FAQs
LayeredRock economic evaluation and analysis software FAQs.
Answers
What is economic evaluation?
Definition of economic evaluation: the process calculating the economics of a plan, a project or a business deal in the context of risks and uncertainty.
What is an economic model? Definition of economic model: a financial model such as P&L of a project or business deal. Economic models can also be cost models, capital model, income statement and balance sheet. The economic model is commonly a pro forma of the projections of volume, expense and cash flow.
What is an economic solution template? Definition of an economic solution template: an economic solution template is an industry and problem specific model that is constructed to provide economic evaluation and analysis of a business problem. Economic solution templates are a means to create prebuilt economic analysis models for specific business problems (e.g., new well analysis, working interest analysis, services planning).
What is tornado diagram and how to read it? Definition of a tornado diagram: a tornado diagram is a type of chart that illustrates the ranges of an outcome to its assumptions based on an economic model. It obtains its name from a weather tornado as it takes similar shape. The vertical line through the tornado represents the nominal outcome value based on each assumption's nominal values. The assumptions for the outcome in a tornado diagram are listed on the side. The horizontal bar associated with each assumption represents the outcome's range as it is impacted by ranging the assumption from its minimum to maximum value. Assumptions are ranked from top to bottom on outcome impact which gives the tornado its shape. The chart can be symmetrical or not according to each assumption, just depending on how it is ranged.
What is a dimension? Definition of a dimension: a dimension is a means in Petranomics economic tools and solution templates to structure an array. For example if Region is a dimension, it could have several members such as East, West, North and South. Dimensions can be applied to assumptions and outcomes.
What is an assumption? Definition of an assumption: an assumption is a variable in an economic model, usually thought of as an input variable. Assumptions are variables that have uncertainty, which can be expressed with a minimum and maximum, where the nominal value is nominal value of the assumption.
What is an outcome?< Definition of an outcome: an outcome is a variable in an economic model, usually thought of as a calculated variable. Outcomes can vary as they depend upon assumptions or other outcomes in their equations. Thus as the assumptions change so does the outcome.
What is sensitivity analysis? Definition of outcome sensitivity analysis: how sensitivity of an outcome as value changes to the assumptions range from minimum to its maximum range. The outcome sensitivity can be shown in table values, tornado charts or in line charts.
What is dynamic sensitivity analysis? Definition of Dynamic Sensitivity Analysis: the ability to change the assumption value for range (minimum or maximum) or change the nominal value of the assumption and dynamically see the outcome value change. This is opposed to the classical approach via a batch change, where an input is changed and then the output value is observed.
What is Petranomics?
Definition of Petranomics: petra is Greek for rock and the second part of the word comes from economics, thus loosely it stands for rock economics.
