Project Investment Appraisal Techniques Used by PPD Managers in Countries of PPD Entities

Abstract

The dissertation work focuses on the use of project investment appraisal techniques used by PPD managers working in different countries. Mainly four traditional methods are analyzed and discussed: NPV, IRR, PBP and ARR, but also some additional modified and non-traditional techniques are reviewed. The purpose of the research is to compare which capital budgeting techniques are used most frequently by the PPD managers situated in different countries and which are dominating in use in the developed and the developing countries. The aim is to find out the current trends of use of investment evaluation methods and to demonstrate whether there are differences between male and female managers, their age, education and working experience in respect to the kind of methods they use most often. Additionally, the research intends to examine whether there is a gap between theory and practice related to the use of capital budgeting techniques. Based on these aims and objectives four research questions were determined. The critical review of the literature points out the advantages and disadvantages of the different project investment appraisal techniques and presents a comparison between them. Furthermore, empirical evidence is demonstrated through several studies conducted by different researchers aiming as well to determine the trends of use of capital budgeting methods. The findings from the secondary and primary data show that there are differences between the previous conducted studies and the current research. Therefore, the analysis and discussion of the results are focused on the links between secondary and primary data as well as on answering all research questions. The main conclusions deduced from the research are that NPV and PBP are the most frequently used methods by PPD managers, although the secondary data findings indicate a greater tendency of use towards IRR. The current trends are related to the use of a combination of techniques and there are no major demographic differences in respect to the use of capital budgeting methods. The managers from the developed countries prefer IRR the most, while those from the developing countries are adherent to PBP and NPV methods. Finally, it was concluded that there is a gap between the theoretical and practical evidence.