Financial Concepts and Performance Indicators in WWS-Projects OperationsOperationsOperationsOperations ManagementManagementManagementManagement SupportSupportSupportSupport.

Financial Concepts and Financial Concepts and Performance Indicators in Performance Indicators in

WWS-ProjectsWWS-Projects

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ProjectProject

Water Water Authority Authority of Jordanof Jordan

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ProjectProject

Water Water Authority Authority of Jordanof Jordan

Financial Concepts

• Return on Investment

• Economic Value Added

• IRR, NPV, Payback

• Break-Even Charts

• Investment-, Profit- & Cost Centres

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ProjectProject

Water Water Authority Authority of Jordanof Jordan

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ProjectProject

Water Water Authority Authority of Jordanof Jordan

Return on Investment

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ProjectProject

Water Water Authority Authority of Jordanof Jordan

Assets

OE

L

(Profit)

(Interest)

Return on Investment (ROI) =

Profit + Interest

Assets

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ProjectProject

Water Water Authority Authority of Jordanof Jordan

> 10 %

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ProjectProject

Water Water Authority Authority of Jordanof Jordan

Profit + Interest

Assets= > 10 %

Assets

B/E Chart

Responsibility Accounting

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ProjectProject

Water Water Authority Authority of Jordanof Jordan

Economic Value Added :

Profit plus Interest (51) + 17

- Cost of Capital (56)

---------------------------------------------

= EVA

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ProjectProject

Water Water Authority Authority of Jordanof Jordan

Ownership and Assets Management

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ProjectProject

Water Water Authority Authority of Jordanof Jordan

(1) (2) (3) (4) (5) (6)

A

OE

L

OE

L

A Rev Exp

OpeningBalance

P & LClosingBalance

State concentrates mainly on (4)“We do not need a clock (faster, harder) but a compass”

Sensitivity Analysis of Assets

-40,00%

-20,00%

0,00%

20,00%

40,00%

60,00%

80,00%

100,00%

-50

-40

-30

-20

-10 0 10

20

30

40

50

% Variance

IRR

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ProjectProject

Water Water Authority Authority of Jordanof Jordan

Sensitivity Analysis

-5,00%

-4,00%

-3,00%

-2,00%

-1,00%

0,00%

1,00%

2,00%

3,00%

4,00%

-50

-35

-20

-5 10

25

40

% Variance

IRR

PRICE

QUANTITY

VAR.COSTS

FIXED COST

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ProjectProject

Water Water Authority Authority of Jordanof Jordan