The variable to be optimised financial return

Which variable should be optimised - once the constraints allow a positive solution space - is open to question. In the case of an office building, for instance, we may choose the return on investment, the office space per employee, the parking area, the budget for a prestigious entrance, etc. The problem can be circumvented to a certain extent by assigning weight factors to a limited number of variables and optimise the weighted sum of these. The choice of the weight factors and the selection of the set of variables remain, however, arbitrary. We therefore recommend optimising, ultimately, always the same variable: financial return, either Net Present Value (NPV) or Internal Rate of Return (IRR). At the same time considerations related to variables like the budget for a prestigious entrance or the size of the parking lot should be supported by information from Monte Carlo simulations as described in the next section.

It should be emphasised that our recommendation to select financial return as the variable to be optimised only holds for the final stage of the Open Design process. At intermediate stages, in particular to facilitate negotiations among crucial stakeholders, other variables are chosen in the objective function to show the effect thereof to stakeholders. They then can better decide on possible concessions regarding the constraints assigned to them. This will be elaborated in Section 7.2, Multiple Objectives.

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Best Investment Tips and Ideas

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