Title

Employing the NPV-consistent IRR methods for PFI projects

Document Type

Article

Publication details

Chiang, YH, Cheng, EWL & Lam, PTI 2010, 'Employing the NPV-consistent IRR methods for PFI projects', Journal of Construction Engineering and Management, vol. 136, no. 7, pp. 811-814.

Published version available from:

http://dx.doi.org/10.1061/(ASCE)CO.1943-7862.0000179

Peer Reviewed

Peer-Reviewed

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.