Managing the efficiency of an innovative project in the chemical sector

The paper is dedicated to analyzing the process of innovative product development in the chemical industry, elaborating a methodology for evaluating the efficiency of innovative projects common for this sector of the economy, and testing this methodology using the example of a project. First, the authors consider the specifics of the development process in which a new product is created in the chemical sector. The emphasis is laid on the product-process approach, and a brief characteristic of this approach is provided. Then the authors discuss the general methodology of product development in the chemical sector using investment analysis methods and a decision tree. Then the authors tested the methodology using the example of a Russian chemical enterprise realizing an innovative project on production of urea-formaldehyde concentrate, urea-formaldehyde resins, and phenol-formaldehyde resins. The results of the investment attractiveness of the project demonstrate that the net present value from the implemented project, given the risk factors, is higher than if the project was implemented with the basic initial conditions. The elaborated methodology allows us to evaluate investment projects in the context of uncertainty, and the result of its application is that more informed management decisions about investment projects in the chemical industry become possible.