The value (item 5 in the figure) of an IT project can be found by adding up all annual cash flows after adjusting those sums to take into account time and risk. The resulting number shows how much new net cash you can expect to get from the project—and thus the project's value to the bottom line.

Finally, dividing this figure by the number of the company's outstanding shares calculates an equivalent change in the price per share. If that number is positive, you can safely assume that the IT project will increase the value of the business and that the business should proceed with the project. If the value is negative—in other words, it drains value—then the project should be halted.

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Project Management Made Easy

Project Management Made Easy

What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.

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