Valuation of Public Investment Projects by Marco Luna

1. Preparation and social evaluation of projects

lunavmarco — 2021-10-26 15:58:31 UTC

* First obtain the appropriate information that allows modifying and complementing the private cash flow to transform it into a social one and then proceed to its evaluation, with practically the same private methodologies but with social values.

* Respond to a pre-investment study, the results of which make it possible to establish:
- Social benefit
- Advantage
- Disadvantages
- Quantitative Impact

5. Incidence of the social discount rate.

2021-10-26 16:07:13 UTC

There are two possibilities to estimate the discount rate
- The first is where there is no capital opening, where it is done through the interaction of supply and demand of the funds to be invested
- The second is representative of an open international capital market, considering the cost of obtaining funds abroad

*
It is said that social projects as such, their analysis and study of various investment alternatives acquires greater relevance than in private ones
It is said that social projects as such, their analysis and study of various investment alternatives acquires greater relevance than in private ones

2. Social costs and benefits

lunavmarco — 2021-10-26 16:12:51 UTC

- Social benefit: Value that the increased availability of a certain asset attributable to the project has for society.
- Social cost: Reflects the value that it has for society to provide a greater number of production factors.
- Social prices: differences between benefits and social costs, considering variables such as:
1) Duty factor
2) Labor
3) Currency
4) Zone

7. Corporate social responsibility (RSE)

ci5999309 — 2021-10-26 16:15:32 UTC

It refers to a new vision in business, it is a business management model that integrates economic performance and respect for ethical values. It also perfectly adopts respect for people and the environment.

For this reason, more and more companies analyze their projects under the criterion of the triple result expressed in three dimensions; economic, environmental and social.

3. Incidence of indirect effects or externalities

2021-10-26 16:17:31 UTC

Indirect effects are those changes that the project can generate with its implementation. When there are changes in the production and consumption of the goods related to those that the project would elaborate, it can be decisive the measurement of the possible benefits or indirect costs of its eventual implementation
march, whether beneficial or detrimental to society. These types of effects should be considered in flows.

6. Private and social evaluations

2021-10-26 16:19:41 UTC

the influences the profitability of a project are the social prices and the direct and indirect effects
An important factor to analyze is the linkage of social projects with private ones, each one fulfilling its respective role.
In this sense, it is possible to quantify both private and public investments where:

- Everyone has their own interests
- Carry out the corresponding technical analyzes
- They forecast their own profitability

It is becoming more and more common to see this and it works in an excellent way

4. Incidence of intangible effects

2021-10-26 16:22:21 UTC

Intangible effects are probably the most difficult to quantify, due to their immeasurable nature, which is why they become a parameter. What's more difficult to identify, in other cases it can be seen that they are of a antagonistic: some favorable and some unfavorable. Measure the magnitude of each of them and the effect they might have on flow is impossible to achieve.

8.¿How to transforma private flow into a social one?

ci5999309 — 2021-10-26 16:29:36 UTC

The first step is to change the focus, instead of identifying the benefits and costs for the private sector, it must be done from the social point of view.

2.- The second step is to quantify the externalities by applying methodologies that the project preparer and evaluator must develop for thisThe first step is to change the focus, instead of identifying the benefits and costs for the private sector, it must be done from the social point of view.

3.- Third, shadow prices or social prices must be used. It should be remembered that the objective of social prices is to have values that reflect the true cost
for the company to use additional units

4.-

And fourthly, everything that has to do with taxes and subsidies should be eliminated,
since they only correspond to transfers of resources between different members of society, so the effect is finally netted. Therefore, depreciation, amortization and
Book values are meaningless in a social evaluation.