How To Manage Risk In Project Investment

　 (1) risk management in pre investment period

Before entering the investment and construction project, the project must first go through the decision-making, financing and budgetary review and other links, and different links will have different investment risks. Effective risk management before investment can control investment risk in the bud and avoid or mitigate risk loss.

1. risk management in project decision-making. Project decision is the process of selecting and deciding the investment behavior plan. It is a technical demonstration of the necessity and feasibility of the proposed project, and the process of economic and technical comparison and judgment and decision making for different construction projects. Correct decision is the premise of reasonably determining and controlling project investment. The right decision depends on the scientific nature of decision making, especially the investment decision making of large projects is highly complex and systematic. Its success or failure has great influence and large investment risk.

Facing strategic risks, industry risks, financial risks, market risks, operational risks, policy risks, legal risks and other risks such as the introduction of technology level risks, we must give full consideration to effective measures to resist risks by making proper predictions and analysis of projects. The most important and most commonly used means are economic and technological demonstration of investment projects. In the economic and technological demonstration of investment plans, according to the relationship between investment plans, it can be divided into single plan risk decision analysis, multi project risk decision analysis and multi stage risk decision analysis. Different risk decision analysis can adopt different analysis methods.

2. risk management of project financing. Fund raising is regarded as the "blood" in the operation of investment projects, and is the focus of interest and risk accumulation. In the aspect of project financing, it is necessary to combine internal financing and external financing, use short-term and long-term funds to plan, rationally determine and arrange the amount of funds to be used, save the cost of capital use, and raise the efficiency of fund utilization, thus effectively controlling the cost of raising funds and controlling the total investment of investment projects.

As the financing link is prone to generate financial risks and capital operation risks, we should pay attention to the selection of various financing methods, the use of financial instruments and the plan of fund utilization, so that the cost of financing and the cost of use are the lowest.

3. risk management of the project budget review. To strengthen investment control of investment projects, we can not do without budgetary review. Budgetary estimate refers to all the cost documents compiled and determined from the preparation of the project to the completion and delivery of the project according to the preliminary design or expansion of the preliminary design drawings, estimates, quotas or budgetary indicators, fees or quotas, and the construction of regional natural, economic, technological and equipment, materials and budgetary prices. The purpose of the budget estimate is to allocate investment funds rationally, strengthen investment plan management, rationally determine and effectively control project investment, promote the combination of advanced technology and rationality of design, check the scale of investment in projects, make the total control accurate and complete, provide reliable basis for the implementation of project investment funds, and improve the investment returns of investment projects.

　　 budget It refers to the investment documents of building and installation engineering according to the design drawings, the current budget quota, the cost norm, and the budgetary price of equipment, materials, labor and construction machinery in the area. Construction drawing budget is an important part of controlling project investment. The review budget is an important measure to control the design of the construction drawing without breaking the budgetary estimate, because the budget is the basis for compiling and adjusting the investment plan of the project, the basis for making the tender price, and the basis for the Contractor's bid price, as well as the basis for determining the contract price.

By strengthening the review of investment budgets, enterprises can ensure the accuracy and completeness of budgetary estimates, prevent arbitrary expansion of investment scale or leakage items, thereby reducing investment gaps and avoiding deliberately lowering the estimated investment. Finally, the actual investment will substantially break through budgetary estimates, thereby reducing investment risks.

　 (two) risk management during investment execution period

Project investment execution period is the most important critical stage for achieving project objectives, and is also a critical period for implementing project risk management. At this stage, whether the project contract negotiation signing, engineering design, construction and installation, or trial operation and completion acceptance, the project will face many problems, such as economic risk, technical risk and so on. Only by implementing effective risk management can the project get more security.

In the investment execution period of a project, risk transfer is the most commonly used technical means of management risk, and engineering insurance and project guarantee are two commonly used methods to transfer project risk.

1. project insurance. Project insurance refers to the insurance premium paid by the project owner and contractor to the insurance company for the smooth implementation of the project. The insurance company shall bear the liability of compensation insurance for the property and personal injury that may arise in the course of construction according to the contract. Engineering insurance is generally divided into two types: compulsory insurance and voluntary insurance.

