Investment Analysis At Texasgulf

A computer system was developed by Texasgulf's Corporate Data Center (at Raleigh, North Carolina) to evaluate the economics of proposed new projects and to determine the incremental expansion effects of existing projects. The Corporate Treasurer, Controller, and Senior Staff Members of the corporate office guided the project with advice from the Chairman's office. After consideration of commercially available programs, the decision was made to develop an in-house investment system. The main specification was that the program must do the accounting calculations on the computer exactly as done by hand in the corporate office. No average "approximations" or values were allowed. Also, the capability to change the calculation procedures quickly was a must. The experience gained in developing a program to evaluate Gulf Coast off-shore oil lease-bids was used to develop an investment system. Several ideas were taken from A Programming Language (APL) concepts. An investment functional language was developed, and computer programs were written to process the functional language. One feature is a print-out of the model in English. The English print- out assists the debugging and documentation of a model. The major expansion at the Kidd Creek mine was the test case for the new system. After the results were approved and accepted for the base case, many sensitivity runs were made. Numerous additional models were developed to reflect the investment opportunities at other sites. An existing edit program was used to build the models and to systematically organize all the data for different projects. Remote input-output capabilities were added to the system, allowing data to be prepared and submitted at one Texasgulf site with the results printed at another location within minutes. The project has been well accepted by Texasgulf's senior management. Growth of the system is now in the areas of (1) merging individual projects into the corporate financial statements, (2) use of classical forecasting to project future costs, and (3) coupling the investment program to mine planning and general ledger systems. Also, the system is now being installed on an interactive computer system to provide faster turn-around time and more flexibility.