nep-ppm New Economics Papers
on Project, Program and Portfolio Management
Issue of 2008‒01‒05
eleven papers chosen by
Arvi Kuura
Parnu College - Tartu University

  1. Modelling general resource transfers in (multi-)project scheduling By Doreen Krüger; Armin Scholl
  2. Evolving Strategy: Risk Management and the Shaping of Large Engineering Projects By Miller, Roger; Lessard, Donald
  3. Project Valuation Using fuzzy Real Options By Bacchini, Roberto Darío; Garcia-Fronti, Javier; Marquez, Ezequiel
  4. Innovation in Private Infrastructure Development: Effects of the Selection Environment and Modularity By Nuno Gil; Marcela Miozzo
  6. Efficient Urban Renewal Without Takings: Two Solutions to the Land Assembly Problem By Florenz Plassmann; T. Nicolaus Tideman
  7. What Determines the Structure of Corporate Debt Issues? By Brandon Julio; Woojin Kim; Michael Weisbach
  8. A System Architecture Approach to Global Product Development By Tripathy, Anshuman; Eppinger, Steven D.
  9. A Coordination-Theoretic Approach to Understanding Process Differences By Klein, Mark; Poltrock, Steven; Handel, Mark
  11. Strategic analysis of petty corruption with an intermediary By Ariane Lambert-Mogiliansky; Mukul Majumdar; Roy Radner

  1. By: Doreen Krüger (Friedrich-Schiller-Universität Jena, Fakultät für Wirtschaftswissenschaften, Lehrstuhl für Betriebswirtschaftliche Entscheidungsanalyse); Armin Scholl (Friedrich-Schiller-Universität Jena, Fakultät für Wirtschaftswissenschaften, Lehrstuhl für Betriebswirtschaftliche Entscheidungsanalyse)
    Abstract: We consider the problem of scheduling multiple projects subject to joint resource constraints. Most approaches proposed in the literature are based on the assumption that resources can be transferred from one project to the other without any expense in time or cost. In many real-world settings this assumption is not realistic. For example, cranes have to be transported to another location and reinstalled there. We generalise the multi-project scheduling problem by addition- ally including transfer times and cost. In order to consider this aspect, resource transfers are classified and new resource roles in project scheduling are introduced. We define the modified multi-project scheduling problem with transfer times (RCMPSPTT), formulate a basic and an extended integer linear programme with transfer times. Eventually, it is supplemented by cost considerations and introduced as resource constrained multi-project scheduling problem with transfer times and cost (RCMPSPTTC). A final computational analysis evaluates the presented models.
    Keywords: project scheduling, combinatorial optimization, mathematical model, transfer times, transfer cost, resource flow
    Date: 2007–12–20
  2. By: Miller, Roger; Lessard, Donald
    Abstract: Large engineering projects (LEPs) are high-stakes games characterized by substantial irreversible commitments, skewed reward structures when they are successful, and high probabilities of failure. Their dynamics also change over time. The journey from initial conception to ramp-up and revenue generation takes 10 years on average. While the €ܦront end€ݠof a project €Ӡproject definition, concept selection, and planning €Ӡtypically involves less than one third of the total elapsed time and expense, it has a disproportionate impact on outcomes, as most shaping actions occur during this phase. During the rampup period, the reality of market estimates and the true worth of the project are revealed. Sponsors may find that actual conditions are very different from expectations, but only a few adaptations are possible. Once built, most projects have little flexibility in use beyond the original intended purpose. Managing risks is thus a real issue. The purpose of this chapter is to sketch out the various components of risk and outline ranges of strategies for coping with risks and turbulence based on an assessment of 60 projects as part of the IMEC study. Further more, we propose the elements of a governance system to master their evolutionary dynamics. The main finding is that successful projects are not selected but shaped. Rather than choosing a specific project concept from a number of alternatives at the outset based on projections of the full sets of benefits, costs and risks over the project€ٳ lifetime, successful sponsors start with project ideas that have the potential to become viable. These sponsors then embark on shaping efforts to influence risk drivers ranging from project-related issues to broader governance. The seeds of success or failure of individual projects are thus planted early and nurtured over the course of the shaping period as choices are made. Successful sponsors, however, do not escalate commitments, and they abandon quickly when they recognize that projects have little possibility of becoming viable.
    Keywords: Risk Management, Strategy, Engineering,
    Date: 2007–04–13
  3. By: Bacchini, Roberto Darío; Garcia-Fronti, Javier; Marquez, Ezequiel
    Abstract: This paper is an example of project valuation using fuzzy real options methodology. It is based on the previous work by Carlsson y Fullér (2000).
    Keywords: fuzzy real options
    JEL: G32
    Date: 2007–12–01
  4. By: Nuno Gil; Marcela Miozzo
    Abstract: This study investigates how the selection environment and modularity affect innovation in private infrastructure development. Our findings stem from an in-depth empirical study of the extent ten process innovations were implemented in an airport expansion programme. Our findings suggest that developer and customers can each occasionally champion or resist innovations. An innovation succeeds contingent upon the capability of the stakeholder groups to develop collectively a plan to finance and implement the innovation, which reconciles subjective individual assessments. Innovations can be particularly hard to adopt when they require financing from different budgets, or when the developer’s investment pays off only if customers behave in a specified way in the future. We also find that the degrees of novelty and modularity neither represent sufficient or necessary conditions enabling or hindering innovation. Novelty, however, makes the innovation champion’s job harder because it leads to perceptions of downside risk and regulatory changes, whereas modularity helps the champion operationalise ways that moderate resistance to innovate.
