The evaluation of investments in the case of the re-engineering of enterprises
1996
Bizjak, F. (Ljubljana Univ. (Slovenia). Biotechnical Fac., Wood Science and Technology Dept.)
Although it is true to say that, around the world, there have been many examples of the successful re-engineering of enterprises, which means that it is frequently possible to use this approach in order to overcome a critical situation in such enterprises, it is also true to say that there have also been many unsuccessful attempts to re-engineer enterprises, which means that such measures are not always successful. The reasons for the latter can be found in poor organization of re-engineering projects, as well as in the problems involved in evaluating investments and of their effects. This paper is therefore mainly concerned with methods for the evaluation of effects and risks. First is described the internal-degree-of-saving method, by means of which it is possible to estimate, according to dynamic criteria, the savings which can be made through re-engineering. This is followed by a description of the estimated maximum investment method, in which the largest possible investment which would not reduce profits is estimated. Finally, the method for assessing the risk to profits is presented, this method making it possible to estimate the probability of achieving the expected profits. All these methods have been designed so that it is possible to carry out dynamic analysis and the assessment of the effects expected due to the re-engineering of enterprises over longer periods, and they also make possible the minimalization of risks.
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