, is given in Appendix 3 to Program No. 2190-r.
1. Express diagnostics of the financial and economic state of the enterprise: based on the analysis of data from the previous period of activity, it allows to identify and show causal relationships between individual events and the existing financial result companies, predict the most likely options for the development of the economic situation in the future, introduce the necessary adjustments to goals and objectives to achieve the intended result, correctly assess the efforts required for this.
2. Express assessment market value enterprise (business): done as soon as possible according to a specific method based on the data provided by the enterprise.
3. Comparative comprehensive assessment of efficiency for a number of parameters of individual territorial structural divisions of the enterprise
4. Implementation in the constituent entity of the Russian Federation on the basis of a sectoral ministry (or its departmental subdivision) of an information technology complex for planning, control and management production activities in crop production.
The complex's wide capabilities allow:
ensure planning, continuous monitoring and control of the use of agricultural land throughout the territory of the subject;
digitization (digital mapping) of all agricultural lands, assigning them the appropriate numbers and providing information about their intended purpose and current state, create on its basis a single subject (regional, regional, republican) base of lands;
conduct a comparative analysis of the efficiency of land use, both in the context of districts and in the context of enterprises, including leased land tracts of municipal and state forms of ownership;
to carry out zoning of lands by type and qualitative composition of soils, types of farmland, content of basic nutrients;
control in real time the hotbeds of fire, the progress and volumes of field work, the emergence and development of hazardous weather and climatic phenomena, pests, plant diseases and other adverse factors;
to rank the subject's commodity producers into groups according to the levels of production development (taking into account yield indicators, production costs, etc.);
rank municipalities and enterprises for social level development;
display the placement and progress of investment projects;
monitor and evaluate production, economic and social processes taking place in the region, exert timely (advanced) influence on them;
increase the reliability of data provided by producers on the gross harvest of various crops;
use expanded opportunities for the management of the industry on the part of regional (regional, republican) executive authorities and local self-government, significantly improve the quality and efficiency of their work.
The complex is developed on the basis of Russian software. Its implementation involves the use of satellite monitoring systems, data space images and aerial photography, agrochemical land survey, statistical data, cadastral and other information.
During the development and operation of the complex, special attention was paid to safety issues. All information, software and the database is stored on the own server of the organization that installed it. The complex is adapted for use by regional executive authorities and large agricultural enterprises.
Analysis of what is happening in modern agriculture processes indicates the need to improve the quality operational management industry, its strategic planning, which is impossible without systemic control of their progress. The efficiency of the use of leased agricultural land of state and municipal property also requires special attention. The complex in the best way contributes to the solution of these problems.
When studying questions regarding the prospects of investing in a particular undertaking, the most important criterion is the economic efficiency of the project. In order to avoid misunderstandings in the business environment, there are generally accepted indicators of the economic efficiency of investment projects. They characterize the initiative from different angles, including from the point of view of lean manufacturing, which helps the investor to make informed decisions.
What are the main performance indicators used
Any project according to design codes consists of two parts: descriptive and calculated. If the first describes the very essence of the idea, the prospects for its implementation and product promotion on the market, the second contains technical and financial calculations, including the calculation of performance indicators. Determination of economic efficiency is understood as a certain result obtained after comparing the level of profitability of production to the resources used and the total costs of it.
The essence of economic efficiency is to get the maximum amount of products from available resources with the condition of their recoupment and profit. This concept is multifaceted, it is impossible to evaluate it by any one indicator, one should approach the issue in a comprehensive manner.
The economic efficiency of an investment project is usually assessed according to the following criteria:
- net present value (), or NPV;
- internal rate of return (IRR);
- internal modified rate of return (MIRR);
- profitability index (PI);
- payback period of initial investment (PP);
- discounted payback period (DPP);
- weighted average return on investment (ARR).
Many specialists, when analyzing the economic efficiency of an investment project, do not study all the indicators in detail, limiting themselves to 3-4 of the most significant of them. This mainly depends on the field of activity or industry in which you intend to invest.
