American Journal of Applied Sciences

Use of Capital Budgeting Methods for Investment Project Evaluation in the Field of Civil Engineering

Igor Pšunder and Nadja Ferlan

DOI : 10.3844/ajassp.2008.18.21

American Journal of Applied Sciences

Volume 5, Issue 1

Pages 18-21

Abstract

The present article deals with use of capital budgeting methods in investment and project evaluation, with special emphasise on their use in the field of civil engineering. The research, presented in this article, was performed among project managers of Slovene companies. Their personal opinions about the use of capital budgeting methods and knowledge of their faults were studied during the research. Discounted cash flow methods were investigated, as well as single-period. During analysis of the results the situation in the field of civil engineering was treated separately and compared with other technical and non-technical sciences. Research showed that those experts dealing with investment evaluation who have a degree in the field of civil engineering use capital budgeting methods for investment evaluation less often than experts from other technical sciences, economics, and similar sciences. However, civil engineers are more familiar with the flaws in capital budgeting methods. More than 80 % of civil engineers know the faults of the payback period method’s disregard of payment expiration, but at the same time, only half of them know about the multiple internal rate of return, which is the most common fault of this method.

Copyright

© 2008 Igor Pšunder and Nadja Ferlan. This is an open access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.