Business planning. Scenario analysis (most important)

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Business planning. Scenario analysis (most important)

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32. SCENARIO ANALYSIS

Scenario Analysis - risk analysis, in which, along with the basic version of the project, several potential options for implementation are considered. In fact, a scenario is a probable event that can significantly affect the integral indicators of the project. Scenarios (variants) are usually based on expert assessments of the forecast of changes in economic indicators (inflation, changes in the tax burden), the economic situation in a particular market (prices, sales volume). In accordance with them, the values of the project factors that are checked for risk are determined, the pessimistic, optimistic and realistic (most probable) options for the project are calculated. The NPV is determined for each of these scenarios and compared with the NPV value of the project's base case.

Scenario analysis is carried out using Project Expert tools. application What-if. A previously prepared project model is used as a base case. In this case, it is not different project scenarios that are compared, but a number of ones created on its basis. Several scenarios - project options are specified by deviations from the base option, and then their indicators are compared with each other.

The What-If-analysis program will calculate integral indicators for all scenarios and provide them both in absolute values and in the form of deviations from the base case.

Also used for decision making graphical display of Cash-Flow и NPV compared scenarios. Cash-Flow deviations will allow you to evaluate the financing scheme included in the model, including the time of occurrence of a deficit or excess of funds for various options.

Scenario analysis recommended for use in a finite number of scenarios. Often, a real project involves an unlimited number of possible scenarios, the probability of which is not determined, and therefore can be considered the same. To solve this problem, Project Expert uses simulation modeling, which involves a probabilistic assessment of the occurrence of various circumstances.

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