Innovation-Gate-Process - Hochschule Ludwigshafen am Rhein

Vorlesung: Produkt- und Innovationsmanagement
Teil II: Innovationsmanagement – Der Innovation-Gate-Prozess
Expected Commercial Value
Auszug aus: http://www.prioritysystem.com/glossary2.html#npv
A probability-weighted value for a project with uncertain outcomes similar to expected net present value (ENPV).
As with ENPV, scenarios are defined to represent different project outcomes, and each scenario is assigned a
probability. A project value is computed for each scenario. The expected commercial value is obtained by
multiplying each scenario's value by the scenario probability and adding the results. Estimated commercial value
is another term for ECV.
Depending on the techniques 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 simplifications that may or may not be
appropriate.
Typically, ECV denotes a simplified version of ENPV often appropriate for projects that generate new products.
The project is broken into stages which are represented in a decision tree. The first stage is the product
development stage, where the probability of technical success is Pts. The second stage is the product launch,
where the probability of commercial success is Pcs. If D is the development cost, C is the cost of commercially
launching the project, and PV is the present value of future earnings assuming a commercially successful project,
then:
ECV = [(PV*Pcs-C)*Pts]-D
In reality, of course, technical and commercial success are not yes/no outcomes. There are varying degrees of
technical success and, assuming the product is launched, commercial sales could be anywhere within a range of
possibilities. Still, depending on the application, the simple formula may provide a sufficient approximation. 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 inadequate treatment of risk).
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Prof. Dr. Manfred König