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on Project, Program and Portfolio Management |
| By: | Gersbach, Hans |
| Abstract: | We propose a two-stage process called minority voting to allocate public projects in a polity. In the first period, a society decides by a simple majority decision whether to provide the public project. If the proposal in the first period is rejected, the process ends. Otherwise the process continues, but only the members of the minority keep agenda and voting rights for the second stage, in which the financing scheme is determined. In the second stage, the unanimity rule or the simple majority rule is applied. We provide a first round of relative welfare comparisons between minority voting and simple majority voting and outline our research program. |
| Keywords: | democratic constitutions, minority voting, public projects |
| JEL: | D60 D72 H40 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifwedp:5567&r=ppm |
| By: | Josepa Miquel-Florensa (Department of Economics, York University) |
| Abstract: | We design a multiple project-funding contract that provides optimal incentives to recipients, in a setting where externalities exist among the multiple projects and where donors and recipients may differ in their valuation of the projects. To do so, we study optimal incentive payments in a dynamic principal-agent framework with focus on two-project contracts. The principal cannot observe the agent’s investment, but only completed projects. We consider principals that cannot commit to contract termination before completion of the projects; we assume that the contract does not end until both projects are accomplished. We derive the optimal contract for each possible combination of principal-agentproject characteristics to find that projects should be undertaken simultaneously when value externalities among them are large, i.e. when completing both projects gives the recipient significantly more utility than the sum of the projects’ independent values. The principal’s utility maximizing strategy, when technical externalities among projects are important, is a sequential contract that starts with the project that generates the externality. We find that differences in project valuation between agents and recipients may, in some cases, lead to inefficient contracts, when in other situations the ability of the principal to choose the timing of the project competition may be a safety clause for him. |
| Keywords: | Dynamic Contracts, Multitask, Foreign Aid |
| JEL: | D82 O12 O19 F35 |
| Date: | 2007–05 |
| URL: | http://d.repec.org/n?u=RePEc:yca:wpaper:2007_2&r=ppm |
| By: | Josepa Miquel-Florensa (Department of Economics, York University) |
| Abstract: | We present the optimal contract for financing a project that has N stages to be completed sequentially when the principal can not commit to abandone the project before it is completed and the project to be completed is valued by the agent. In a dynamic moral hazard setting, we find that the optimal contract provides decreasing transfers for successive unsuccessful attempts in a given stage, and smaller transfers when the subsequent stages are reached. We find that the optimal sequence of transfers is greater the bigger is the exogenous probability of returning to a preceding stage and the greater the principal’s cost of stage verification is. When intermediate stages are valued by the agent, we find that smaller transfers are optimal. |
| Keywords: | Dynamic contracts, Moral Hazard, Foreign Aid, multi-stage projects |
| JEL: | D82 D86 F35 O12 |
| Date: | 2007–05 |
| URL: | http://d.repec.org/n?u=RePEc:yca:wpaper:2007_4&r=ppm |
| By: | Björn Johnson; Jens Müller; Jeffrey Orozco |
| Abstract: | A number of attempts have been made in the North to assist in the formation of independent research capacities in the South by establishing knowledge sharing through North-South research collaboration. One such attempt was initiated by Danida through its programme for Enhancement of Research Capacity (ENRECA). Aalborg University was approached by the National University of Costa Rica to make a joint research venture within the field of sustainable development. The project got a Central American (CA) regional perspective by including participants from Nicaragua and El Salvador. The project was titled Sustainable Development Strategies for Central America (SUDESCA) and aimed at support of relevant CA research activities, including the formation of adequate organizational setups that would eventually sustain forthwith. The project focused on two theoretical themes, i.e. the National Systems of Innovation and the Social Construction of Technology approaches. In this paper the CA universities are viewed as important sub-systems of the respective national systems of innovation. Thus, the following is an analysis of the institutional sustainability of the research capacity of universities perceived as parts of the national systems of innovation. To what extent did the knowledge transfer and exchange as well as the organizational capacity building efforts succeed? What were the main pitfalls and opportunities experienced? What did the Aalborg team learn about its own research capacity set-up? Our overall conclusion is that it is a mistake to assume that research capacity may be more or less directly transferred from the North to the South. Research capacity existing in the North has to be carefully adapted to the specific conditions where it may be expected to be useful. |
| Keywords: | Innovations systems; knowledge adaption; Central America |
| JEL: | O19 O32 N86 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:aal:abbswp:07-04&r=ppm |
| By: | Claude Montmarquette; Iain Scott |
| Abstract: | Because of the time value of money (that is, a dollar today can be invested to yield more than a dollar tomorrow), a project’s costs and benefits in different periods are not comparable. Therefore, a discount rate that will convert future sums into present values is used in cost-benefit analysis. This rate fundamentally influences the outcome: a rate too high will favour the present over the future and vice-versa. This paper addresses the issue of what the appropriate social discount rate for cost-benefit analysis of public projects should be in Quebec. In practice the Quebec government often uses the public sector’s long-term borrowing costs as a proxy for the social discount rate. We find that this is inconsistent with both the scientific literature and international methodology on the subject.<p> The social discount rate in Quebec: <p> • should be 8% in nominal terms, whereas the real rate should be 6%.<p> • Should be calculated without a risk premium.<p> • Should apply to all projects, including public private partnerships (PPPs).<p> • Should be revised every five years.<p> <P>La détermination du niveau du taux d’actualisation à utiliser est un élément critique du calcul économique qui doit être effectué lors de l’évaluation des projets publics envisagés. Ce taux permet de ramener sur une base comparable les coûts et les bénéfices qui sont échelonnés sur plusieurs périodes. En effet, un taux trop élevé aura pour effet de valoriser le présent au détriment du futur et vice-versa. Dans ce texte, nous suggérons un taux d’actualisation public pour le Québec qui est cohérent avec la littérature scientifique et les pratiques internationales sur ce sujet. Nous démontrons aussi que fixer le taux d’actualisation public au niveau du taux d’intérêt nominal moyen des emprunts gouvernementaux n’est pas l’option à retenir. <p> Le taux d’actualisation :<p> • nominal du gouvernement du Québec doit être de 8 % et le taux réel du gouvernement du Québec doit être de 6 %. <p> • est un taux d’actualisation calculé hors prime de risque. <p> • est unique et s’applique de manière uniforme à tous les projets, incluant le partenariat public-privé.<p> • doit faire l’objet de révisions périodiques au moins tous les cinq ans. |
| Keywords: | cost-benefit analysis; discounting; public sector investments; social discount rate; public private partnerships, actualisation, investissements publics, partenariat public-privé, taux d’actualisation, valeur nette actualisée |
| Date: | 2007–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:cir:cirpro:2007rp-02&r=ppm |
| By: | Graves, Philip E. |
| Abstract: | Elected representatives have little incentive to pursue the interests of those electing them once they are elected. This well-known principle-agent problem leads, in a variety of theories of government, to nonoptimally large levels of government expenditure. An implication is that budgetary rules are seen as necessary to constrain politicians’ tax and spending behavior. Popular among such constraints are various Balanced Budget Amendment proposals. These approaches, however, are shown here to have serious limitations, including failure to address the central concern of spending level. An alternative approach is advanced here that relies on a Coase-like mechanism that transfers control of government spending to the voter. Prisoner's dilemma incentives and political competition are seen to be critical to the superiority of the present mechanism to approaches requiring budget balance. |
| Keywords: | political incentives, government spending, mechanism design, balanced budget amendments |
| JEL: | H11 H61 H62 H72 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifwedp:5526&r=ppm |