Employing the net present value-consistent IRR methods for PFI contracts

Y. H. CHIANG, Wai Lun Eddie CHENG, Patrick T. I. LAM

Research output: Contribution to journalArticles

13 Citations (Scopus)

Abstract

The internal rate of return (IRR) is a common financial indicator for private finance initiative (PFI) projects. Due to the long and complicated cash flow nature of PFI projects, more plausible IRR techniques are necessary for appropriate project evaluation and ranking. However, not all the published articles researching on IRR techniques are reliable. Given the importance of computing the profitability of PFI projects, this paper is intended to introduce three reliable IRR methods, which are proven to be consistent with net present value. Examples are used to illustrate their utility. The paper is of high value as it guides industry's practitioners to use proper IRR methods for selecting PFI projects. It also provides academic researchers a platform to explore more robust methods. Copyright © 2010 ASCE.
Original languageEnglish
Pages (from-to)811-814
JournalJournal of Construction Engineering and Management
Volume136
Issue number7
DOIs
Publication statusPublished - Jul 2010

Citation

Chiang, Y. H., Cheng, E. W. L., & Lam, P. T. I. (2010). Employing the net present value-consistent IRR methods for PFI contracts. Journal of Construction Engineering and Management, 136(7), 811-814. doi: 10.1061/(ASCE)CO.1943-7862.0000179

Keywords

  • Profits
  • Private sector
  • Value engineering
  • Financial management
  • Industries
  • Contracts
  • Colleges and universities
  • Financing
  • Investments
  • Decision making
  • Revenues

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