Re-examining project appraisal and control: Developing a focus on wealth creation

Capital investment appraisal techniques based on discounted cash flow have been in use since the 1970s. However, in spite of their popularity, the link between the value projects assured by these techniques and the value attained by the organization is not certain. Thus, there is a growing interest in the search for appraisal techniques, which directly link project value to shareholder value. Therefore, it is a universal principle to base choices on alternative courses of action both at the investment stage of the project, and during project execution. This paper reviews the strengths and weaknesses associated with traditional investment appraisal techniques and their effect on shareholder value. It also explores the prospects of shareholder value analysis as a candidate for the future investment evaluation and monitoring. © 2001 Elsevier Science Ltd and IPMA. All rights reserved.