Preprint Article Version 1 This version not peer reviewed

The Purpose of Project Economic Models

Version 1 : Received: 4 April 2017 / Approved: 5 April 2017 / Online: 5 April 2017 (18:09:25 CEST)

How to cite: Omoregie, U. The Purpose of Project Economic Models. Preprints 2017, 2017040031 (doi: 10.20944/preprints201704.0031.v1). Omoregie, U. The Purpose of Project Economic Models. Preprints 2017, 2017040031 (doi: 10.20944/preprints201704.0031.v1).

Abstract

Models come in different forms: visual, arithmetic, mental, physical. The most common type of model is arguably the mental model, which people use to view and interpret the world. A model can be described as a representation of a problem or a situation – a simplified representation. The process of building or developing a model is called modeling. A model once developed by the modeller, can be ‘owned’ by a manager or decision maker. The ideal is to make the model an extension of the user’s ability to think about and analyse problems or situations. When used properly – taking into consideration its limitations – an economic model for a project can provide insight for decision makers, when making the crucial decision to approve a project. An economic model for a liquefied natural gas (LNG) project is shown as an example.

Subject Areas

Models; Projects; Modelling; Quality Assurance

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