The 10th International Conference on Energy, Resources, Environment and Sustainable Development (ERESD 2024)

Engineering projects face risks over time. The risks generally may come from financial, technical, and social aspects. Given that the risks cannot be eliminated, considering the risks in the project evaluation is urgently needed. One common technique to evaluate engineering projects is through discounted cash flow where Net Present Value (NPV) is widely used. However, the existing NPV assumes the risks are transformed into one single number (i.e., discount rate). This paper discusses how the risks may affect a project economically and how we may benefit the proposed approach towards sustainability in the industry. The financial risk is quantified by weighted average cost of capital (WACC) model, the technical and social risk is assumed as a cost that is deducted from cash flow and modeled through probability concept. The proposed approach enhances the traditional DCF technique. Eventually, the sustainability of the mineral project can be achieved through managing the resources economically.

risk profile in engineering projects evaluation