In project management, we usually complete our project with the final delivery of a product or service. Product marketing and sales is a separate project or operation. But in many cases, as part of risk analysis, it may be useful to analyze all phases of product development. For example, it is very important for economic evaluation of oil and gas projects. Oil and gas producers must ensure that production is profitable given all uncertainties. Generally, project revenue or income is calculated the same way as cost, it just has a different sign: cost will be negative, and revenue is positive. Profit is the difference between revenue and cost.

In addition to cost uncertainties, the project schedule can include information about revenue uncertainties. It includes risk “Fixed or relative revenue increase”. It is also possible to assign statistical distributions to revenue.

As part of risk analysis, we can calculate cost and revenue for each period of time (weekly, monthly, yearly, etc.). The results of analysis can be presented as a probabilistic cash flow chart. Each bar of the chart is associated with statistical distribution. We can calculate low, base, and high estimate of cost and revenue. Each estimate can be associated with particular percentile of statistical distribution. For example, low can be P10 and high will be P90.

As part of cash flow analysis, we can calculate a number of key performance indicators that help to determine the economic feasibility of a project. Among them are:

Net present value (NPV): the sum of the present values (PVs) of cash flows over a period of time. Each cash inflow/outflow is discounted back to its present value (PV). According to time value of money theory, time has an impact on the value of cash flows. Particularly money in hand is worth more than future cash flow. NPV is a measure of the value of a project. If the NPV > 0, the project would add no value.

Rate of return: the profit from an investment over a period, expressed as a proportion of the original investment. In the case of project management, the return can be calculated as profit of the project divided by incurred cost.