- a separate enterprise;
- a legal or natural person acting as an investor;
- shareholders who have invested in the undertaking;
- higher-level structures;
- budgets of different levels;
- society in general.
This implies different criteria for the effectiveness of investment projects for different participants:
- The effectiveness of an undertaking as a whole characterizes a project implemented by a single participant for his own money. It is being analyzed in order to find additional sources of funding or to attract other participants.
- The effectiveness of participation in a common project includes indicators of participation of shareholders, banks, enterprises, various structures (sectoral or regional) and budgets (from local to federal).
If there are several participants in the implementation of the initiative, then their interests will not necessarily coincide, especially in terms of the priority of the implementation of certain processes. For each participant, special cash flows are formed, and they can expect different results. Consequently, for each of the participants separately, an analysis of the effectiveness of the investment project is carried out.
Absolute criteria by which the project is analyzed
Let us dwell in more detail on those performance indicators of an investment project that characterize the success of investing in the proposed initiative.
First of all, it is considered present net worth, since it characterizes in absolute terms the amount of money that an investor can receive during the life cycle of an undertaking. To calculate the economic efficiency of a project according to this criterion, you need to have information about the nature of money flows (expense or income) and their distribution over time.
Typically, the most significant expense occurs during the pre-production period (preparation of documentation and product development), as well as the time of the beginning of production. Subsequently, costs decrease sharply (or cease altogether), and incomes grow. To calculate this indicator, use the following formula:
- NPV - current net value of invested money;
- ICo - the size of the initial investment;
- CFt - cash flow from investment in t - year;
- n is the duration of the initiative (its life cycle);
- r - the value of the discount rate, it can be the alternative or weighted average cost of capital, the rate of return or the bank lending rate.
Consider an example of calculating the present value. The owner invested 200 thousand dollars in the modernization of the equipment. We will set the discount rate at the level of profitability of the enterprise - 12%. The return by years, starting from the first settlement year, is:
- 1 year - 40 thousand dollars;
- 2nd year - 60 thousand dollars;
- 3 year - 80 thousand dollars;
- 4th year - $ 100 thousand
If we substitute these values into the formula, we get the following picture:
NPV = - 200,000 + 40,000 / (1 + 0.12) + 60,000 / (1 + 0.12) 2 + 80,000 / (1 + 0.12) 3 + 100,000 / (1 + 0.12) 4 = - 200,000 + 35714 + 47831 + 56943 + 63552 = 4040 dollars.
The net present value of the investment is positive, but its size is small, which should alert the investor, since the indicator may become negative under any market fluctuations. In addition, the discount rate, which we considered constant, is a dynamic indicator and can change depending on various factors (refinancing rate, inflation rate, market prices in a particular industry). Therefore, the assessment of the effectiveness of such an initiative is generally positive, the flows of money generated by it reimburse costs and increase the value of the company. However, if the main task is to maximize profit, then in this case, with a low positive result, the risks of losses are quite high.
The considered formula shows a situation in which an investor makes only an initial contribution (at once), but in practice this does not happen often, since in most industries one cannot do without operating capital and overhead costs. Therefore, taking these factors into account, the formula will take the following form:
- ICt = investment in the period from i (0) to t;
- r is the discount rate;
- n is the life cycle of the investment.
Equally important for investors is the question of how quickly they return their capital invested in the project. Nobody wants to freeze their assets in a long-term initiative with a high degree of depreciation of money. Therefore, the faster the investment returns, the more chances there are to put this money into circulation again.
The calculation of efficiency necessarily includes the calculation payback period of initial investment... There is a general formula that looks like this:
- PP is the payback period for starting investments;
- Io - the amount of the initial investment;
- CFt is the flow of funds in the t-year;
- t - time periods.
The calculation is even more simplified if the conditions allow you to calculate the average return on investment over the period. Then the following formula is applied:
in which CFcr is the average annual (average monthly, average quarterly) income from the initial investment.
However, this approach has a significant drawback - it does not take into account changes in the value of money in the time aspect. Therefore, a more efficient method is to determine the payback period taking into account discounting.
