What is the Total Project Approach?

The total project approach is a financial analysis method that compares the profits generated by two alternative projects. The project selected is usually the one with the higher projected profit level. However, a number of additional issues should be considered when making this decision, such as:

Do the cash flows of the projects match their profits?
How well do the required investment levels of the two projects compare to each other?
How long does it take each of the projects to generate a return?
Are there differences in the variability of sales between the two projects?
Are there differences in the risk of project failure?

Thus, there are a number of additional considerations involved, rather than just comparing profitability.