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expected commercial value (PPM-PFM)
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Portfolio Management (PPM-PFM)
A metric that seeks to maximize the value or commercial worth of the
project portfolio, subject to certain budget constraints.
The expected commercial value (ECV) is calculated using the formula
ECV = [(NPV * pcs - C) * pts - D] where
- NPV = net present value of the project's future cash flows discounted at the weighted average cost of capital (WACC)
- pcs = probability of commercial success
- pts = probability of technical success
- C = commercialization (launch) costs
- D = development costs remaining in the project
