Valuation of projects in the public sector

Valuation of projects in the public sector

  • Study programme and level:The joint doctoral study programme Governance and Economics in the Public Sector (third cycle)
  • 2nd year
  • 5 ECTS
  • Course type: Elective course
  • Lectures: 20
  • Seminar: 20
  • Others forms of study: 20
  • Individual work: 90
  • Lecturer: Mira Dimitrić, PhD

1. Objectives and competences


  • Advanced knowledge of internal financial analysis.
  • Understanding key characteristics of different types of assets and creating investment projects.
  • Acquiring specific knowledge of organization and capital budgeting procedures.
  • Understanding the scope and limits of different financial decision rules for investment projects.
  • Acquiring specific knowledge of cash flow estimation. Acquiring knowledge of analysis and risk estimation and incorporating relevant risk into project efficiency.
  • Understanding real options and acquiring knowledge of incorporating option value in real NPV.


  • able to collect and understand wider knowledge in the field of capital budgeting in public sector,
  • application of methods, technics and tools for valuation and ranking of projects,
  • able to develop theory and methodlogy in the field of real investment,
  • able to take an real investment decisions 

2. Content (Syllabus outline)

  • Features of projects in the public sector - distinctive characteristics compared to commercial projects
  • Capital budgeting in the public sector
  • Benefit - Cost Analysis
  • Economic and cash flow of projects
  • Economic valuation criteria 
  • Financial valuation criteria
  • The cost of capital estimating
  • Quantification of risk
  • Basics of real option valuation
  • Ranking of projects - multi-criteria analysis

3.  Readings

  • Silvije Orsag, Lidija Dedi, Budžetiranje kapitala, Procjena investicijskih projekata, drugo prošireno izdanje, Masmedia, 2011.
  • T. Copeland, V. Antikarov, Real Options, a practitioner's guide, Thomson Texere, 2003.
  • Pamela P. Peterson, Frank J. Fabozzi, Capital Budgeting, Theory and Practice, Willey & Sons, inc., New York, 2002.
  • European Commission, Regional Policy, Guide to Cost -Benefit Analysis of Investment Projects, July 2008 Edition.

4. Intended learning outcomes

Deepening the theory of real investment and specialisation in capital budgeting techniques. Reach the abilities to solve different types of investment project problems in public sector.

5. Learning and teaching methods

  • Lectures on selected topics.
  • Seminar work and exercises (seminar paper – case of project).
  • Individual learning and exam preparation.

6. Assessment

Seminar work – case study 50%
Discussions (leading and cooperate) 30%
Exam 20%