Net Present Value as a Project Management Tool - Theoretical Basis and Practical Consequences

Abstract

The article deals with the net present value as a project management tool. The net present value is the most common criterion used in practice for evaluating the effectiveness of investment projects, which is associated with a minimum number of restrictions. The authors of the article aim to characterize the net present value as a project management tool, to evaluate its use in the management of projects in the Czech business practice and formulate recommendations for its application in project management. The starting point of the article was a literature review. It was followed by a qualitative research conducted via e-mail questioning and a quantitative research in the form of a questionnaire survey. Firstly, the net present value is presented in the context of project type, project life cycle stages and project management information systems. Secondly, the authors analyzed and, in comparison with the international practice, assessed the extent to which the net present value is used by managers of companies operating in the Czech Republic. They also discuss available software support for the net present value as a project management tool. Finally, recommendations are formulated for the application of the net present value in the context of project type and project life cycle stages.