The analysis of a project sensitivity

What is the analysis of a project sensitivity? 1. Overview: The analysis of project sensitivity is to consider the project changing of financial performance indicators such as Net present value (NPV), Internal rate of return (IRRP), Payback period (PP), etc… when the related factors change.
2. Project sensitivity analysis will give the information to investors about project sensitivity level and indicate which factors have high sensitivity level. From that they can definite choose which solutions could be used to manage those factors on the project implementation or choose other projects safer. 3. To analyze the project sensitivity, they commonly use the following method: Sensitivity analysis of each financial performance indicator with related factors to rank each factor project impacting level. This method is done through two steps: - Step 1: Identify all factors related to the financial performance indicator is being addressed. - Step 2: Change one factor and keep the value of the remaining factors and review the changing of the financial performance indicator. Multiple factors analysis in the different situations affects the project to determine the safety of the project. 4. How does a project shall be called that has a highly safety? The project shall be considered as having high safety when its factors impact financial performance indicators of the project change into disadvantage direction in the certain changing limit and these indicators are achieved the required levels.

This article is translated from KTXD.NET

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