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Capital Projects

Author

Listed:
  • Lewin, C.G.
  • Carne, S.A.
  • de Rivaz, N.F.C.
  • Hall, R.E.G.
  • McKelvey, K.J.
  • Wilkie, A.D.

Abstract

The paper surveys the present state of knowledge about the appraisal and control of capital projects, and identifies the useful contribution which actuaries can make to the process. Relevant theoretical considerations are discussed, including the choice of appropriate discount rates for use by companies when screening proposals. It is recommended that discount rates should be lower than those commonly used. Some practical working methods are summarised and examples are given of how risk analysis can be carried out, for both simple and complex appraisals. Attention is drawn to the special ‘social’ considerations which may apply in the case of Government projects. The opportunities now opening up for joint ventures between the UK Government and private sector partners are examined, and it is concluded that proper sharing of costs and risks can facilitate arrangements which are acceptable to both sides. The paper concludes with a discussion of the procedures which companies can use to identify, appraise, control and monitor projects.

Suggested Citation

  • Lewin, C.G. & Carne, S.A. & de Rivaz, N.F.C. & Hall, R.E.G. & McKelvey, K.J. & Wilkie, A.D., 1995. "Capital Projects," British Actuarial Journal, Cambridge University Press, vol. 1(2), pages 155-249, June.
    • Handle: RePEc:cup:bracjl:v:1:y:1995:i:02:p:155-249_00
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    Cited by:

    1. Thomas Wing Yan Man & Theresa Lau & K. F. Chan, 2008. "Home-Grown And Abroad-Bred Entrepreneurs In China: A Study Of The Influences Of External Context On Entrepreneurial Competencies," Journal of Enterprising Culture (JEC), World Scientific Publishing Co. Pte. Ltd., vol. 16(02), pages 113-132.

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