- r is the money discount rate;
- CFt is the size of the flow in year t.
Based on the formulas under consideration, you can see that the repayment period, taking into account the discount, is always higher than in the simple formula. For clarity, we will solve a simple problem using both methods. The initial parameters are as follows: the purchase of new equipment cost the owner of the plant 150 thousand euros, the income for the first three years is 50, 100 and 150 thousand euros, respectively.
In a simple method, summing up the incomes of the first and second years (50,000 + 100,000), we get an indicator of 150 thousand, which indicates that the payback period is exactly two years, and starting from the third year, the owner will recoup the investment and make a profit, you can do not even count by the formula.
What will we see if we introduce into the calculation a discount rate of 15%? All annual income will have to be brought to its present value:
1 year - 50,000 / (1 + 0.15) = 43,478 euros;
2 years - 100,000 / (1 + 0.15) = 86,956 euros;
3 years - 150,000 / (1 + 0.15) = 130,435 euros.
Accordingly, the average annual rate of return for the first 2 years will be:
CFcr = (43478 + 86956) / 2 = 65217.
DPP = 150,000 / 65217 = 2.3 years, or 2 years 4 months.
This indicator gives a clear vision of how long it will take to wait to cover the costs incurred, but it has a significant drawback: it is impossible to understand from it how financial flows will be formed outside the payback period. Consequently, the understanding that is being studied can be skewed.
The above indicators of economic efficiency differ in that they show the result in absolute terms (monetary units and time units). In addition to them, there are a number of criteria for the potential success of an undertaking, which have the form of numerical coefficients and are more difficult to understand.
Relative indicators of project success
The calculation of the effectiveness of an investment undertaking can be characterized by several more indicators.
Profitability index- This is a coefficient that gives the concept of the profitability of each invested monetary unit at a specific point in time. It is calculated like this:
If we apply this formula to the initial data of the problem, for which we calculated
NPV, then you can determine the profitability index:
PI = (35714 + 47831 + 56943 + 63552) / 200000 = 1,02
Thus, we get a result showing that every dollar invested brings 2 cents of income.
Internal rate of return calculated based on the condition that the investments made are equal to those generated by them cash flows taking into account discounting.
- IRR - internal rate of return.
This criterion represents the rate of return (average) over the entire life cycle of the initiative. In addition, he points to the marginal rate of return on the undertaking, below which it is unacceptable to fall. If the IRR value is below the discount rate or equal to it, then the project may become unprofitable, this indicator is used when deciding which business proposal to accept.
With regard to our example, let's try to determine the value of IRR using the successive approximation method. Let's take into account that NPV at a rate of 12% was very small ($ 4040), so let's try to calculate the indicator using a discount rate of 13%:
NPV = - 200,000 + 40,000 / (1 + 0.13) + 60,000 / (1 + 0.13) 2 + 80,000 / (1 + 0.13) 3 + 100,000 / (1 + 0.13) 4 = - 200,000 + 35938 + 46989 + 55444 + 61330 = - $ 299.
Based on this result, we can conclude that the rate proposed in the initial condition is 12% and is equal to IRR, since when the rate value changes upward, the net value, taking into account the discount, becomes negative. Therefore, invest at a rate greater than 12% in this project not worth it.
If the project is large-scale and requires large investments, then the owner or shareholders may decide to invest part of the profit in the implementation of the undertaking (reinvestment). In such cases, a modified computation mechanism is used. The formula for the internal modified rate of return:
- r is the discount rate;
- d is the weighted average cost of capital;
- CFt - cash flows in year t;
- ICt - investment flows in year t;
- n is the number of periods.
At the same time, MIRR is always less important than IRR, since the investments of each year are also based on the rate at the start of the project, and all revenues are at the end of the initiative. It is more accurate than IRR in assessing the state of an investment, taking into account the inflows of positive and negative.
There is another criterion for the success of an undertaking - investment project efficiency factor(ARR), which is tied to the payback period, and is its reciprocal.
If there is an indicator of the average annual return on equity CFcr, the ratio is calculated as follows:
PP is the payback period of the initiative.
