Expected commercial value
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Expected commercial value (ECV) is what a company seeks in terms of maximizing the value of commercial appeal and worth of a portfolio, while working within certain budget constraints. The report shows the portfolio priority with its items and their values for the predicted commercial value and the net present value; this is compared to planned and specific cost(s). The numbers are collected on bucket levels.
ECV is a very prospected weighted value for a project with unclear conclusions, similar to likely net existing value (ENPV). As with ENPV, developments are defined to represent different project outcomes, with each scenario being assigned a possibility. A project value is computed for each scenario. The expected commercial value is obtained by multiplying each situation's value by the scenario odds and adding the results. Estimated commercial value is another term for ECV.
Depending on the procedures used to estimate the value of the project under each scenario (and on the techniques used to estimate the probabilities of the scenarios), ECV can be a useful way to address project uncertainties. However, as indicated below, the technique often involves explanations that may or may not be appropriate. Typically, ECV represents a simplified version of ENPV often necessary for projects that produce new products. The project is broken down into stages which are represented in a decision tree.
In reality, technical and commercial successes are not definite outcomes. There are changeable degrees of technical success and, assuming the product is launched, commercial sales could be anywhere within a variety of possibilities. Still, depending on the assertion, the simple formula may provide a satisfactory calculation. More generally, because ECV is a simplified version of ENPV, it has the limitations of the more general approach (including omission of non-financial sources of project value and potential for insufficient treatment of risk.
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