Economic Analysis and Project Viability

The major deciding factors for any optimization project will be the economics. Key indicators include values such as net Present Value (NPV), Rate of Return (ROR), Profit to Investment Ratio (PIR), and Payout Period, to name a few. These may all be calculated from predicting revenue and cash flow, which are taken directly from production forecasting scenarios, and the values for each indicator will show the most desirable production optimization scenario. Understanding economic viability will often help to justify the value of an optimization project, provided the modelling has considered the risk and uncertainties involved, and the project can be carried out with quality close to that as indicated in lab testing and modelling.