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on Project and Portfolio Management |
| By: | Odin K. Knudsen (The World Bank, Washington, DC, USA); Pasquale L. Scandizzo (University of Rome, Tor Vergata, Italy) |
| Abstract: | Society often sets social standards that define thresholds of damage to society or the environment above which compensation must be paid to the state or other parties. In this article, we analyze the interdependence between the use of social standards and investment evaluation under dynamic uncertainty where a negative externality above a threshold established by society requires an assessment and payment of demages. Under uncertainty, the party considering implementing a project or new technology must not only assess when the project is economically efficient to implement but when to abandon a project that could potentially exceed the social standard. Using real-option theory and simple models, we demonstrate how such a social standard can be integrated into cost benefit analysis through the use of a development option and a liability option coupled with a damage function. Uncertainty, in fact, implies that both parties interpret the social standard as a target for safety rather than an inflexible barrier that cannot be overcome. The larger is the uncertainty, in fact, the greater will be the tolerance for damages in excess of the social standard from both parties. |
| Keywords: | Efficiency; Precautionary principle; Real Options; Social Standard. |
| Date: | 2006–12–10 |
| URL: | http://d.repec.org/n?u=RePEc:rtv:ceisrp:87&r=ppm |
| By: | Giuseppe Pennisi (Advanced School of Public Administration, Rome, Italy); Pasquale L. Scandizzo (University of Rome, Tor Vergata, Italy) |
| Abstract: | Supporting value judgements about policies and programmes is a central task in evaluation. There is, however, little consensus on how evaluators are to accomplish this task.The traditional cost-benefit approaches were found wanting and yet valuation as promoted by checklists or qualitative stakeholder interviews is not anchored to an economic theory and thus inspires little confidence. While no single methodology is likely to be accepted by all, recent developments in economic theory support a new interpretation. This proposed approach is a variant of social cost benefit analysis (SCBA); it retains the representation of stakeholder values while avoiding the more dogmatic, and even mechanical, underpinnings of traditional economic analysis. In this article we trace the development of this new ‘options-based’ approach and chart out the path for further research. It warrants, we believe, a voice in the dialogue on economic evaluation. |
| Keywords: | Cost Benefit Analysis; Evaluation; Stakeholders; Real Option. |
| Date: | 2006–12–10 |
| URL: | http://d.repec.org/n?u=RePEc:rtv:ceisrp:86&r=ppm |
| By: | Alina Mihaela Popescu; Peter Friedrich; Gunther Wonnemann |
| Abstract: | The authors determine the income effects, employment effects, production effects, migration effects as well as the budget effects and effects concerning social insurances. These effects concern the city of Munich, the hinterland, other municipalities, Bavaria, other states and the federation. The so-called “Taxonomic Localization Approach for Public Offices“ is applied. The model for identifying the effects considers the characteristics of the games and of the Munich region. Direct effects are related to economic units directly involved in the World Cup™ games. Indirect effects concern the reaction of economic units which are not part of the project, e.g. hotels in Munich. A project includes the effects of the visitors and accompanying persons, of journalists, of a media centre, of FIFA-congresses and of special social events related to the games organized by the city of Munich. In addition, activities of fan-shops, restaurants, service and marketing companies, of the FIFA, the firm operating the stadium influence the size of the effects. The effects are estimated for the year 2006. In Munich, the effects on income, employment, and production turn out considerable high. The budget effects to the city of Munich are also positive. These are going to be positive for the hinterland and the social insurance, too. The size of the effects depend mainly on the visitors and journalists as well as on their expenses. Positive effects caused by the World Cup™ games in Munich compensate the losses of other regions. Moreover, the business and financial conditions of the stadium, the intergovernmental horizontal and vertical fiscal relations, the characteristics of the regional economy, number of visitors, etc. determine the effects. Public relation effects for Munich, social and political effects and promotion of sports occur, but are not considered here. |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwrsa:ersa06p115&r=ppm |