chapter 13financial modeling case study in forestry project evaluation

1 Chapter 13: FINANCIAL MODELING CASE STUDY IN FORESTRY PROJECT EVALUATION. Description of a generic computer model for the evaluation of various forestry investments. 2 Forestry Investment Computer Models  To evaluate the NPV and LEV of particular plantations. The roles of modelling in forestry investment.  To allow sensitivity and risk analyses of forecast variables.  To facilitate analysis of various cropping scenarios: eg; harvest lives, planting regimes, species mixtures. 3 Forestry Models  Modelling is useful because: 1. There are many data types. 2. The computational inter-relationships between data types are complex: eg rainfall/soil type/location/species. 3. Plantation life spans are very long. 4. Many scenarios are possible. 4 Forestry Models: Specific Vs Generic  A Specific model can evaluate individual forestry projects.  A Generic model can evaluate a variety of separate investment projects for a variety of users. 5 Forestry Models: Specific Vs Generic Choice  Specific –  Shorter development time  easier to develop  less data required   limited to one user/one application  a once off application means that there are no economies of scale. 6 Forestry Models: Specific Vs Generic Choice  Generic –  multiple applicability means economies of scale  wide range of users and applications  can be commercially marketed   long development time  extensive data required  data relationships more complex. 7 Forestry Investment Computer Models  There are two types: 1. For evaluating forestry investments as independent projects 1. For evaluating forestry projects within the overall operations of a business firm. 8 Forestry Investment Computer Models  Who are the ultimate users? Model Design Considerations I:  What software should be used to build the model ?  What hardware platform should be employed? 9 Forestry Investment Computer Models  How is the model going to be tested? Model Design Considerations II:  What type of user interface is best  Who is responsible for maintenance and updates? 10 Forestry Investment Computer Models Ch 13 reviews a generic computer model: the ACTFM Australian Cabinet Timbers Financial Model. This model:  Suits investors, consultants, landholders, and government agencies  Covers over 30 native species  Uses linked sheets in an Excel workbook  Is menu driven. [...]... Behind the Scenes The Excel sheets behind the menus hold: 1 Information about the program; data relating to MAI’s, stumpage prices, and harvest ages of over 30 different cabinet timber species 2 Data relating to plantation establishment and maintenance costs 3 Input tables for the entry of alternative MAIs, prices and costs, and harvest age data 4 Pages containing visual basic code 11 ACTFM- Behind... basic code 11 ACTFM- Behind the Scenes A picture of the logical layout 12 ACTFM- The User Interface An output screen showing results calculated from input selections 13 ACTFM- The User Interface Selected dialog screens An annual cost sheet A prescriptive cost sheet 14 ACTFM- The User Interface A dialog screen “Costs during plantation” sheet 15 ACTFM A Generic Computer Model This model was difficult to develop... “Costs during plantation” sheet 15 ACTFM A Generic Computer Model This model was difficult to develop as it required extensive data collection, complex computational formulation, and extensive interface planning, but it is very successful, and has wide application 16 . 1 Chapter 13: FINANCIAL MODELING CASE STUDY IN FORESTRY PROJECT EVALUATION. Description of a generic computer model for the evaluation of various forestry investments. 2 Forestry Investment. more complex. 7 Forestry Investment Computer Models  There are two types: 1. For evaluating forestry investments as independent projects 1. For evaluating forestry projects within the overall. possible. 4 Forestry Models: Specific Vs Generic  A Specific model can evaluate individual forestry projects.  A Generic model can evaluate a variety of separate investment projects for