We explain what an investment project is, its relationship with planning, investment and its stages. Also, what types exist.
What is an investment project?
An investment project is a detailed plan of activities aimed at future economic action that is, to a possible investment of some kind. This is a common type of document in business administration and project management, which arises from the need of a public or private economic actor (say, a company) to increase the return on its capital.
The investments that this type of project contemplates do not necessarily have organized objectives and trajectories, but are intended to increase the available financial resources, that is, they bet on profitability.
In that sense, Planning is essential in its preparation since it allows organizations to maximize or preserve their resources, through different possible investment strategies, many of which involve the immobilization of long-term capital.
Since they involve the mobilization of resources, investment projects usually undergo evaluation processes that determine their suitability: their profitability, their risk margin and other possible aspects, such as the environmental, legal and administrative aspects. The evaluation of projects, thus, can occur using very different tools and from very different points of view.
Types of investment projects
Investment projects They can be classified in many ways, either by economic sector to which they refer (primary, secondary, tertiary, quaternary), by the area of influence that would have to be carried out (national, provincial, district, etc.), or by the type of financial elements involving: goods (tangible) or services (intangible).
Ultimately, the classification of projects will depend on the concerns of the organization or the aspects that its evaluators consider most important. It is possible, for example, to classify them as profitable and unprofitable, according to what the organization is willing to invest and the return it wishes to obtain from the project.
Stages of an investment project
Normally, an investment project goes through the following stages:
- Prefeasibility. Project formulation and determination phase, which includes setting general and specific goals, and gathering sufficient information to submit the project to a prior evaluation. It is the research and documentation stage, if you will.
- Design. Once you have the general investment plan, you proceed to develop a detailed design to carry it out. That is, a second planning stage, but with much greater detail, in which the specific plan for each of the activities that the investment project involves will be drawn up. At the end of this stage there will surely be new controls and evaluations to ensure that the design corresponds to what was established.
- Operation and start-up. As its name indicates, it is the stage in which the team in charge of the project carries it out. This stage can be long or short, depending on the case, and may involve different feedback mechanisms or information feedback that will be useful in the next stage.
- Evaluation or control. Whether or not the useful life of the project has ended, it is normal for this cycle to close with an evaluation stage, in which the information collected during the operation itself is used to compare the results obtained with the results initially proposed, and thus be able to take relevant decisions. In general, this stage will seek to answer two questions:
- Were the initially proposed objectives achieved?
- How can the project design be improved for future experiences?
Continue with: Financing
References
- “Investment project” on Wikipedia.
- “What is an investment project?” on EconLink.
- “The life cycle of an investment project” at IDESAA Business School (Mexico).
- “Stages of a research project” (video) by Marcos Porta.
- “Investment project” in the Economic Zone.
