A Synthesis of Methods for Evaluating Interrelated Investment Projects

Strategic investments are frequently placed in increments through time, while simultaneously impacting other processes. These sources of dependency cause the economic evaluation of these projects to be a complex affair. There are a number of methods that allow the analyst to evaluate these types of investments. This paper identifies, explains, and provides practical examples for seven different evaluation methods. For each of these approaches we identify strengths, weaknesses, and best application. We conclude by suggesting that an approach that combines simulation with activity-based costing for tactical evaluation and expert systems for strategic evaluation may have the most future promise.