ABSTRACT
Most project managers are appointed after the project's initial commercial environment has been established by others. Many large organizations expect their project managers to refer all matters requiring commercial decisions to their marketing, commercial or legal departments. Apart from marketing activities, as far as project management is concerned the principal areas of commercial management are: financial project appraisal, funding, contracts and negotiations, accounting, invoicing and credit control, and insurance. For many commercial projects a financial appraisal might be conducted to find the expected return on the capital investment. Although cost inflation can also have a significant effect, it is usually ignored for the purposes of appraisal calculations. Simple payback is the appraisal method familiar to most managers. The boiler replacement project can be used to demonstrate the net present value concept. The example has been kept simple and does not include all possible cash flow items.
