Study On Interval-based Economic Evaluation Methods For Power Construction Projects

Power construction projects are highly capital intensive projects with large investment scale and long payback period. With the utility deregulation and market operation in China, the economic evaluation of the power construction project has become extremely important. As an important characteristic of the market --Uncertainty (mainly includes the stochastic characteristic, fuzzy characteristic, grey characteristic and indefinite characteristic) and risk present new challenges to the projects economic evaluation. In order to study the project economic evaluation in new environment, we should draw lessons from the latest research results of the project economic evaluation and decision-making theory urgently. In addition, for different economic evaluation methods, the evaluation rules and conditions are also different. To solve these problems, this dissertation has made research as follows:(1) Firstly, models based on interval cash flow and interval interest for economic evaluation are established. A complete set of interval calculation and solution formulas under certain and uncertain life period conditions are deduced for the economic evaluation methods, including Interval Net Present Value (INPV)method, Interval Payback Period (IPT)method and Interval Internal Rate of Return (IIRR)method. The concepts and assessment criteria of these methods are also presented, as well as a method to measure the risk of projects.(2) Cases are given to test and compare these methods under both certain and uncertain life period conditions. Case study suggests that the results of the three methods are accordant, but there is still some difference. Under both certain or uncertain life period, the risk of IIRR method is the highest, followed by INPV; and the risk of IPT is the lowest. A conservative decision-maker's priority is: IIRR, INPV and IPT; while an optimistic decision-maker's priority is: IPT, INPV and IIRR.In a word, the proposed interval-based methods are efficient and flexible to deal with the uncertainties in economic evaluation, which are capable of giving out the accurate interval solutions for the problem and suitable for power construction projects.