Survey of Project Evaluation Techniques Currently Used in Industry

Companies use various project evaluation techniques to determine the feasibility and profitability of a project. We surveyed some of the largest “Fortune 500” Industrial and Service corporations in December 1991 about their use of these techniques. The survey was compared to a similar 1978 study by the American Association of Cost Engineers (AACE). Thirty-three (33) companies replied to the 1991 survey. These replies show a change in the use of corporate project evaluation techniques since 1978. There has been a shift from the use of Internal Rate of Return (IRR) to Net Present Value (NPV) and a decrease in the use of the Payback Period (PBP). The 1991 survey showed 97% of the surveyed companies use NPV, as opposed to only 52% in the 1978 AACE survey. The percentage of surveyed companies using IRR dropped from 100% in 1978 to 90% in 1991. Also, the percentage of surveyed companies using PBP dropped from 78% in 1978 to 64% in 1991.