Abstract："Moststart-upsfailonthewrongprojects."That'sillustratehowimportanttochoosearightproject.Agoodprojectmanagementconsistsofmanyfactors，includingscope，time，costs，qualityandhumanresources.Allofthesearebasedonaprojectthatisgoingtoexecute.So，forasponsororstockholder，thefirstquestionishowtochooseaproject?Whichprojectcanbringthemostbenefitforthecompany?
Keywords：the"right"project；riskanalysis；SensitivityAnalysis；ScenarioAnalysis；BreakevenAnalysis
1Howtochoosetheproject?
Tomanagequality，itisimportanttodistinguishbetweentheinherentfluctuationofprojectswiththeunderlyingproductandservicedevelopmentprocesses.Therearefarmore"goodprojects"forthingstodothanitcanbeactually.Soallhopewillloseformanagingqualityonprojects?Shouldwejustthrowinthetowelandsay"forgetit"?Oristhereabetterwayofbeingabletomeasureandmanagequality?
Fortunately，herearesomeoptimizationmethodsthatusecomplexmathematicalcalculationbasedonfinancialtheories，sothatcanselectprojectonbestresults.Netpresentvalue，paybackperiod，returnoninvestment，internalrateofreturn，modifiedinternalrateofreturnandprofitindexarealldifferenttypestoestimatethequantitativeprojects.
Netpresentvalue：thismethodisbasedonthediscountedcashflow.Itisthemostpopularwayusedtomakeadecision.CompanyshouldaccepttheprojectthatNPVispositive.Nomatterindependenceprojectormutuallyexclusiveproject.Itreflectsthetimevalueofmoney，andranksseveralprojectsatthesametime，justtochoosethebiggerNPV.
Paybackperiod：itmaybethefirstwayofquantitativemodels.It'sdefinedastheexpectednumberofyearsrequiredtorecoverytheinitialinvestment.Forthismethod，theshorter，thebetter.
Returnoninvestment：it'softenusedintheprojectmanagement，andobtainstheaveragerevenueofvariousprojectsinawhole.Obviously，ROIisthemore，thebetter.
HereIwillcomparethemostpopularmethodsNPVandIRRinbrief.Bothtwomethodshaveadvantagesanddisadvantages.Forindependentprojects，theyareconsistentwitheachother，butformutuallyexclusiveprojects，NPVisbetterthanIRRbecausewhenyouchooseafinanceprojectsIRRwillopposetoNPV，andforsomeirregularprojects，you'llgetmorethanoneIRRthatwillconfuseyourdecision.Inaword，whenIRRisconflictwithNPV，thelatterisoptimalchosen.
2Riskanalysisinthefinancialmethods
Foruncertaintyanalysis，therearetwokindsofmethods：oneisProbabilisticRiskAnalysisMethodandtheotherisCashflowdiscountrateAdjustmentAct.Forthefinancialmodelsmentionedearlier，theyaresuitableforthefirstkindmethod.
Inordertoreducethevariousrisks，theProbabilisticRiskAnalysisMethodincludesfoursorts.TheyareSensitivityAnalysis，ScenarioAnalysis，BreakevenAnalysisandDecisionTreeAnalysis.
3SensitivityAnalysis
Itisusedtomeasurethesensitivedegreeiftheassumeconditionschange.ItisamethodtoanalysistheriskofNPVandIRR.Theprocessofthiswayiscomparingthecashflowthatbeforeandafterconditionschange，sothatyoucangeteachvariableeffectsofNPVorIRR.Flyintheointment，thisapproachistoosubjective，furthermore，manyvariablescanchangeatthesametimeandwedon'tknowtheexactchanges.
4ScenarioAnalysis
Thisisappliedfortheprojectsinthevisionofaseriesofspecificprofiles（Basedonmacro-economic，industrialandcorporateFactors），alsofitNPVandIRR.First，youneedtosetupaspecificscenario，thencalculatedifferentNPVandIRRindifferentscenarios.Finally，youcanmakeadecisionbasedontheoutcomeofNPV.Inmanycases，thisassumptionisnotrealisticandlackofclearrecommendationstoguidedecision-makershowtoapplytheresultsoftheanalysisprojectdecision-making.
5BreakevenAnalysis
Itmeansyouhavetoachievesalesinordertoensuretoavoidtheaccountinglossandmakesureaccountingprofitandlosskeepbalance.（AsshowninFigure1）
6DecisionTreeAnalysis
Itvisuallyrepresentsamulti-stageitemheadindecision-makingateverystageoftheinvestment.Itshowstheresultsandtheirprobabilityofoccurrence.Inthatway，youcangettheeffectsmadebyeachresult.Then，withthediscountrateandcashflow，itcandecidewhichisthebestone.（AsshowninFigure2）
7Needaportfolioinprojectriskmanagement
Theseabove-mentionedarecriteriawhichreflectexistingfinancialsituation，alsoreflectthebalancebetweenbenefitsandrisks.Oneimportantuseofportfolioriskconceptsistoselectefficientportfolios，definedasthoseportfoliosthatprovidethehighestexpectedreturnforanydegreeofrisk，orthelowestdegreeofriskforanyexpectedreturn.
Themainpurposetosetupaportfolioistoreducetherisksduringtheprocess.Ifyoutaketheperspectivefromasingleprojectormethodology，youwillundertakemorerisksthanapackageprojects.Allscoringandweightingshouldbecombinedtocreateasinglelistofprojectsinorderofpriority.Theprioritizationprocessshouldincludeafinalreviewanddeliberationoftheoutputofthemodel，whereyouwillneedtoconsiderfactorsthatmaynothavebeenincludedinthescoring，andmovethingsaroundaccordingly.
8Conclusion
Whenyouarefacedwiththeoptionsoftheprojects，youcan'tonlyuseonewaytoestimate.Commonly，severalmethodswouldbeusedtogethertoachievebetterresults.However，financialmodelshavetheirownlimitations，sothetheoryofportfolio，combinedtocalculatethenetpresentvaluecomparison，fortheprojectriskmeasurementandmanagementprovidesagoodtool.
标签：andranksseveralprojectsatthesametime论文; justtochoosethebiggerNPV论文; Nomatterindependenceprojectormutuallyexclusiveproject论文;