Employing the Net Present Value-Consistent IRR Methods for PFI Contracts
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VIEW THE REPLYPublication: Journal of Construction Engineering and Management
Volume 136, Issue 7
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.
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Acknowledgments
This study was jointly funded by grants from the Hong Kong Polytechnic University (Project No. UNSPECIFIEDA-PF57) and the Research Grants Council of Hong Kong Special Administrative Region (RGC Reference PolyU No. UNSPECIFIED5144/06E). The writers would like to thank anonymous reviewers for their useful comments on earlier versions of the paper.
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Information & Authors
Information
Published In
Journal of Construction Engineering and Management
Volume 136 • Issue 7 • July 2010
Pages: 811 - 814
Copyright
© 2010 ASCE.
History
Received: Jul 11, 2009
Accepted: Dec 14, 2009
Published online: Dec 16, 2009
Published in print: Jul 2010
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