Monday, July 04, 2016

UniPhi 12 - Net Present Value and IRR

When I hired my first software developer back in 2003, one of my main goals was to build a web based application that could replicate the financial models I was building at the time as part of the management consultancy (mbh consulting) that I was running. Key to this was the ability to build NPV (net present value) models. Opportunities in the construction sector meant that this feature was put on hold.....for 13 years! But finally, UniPhi 12 includes the ability to generate both NPV and IRR calcs for any type of investment.

Utilising the revenue/benefits/fees and the costs modules enhanced cash flow phasing method and adding a panel on the project summary for the discount rate, users can now get up to the minute NPV outcomes.

One of the most exciting aspects of this is the fact that the NPV re-calculates every time actuals are authorised and costs to complete updated. This means that sunk costs are always excluded from the calc (one of my pet hates for poor investment decision making) and the executive can now know what investment is currently the most valuable, which is usually the most recently completed as all its costs are sunk and all its benefits remain to be harvested.

Hopefully, this new feature can bring back the push mbh consulting had years ago for much more focus on benefits management and will drive investment decision making around leveraging previous investments over new ones and exercising those call options that these investments represent!

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