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How to select among alternatives. A better and safer method than NPV

How to select among alternatives. A better and safer method than NPV? For mining rehabilitation or mining transportation system, the “strongest alternative” is the one that has the largest Economic Safety Margin (ESM), evaluated as the difference between the Project Net Gain (PNG)= Project Returns (PR) – Costs (C) and Total Risk (TR), i.e. the value obtained through the Comparative Decision Analysis (CDA) methodology. Where: ESM=PNG-TR=PR-C-TR=PR- (C+TR). The ESM is the difference between the capacity (the “strength” of a project…

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Comparative Decision Analysis-Economic Safety Margin (CDA-ESM): finally an alternative to the obsolete NPV.

We have included CDA/ESM  in our Edumine Risk courses for mining for many years. In 2010 we published the article (STOP PROCRASTINATING! NPV IS DEAD: USE RISK AS A KEY DECISION PARAMETER.) in the Canadian Reclamation. Indeed it showed two mining applications. Is CDA/ESM more complex than NPV? Yes, of course! Like a motorcycle is more complex than a motorbike. The point here is that NPV will not take you anywhere safely. Indeed it is misleading, especially for long term projects…

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