Evaluation of the effectiveness of innovative projects based on project investments: advantages and the disadvantages of different approaches

The article considers and analyzes methodological approaches to evaluating the effectiveness of innovative projects based on project investments, which allow determining their investment attractiveness, both for investors and public partners or government agencies. Both short-term and long-term assessment methods are considered, including their application at various stages of the project life cycle. Special attention is paid to the discounted cash flow model as the most common assessment tool. Both the advantages of discounted cash flow (accounting for the time value of money, the possibility of forecasting) and the limitations of the model associated with high sensitivity to source data and the complexity of forecasting cash flows in conditions of uncertainty characteristic of innovative projects are considered in detail. As an alternative to discounted cash flow, the real options method is presented, which allows taking into account the flexibility of management decisions and responding to changing project conditions. Various models for evaluating options are analyzed, including the binomial decision tree and the Black-Scholes model. Brief characteristics of the methods of scenario analysis and sensitivity analysis are presented. The risks of a technological, market and organizational nature are analyzed, and the application of sensitivity analysis is demonstrated by a practical example to assess the impact of risks on the net discounted income of the project. As a result of the study, the economic feasibility of using a particular method at various stages of innovative projects is shown, and a universal financial model of primary efficiency assessment is proposed, which can be used at the stage of pre-project justification for preliminary screening and selection of projects with the greatest investment potential.