A Post-Evaluation System

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NUBS China CSR international talent development program

A post-evaluation system on fixed assets investments

Zhang Kun
GM stream, group B

M a y 2 0 1 3
A post-evaluation system on fixed assets investments

1.Background

With the development of CSR,more and more money was put into fixed assets investment, such as purchasing equipment , building new plants and so on. Due to the slide of the external market, the company will have to bear an unprecedented fund pressure that is caused by fixed assets depreciation and amortization.

Meanwhile, after the last round of the Ministry of railway reform, the railway administration will become the main body of the procurement of vehicles that exacerbate the uncertainty of the market.

In addition, the Ministry of Railways attaches great importance to product quality, and they attribute the present quality problems to the exclusive supply of some components and a lack of competition. Therefore, the Ministry of Railways are putting forward to introduce private capital into the product market that creates more fierce competitions between subsidiaries and the present & potential competitors.

Facing the internal & external troubles, CSR would better make some revolutionary changes. Since my responsibility of my job is to manage the investment projects, and I found that CSR spends nearly 5 billion RMB on fixed assets on average each year, but there hasn’t been an effective way to evaluate whether the previous projects were worth the money or whether they reached their initial purposes. This essay may offer you a new way of thinking about post evaluation being as important as previous analysis and argument. CSR can reduce the operational risk by building such an evaluation system to keep stable development all the time.

2.Fixed Assets

When mentioning fixed assets, it generally refers to something that an enterprise can use more than one year, such as real estate(houses, buildings), and other equipment, appliances and tools which are associated with the production and management .

From a financial perspective, any fixed assets should present three features. First of all, service life should be more than one year; secondly, it should be physical objects that could be touched and seen ; additionally it must have a certain value more than 2000RMB. It is possible that in different companies it may vary. Anyway defining the threshold value is to provide convenience for management.

3.Post-Evaluation System

3.1 General Concept and Principles

It refers to using a comprehensive systematic review of the project implementation process. This review will compare to technical, economic, environmental and social indicators established for making decisions against project results. And then find out the differences and changes, analyze reasons , sum up experience and lessons, get inspiration, put forward countermeasures and Suggestions. Finally, the evaluation can get to the purpose of improving the level of investment decision and benefits through the information feedback.

The general principles of investment project post-evaluation include: independence, science, practicability, transparence and feedback.

3.2 Logical Framework Approach

It is an approach of analyzing four aspects related to the project such as input, output, objective, the macro influence, and then summarization. Data collection is mainly through field investigation and questionnaire survey. So when using this approach, it is the best way to spend as much time as possible with front-line workers. The project evaluation results can boost the responsibility of the implementation.

3.3 Management and Implementation

3.3.1 Setting up expert evaluation group

Before the fixed assets investment, an expert evaluation group should be set up according to the characteristics of the project. Investment management department leads to organize the expert...
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