Valuation at a Glance | ||

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Valuation takes into account the following items:

- Costs and Revenues
- Taxes and Depreciation
- Time value of money (important for early expenses as R&D, implementation)

In case of R&D and IT projects Valuation needs to also account for the Project Risk and costs associated with it. Although in many cases risk is included as one more cost factor, a better approach is to consider it a totally new dimension since if not properly managed it can quickly spiral out of control.

In case of projects for Predictive Analytics valuation needs to account for some items with dramatically different components:

- Change in Revenue & Cost (Implementation, Maintenance, Operations)
- Less than perfect predictions
- Statistical Distribution of the prediction error (complex cost structure, risk)