In industrial developed countries and regions, compulsory engineering insurance mainly includes the following: construction all risks, installation all risks, social insurance, motor vehicle insurance and so on. Internationally, there are several kinds of projects involving voluntary insurance: international cargo transportation insurance, domestic cargo transportation insurance, property insurance, liability insurance, political risk insurance and so on.

2. project guarantee. Engineering guarantee It means that the guarantor (usually a bank, an insurance company, other financial institution) should make a written promise to the other party (creditor) on the request of one party (applicant) of the project contract. Engineering guarantee is another important means of engineering risk transfer measures, it can effectively guarantee the smooth progress of engineering construction.

Common types of engineering guarantee include tender guarantee, performance guarantee, advance payment guarantee and maintenance guarantee. Besides, there are counter guarantee, payment guarantee, sub contract guarantee and completion guarantee.

　 (three) production operation period risk management

The investment project has entered the production run period, which means that the uncertainty factors affecting the project have been greatly reduced and the investment risk is gradually weakening. But it does not mean that the risk of this period is not. The cost management and quality control in production and operation are also related to the success or failure of the project. Therefore, the risk management of project production and operation period is mainly reflected in cost management and quality control. At the same time, it is necessary to carry out post project evaluation at the right time, summarize the experience and lessons of project investment, put forward improvement and remedial measures, and improve the follow-up implementation and management level of the project.

1. cost management during production and operation period. Effective cost management in the production and operation period of the project can reduce costs, increase efficiency and enhance the ability to resist risks. Backward cost, zero inventory management and zero basis budget are commonly recognized cost management methods in recent years. Enterprises can choose to implement them according to the specific industry characteristics of the project.

(1) push back costs. Backward push cost is a method of dynamic backward management of production cost. It calculates the cost index of backward cost according to the product price and target profit that the market can accept, and decomposes it into workshop teams and groups, and rewards and punishments exceed penalties. Once a year, it adjusts once and continuously tapping potential, so as to ensure the continuous decline of unit production cost and material consumption.

(2) "zero inventory" management. "Zero inventory" management usually refers to making sales plans according to the latest market conditions, directly entering the workshop after purchasing materials, and directly selling products after completion of production, reducing or eliminating inventory costs, so that the cost of inventory occupancy reaches the minimum. At the same time, we can make full use of the existing "futures" to lock material prices, delivery places and delivery time, thereby reducing inventories.

(3) the "zero basis" budget. In the production operation period of the project, a zero basis budget can be implemented for cost control. The cost mainly refers to management expenses and sales expenses, and the cost directly affects the profit level. The cost of expenditure has been increasing year by year. Therefore, when controlling the cost, the budget should not be based on the above budget or the actual expenditure in the previous year, but rather based on zero, and strictly control all expenditures. This will help reduce costs, reduce redundant staff and directly increase corporate profits.

2. quality control during production and operation period. The quality of investment project is directly related to the success or failure of the whole project. Scientific quality management can greatly reduce the investment risk of the project. Statistical process control is an important quality control method to ensure product quality, reduce production cost and improve production efficiency in the production process.

Control chart is the most basic tool of statistical process control, and the main means of product quality control in production process. People's evaluation of control charts is: "quality control starts with control charts, and finally controls charts." Because it changes the product quality control into post inspection, it has opened up broad prospects for improving the quality of products, so it has been widely applied in various countries around the world. The main uses of control charts are: (1) to analyze and judge the stability of production process and to control the state of statistics; (2) detect abnormal phenomena and slow variation in production process in time to prevent the occurrence of unqualified products; (3) identify the actual accuracy of production equipment and process equipment so as to make correct technical decisions; (4) provide basis for evaluating the quality of products.

3. project post evaluation. Post project evaluation refers to the comprehensive analysis of the whole process of investment activities - the project's decision making, construction objectives, design and construction, production and operation, after the completion and operation of the investment project and its production and operation for a period of 1-2 years, and a comprehensive and objective re evaluation of the financial, economic, social benefits and effects that the project actually produces is an evaluation method to determine the achievement level of the project objectives.