This middle section of the book was started with an analysis of where we had come from and where we were going. I propose to finish it in a similar manner. I will use a special diagram that I call a ‘fish diagram’ to describe the progress that readers should have made to what should now be skilled practitioner status. I will, through this diagram, explain why the numbers behind all projects should be considered as being fishy and how we can then sort out the real fishy numbers from those that just look that way.

This section started with a consideration of how to model economic value. The basic concept was disarmingly simple but the practical application relied on many factors that had to be got right if we were to be able to trust an economic model. I suggested that one key aim for a financial analyst was to remove spurious number noise from the items that senior decision-makers need to consider. A well-specified methodology would then allow a set of assumptions to be converted faithfully into the economic indicators. If a different analyst was given the same assumptions they too would produce the same profile of after-tax funds flows and the same economic indicators.

A typical set of after-tax funds flows can be used to prepare a chart which I believe sums up how most project people will think about their project. This is a graph of cumulative present value. A typical chart for a hypothetical project is depicted overleaf.