Investment Appraisal

An evaluation of the attractiveness of a proposed investment using a variety of quantitative methods. Businesses seek to achieve a greater return on invested funds than the bank rate, and so when there is a proposal to invest in a new project, the project needs to be evaluated in terms of whether it will make a return, and if so what that return will be? Organisations use a number of appraisal methods, with net present value and payback period being the most common. The role of procurement in investment appraisal is threefold: first to ensure that the risks associated with the project are identified and addressed; second, to ensure that the benefits realisation program is realistic and third, to ensure that any contractual agreements entered into as part of the investment align the suppliers with the project’s goals and outcomes. See also Net Present Value and Payback Period.

« Back to Glossary Index

Discover the world’s largest Glossary of Procurement terms

With over 800 Procurement specific terms (and growing) you will find everything you need to know or thought you knew about the Procurement function. Our aim is to provide you with a comprehensive list collated from the Comprara Groups hub of training and consulting source materials.The Procurement Glossary has been compiled by industry expert Paul Rogers.