If the entire life cycle is calculated, then the formula looks like this:
where If denotes the project's liquidation value, which is determined as a result of the sale of all equipment and property after the completion of all work. The PP / 1 formula is applicable when If is zero.
We calculate the coefficient in our problem:
ARR = 280/4/200 = 0.35, or 35%.
Applying the principles of analysis that were discussed in the article, you can consider different options, choose the most suitable one. In addition, a comprehensive study of the proposed initiatives at an early stage will allow avoiding some risks and controlling the increase in the efficiency of the investment project.
Controlling efficiency in lean manufacturing
In recent decades, in developed countries, and now in Russia, there are more and more supporters of the so-called lean production in industry. The most common systems of this kind are: 5S, TQS, Just-in-time, TPM, Multiprocessing.
The essence of Lean Manufacturing is to improve productivity and economic performance through better management and less waste. Based on this, the management develops a policy and strategy of the enterprise, which is aimed at using resources only for purposes that give real returns. At the same time, not only the work of the entire company is assessed, but also of each of its structural unit, which requires the development of a unified assessment methodology (qualitative and quantitative):
- a qualitative assessment is made based on production indicators and the quality of the products;
- quantitative assessment - on economic performance based on financial statements.
General reporting when assessing lean manufacturing in an enterprise may include the following sections:
- completeness of implementation of planned activities;
- losses in a specific unit at the beginning and end of the reporting period;
- the effectiveness of the introduction of new technologies (in volume, physical and monetary terms) and the justification of their costs;
- methodological and factual materials (drawings, diagrams, techniques, regulations, technological processes).
Problems can be minimized or completely solved only as a result of the complex application of all the tools inherent in lean manufacturing.
At the same time, it is important to identify hidden losses and neutralize them. The analysis of the criteria for the effectiveness of lean production is carried out after defining goals and priorities, as well as determining the relationship between the tools of such production and hidden losses, i.e. which tool how to reduce certain losses. The closer the planned and actual values, the better.
This page displays employee performance information based on the tasks included in the performance report:
Tasks not included in the performance report will not be included in performance calculations.
Note: except when the option is checked show report for all tasks, which you can read about below.
Let's take a closer look at the columns of the table:
- New- the number of tasks created during the period specified in the filter.
- In work- the number of active tasks during the period specified in the filter.
- Done- the number of tasks that were completed during the period specified in the filter.
- Expired- the percentage of tasks not completed on time from the total number of tasks is indicated In work.
- Evaluated- percentage of tasks that were assessed to the total number of tasks In work.
- Efficiency- percentage of positively rated tasks from the total number of tasks In work.
- By time period - select the time period for which you want to display the report on tasks.
- By company structure - click on the down arrow and select the business unit for which you want to view the performance report.
Note: you can select only those departments that are subordinate to the employee under whose profile the sorting is performed.
- By workgroups - click the down arrow and select the portal groups for which you want to display the performance report by membership.
Note: you can select only those groups in which the employee is a member, under whose profile the sorting is performed.
- By employee - in this field you can specify a specific employee whose performance report you would like to view. This is done in the same way as for selecting a contact described in the lesson.
The most important column is Efficiency... Its values are calculated by the formula:
Efficiency= (number of positively rated tasks) / (total number of tasks in progress) * 100%.
The higher the number in this column for a particular employee, the higher his efficiency in terms of completing tasks.
Attention! We are talking only about the tasks set. This tool does not remove subjectivism in assessment. An employee can be given a super difficult task and a dozen simple ones. He will solve the super difficult and get a plus, and fail the simple ones (due to the distraction to the super difficult) and get a minus. As a result, the efficiency score will be low, although the real return to production is high.
To compare the reported metrics with the total number of tasks, i.e. including those not included in the performance report, check the following option:
After that, the report will take approximately the following form:
Note: in a collumn Expired the second specified percentage shows the number of overdue tasks from the total number of tasks available.
Filter
To sort tasks in the performance report, you can use a filter:
Sorting can be done according to the following parameters.
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