Investment appraisal in the water industry of England and Wales

Since privatisation in 1989, the changing nature of the water industry in England and Wales has increased the need for effective investment appraisal. Previous research highlighted many aspects of the industry that could detract from the efficacy of conventional discounted cash-flow techniques, and found that an investment-appraisal technique must fulfil a number of criteria in order to overcome these difficulties. This paper examines a number of financial and strategic management techniques for investment appraisal, and assesses their suitability with reference to these criteria. It shows that, of the studied techniques, the 'balanced scorecard' appears to be most suited for use in the water industry of England and Wales.