Mathematical model for decision-making on economic protection of an innovative project

UDC 336.648; 336.665; 338.28
Publication date: 02.10.2019
International Journal of Professional Science №10-2019

Mathematical model for decision-making on economic protection of an innovative project

Математическая модель принятия решений по экономической защите инновационного проекта

Slavyanov A.S.
Candidate of Economics, Associate Professor of the Department –
Moscow State Technical University N.E. Bauman
Abstract: The creation of fundamentally new technical facilities is associated with a high level of uncertainty, in connection with which, at the initial stage of research, it is difficult to determine the completion date and assess the need for resources. When implementing innovative projects, the investor is forced to solve the problem of choosing the option of economic protection of investments (insurance, creation of a reserve Fund, creation of a reserve technical facility). It is shown that project insurance does not always provide rapid recovery of project characteristics. The creation of a pool may seem to be private companies rather expensive method of protection. A dynamic economic and mathematical model based on the net present value (NPV) method is developed, which allows the investor to determine the limit value of the insurance rate. In case of exceeding the limit value, the investor should focus on other methods of protection-the creation of a financial or material reserve. The model allows you to make the best decision on the protection of the project. The use of the model will reduce the project implementation time, increase the efficiency of resource use.
Keywords: investment, project, innovation, insurance, reservation, decision making.

Introduction Creating fundamentally new types of equipment and technologies requires a significant amount of experimental, research and design work, which, in turn, requires scarce materials, special equipment, testing ranges and the work of highly qualified scientists and specialists [1-2]. As noted in previous studies, the implementation of projects using the results of fundamental and applied research is associated with the so-called innovative risks [3-6], which can be implemented, at all stages of the project life cycle [7-8]. Various types of accidents that occurred during experiments, during the manufacturing process, during transportation, storage, etc., can cause substantial material damage to the investor. In addition to direct damage to the enterprise’s infrastructure, losses associated with delaying the project’s implementation deadline, contract disruption, and reputational costs, which may lead to a market loss, are of particular danger.

Methods of economic protection Insurance, as the most common method of protection, as a rule, does not take into account these risks, which leads to severe consequences for the investor if they are implemented [9]. It should be noted that commercial insurance companies, the purpose of which is to maximize profits, are trying, as a rule, by all possible means to delay payments on insured events, which causes serious damage to the project indicators [10]. An enterprise that does not receive timely compensation cannot sustain the terms of the project and incurs losses.

An alternative method of economic protection is redundancy. here, an enterprise creates its own funds from its own funds, from which all damage from an accident or other negative event is instantly compensated. Funds are immediately directed to compensation for damage, while the insurance organization needs time to collect documents, examinations, conduct an investigation, raise funds, etc. As a rule, large payments are delayed for several months, accompanied by lawsuits and litigation, which greatly complicates the distribution of insurance as a method of protection. In conditions of dynamically developing markets, the loss of time spent in such proceedings may lead to the failure of previously concluded contracts with all the ensuing negative consequences.

Making decisions To make a decision when choosing methods of economic protection, a dynamic model was developed that takes into account all the time spent on the innovation process.

The model is based on a comparison of the NPV project [11], protected by insurance and reservation.

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