    Keywords: Innovation; financing; implementation
    JEL: O31 R42
    Date: 2007
  5. By: Magni, Carlo Alberto
    Abstract: This paper uses counterexamples and simple formalization to show that the standard CAPM-based Net Present Value may not be used for investment valuations. The reason is that the standard CAPM-based capital budgeting criterion implies a notion of value which does not comply with the principle of additivity. Framing effects arise in decisions so that different descriptions of the same problem lead to different choices. As a result, the CAPM-based NPV as a tool for valuing projects and making investment decisions is theoretically unsound, even if the CAPM assumptions are met.
    Keywords: Capital budgeting; CAPM; investment decisions; nonadditivity; framing effects
    JEL: G12 G11 G31 G30
    Date: 2005–12
  6. By: Florenz Plassmann; T. Nicolaus Tideman
    Abstract: When urban renewal projects require that smaller parcels be assembled into a single large one, owners who hold out for higher prices may either prevent or significantly delay socially efficient redevelopment. Local governments seeking private redevelopment currently have only the choice between either hoping that private bargaining will lead to efficient land assembly or taking the properties of these owners under eminent domain. We describe two mechanisms that solve the holdout problem and lead to efficiency in land assembly without resorting to governmental takings.
    Keywords: land assembly, takings, self-assessment
    Date: 2007
  7. By: Brandon Julio; Woojin Kim; Michael Weisbach
    Abstract: Publicly-traded debt securities differ on a number of dimensions, including quality, maturity, seniority, security, and convertibility. Finance research has provided a number of theories as to why firms should issue debt with different features; yet, there is very little empirical work testing these theories. We consider a sample of 14,867 debt issues in the U.S. between 1971 and 2004. Our goal is to test the implications of these theories, and, more generally, to establish a set of stylized facts regarding the circumstances under which firms issue different types of debt. <br><br>Our results suggest that there are three main types of factors that affect the structure of debt issues: First, firm-specific factors such as leverage, growth opportunities and cash holdings are related with the convertibility, maturity and security structure of issued bonds. Second, economy-wide factors, in particular the state of the macroeconomy, affect the quality distribution of securities offered; in particular, during recessions, firms issue fewer poor quality bonds than in good times but similar numbers of high-quality bonds. Finally, controlling for firm characteristics and economy-wide factors, project specific factors appear to influence the types of securities that are issued. Consistent with commonly stated 'maturity-matching' arguments, long-term, nonconvertible bonds are more likely to be issued by firms investing in fixed assets, while convertible and short-term bonds are more likely to finance investment in R&D.
    JEL: G30 G32
    Date: 2007–12
  8. By: Tripathy, Anshuman; Eppinger, Steven D.
    Abstract: Recent advances in engineering collaboration tools and internet technology have enabled the distribution of product development tasks to offshore sites and global outsourcing partners while still maintaining a tightly connected process. Most firms in complex engineering industries are indeed experimenting with various ways to structure their product development processes on a global basis. In this research, we have explored global product development structures from the perspectives of process flow and system architecture. We employ the design structure matrix method to display and explain these structures and our observations thereof. Through five case studies spanning electronics, equipment, and aerospace industries, we consider the interaction complexity inherent in various global work distribution strategies. We conclude the paper with a summary and directions for future research work.
    Keywords: Global Product Development, System Architecture,
    Date: 2007–04–20
  9. By: Klein, Mark; Poltrock, Steven; Handel, Mark
    Abstract: Supporting human collaboration is challenging partly because of variability in how people work. Even within a single organization, there can be many variants of processes which have the same purpose. When distinct organizations must work together, the differences can be especially large, baffling and disruptive. Coordination theory provides a method and vocabulary for modeling complex collaborative activities in a way that makes both the similarities and differences between them more visible. We illustrate this, in this paper, by analyzing three engineering change management processes and demonstrating how our method compactly highlights the substantial commonalities and precise differences between what are on first glance are extremely divergent approaches.
    Date: 2007–04–13
  10. By: Baros, Zoltan; Dávid, Lorant Denes
    Abstract: As a consequence of the rapid growth of the tourism sector, special emphasis is placed on destinations and tourism products connected to or based on certain physical and environmental factors. However, the negative environmental consequences of tourism are, in many cases, overemphasised to the social and/or economic elements of sustainable development. Thus, it is important to find an adequate balance of the elements mentioned above within tourism development in order to achieve an optimal way of fulfilling all requirements of sustainable development. In order to this, a potential method is introduced by applying the Sustainability Value Map, developed originally for buildings and urban development projects, to the evaluation of sustainable tourism products. This method implies further questions arisen concerning the selection of the right set of indicators and the importance of local or regional issues. Using it as a tool, it may promote the process of holistic tourism planning and development.
    Keywords: environmentalism; sustainable tourism; environmental impacts; sustainability value map
    JEL: L83
    Date: 2007–11
  11. By: Ariane Lambert-Mogiliansky; Mukul Majumdar; Roy Radner
    Abstract: This notes reports part of a larger study of "petty corruption" by government bureaucrats in the process of approving new business projects. Each bureaucrat may demand a bribe as a condition for approval. Entrepreneurs use the services of an intermediary who, for a fee, undertakes to obtain all the required approvals. In a dynamic game model we investigate (1) the multiplicity of equilibria, (2) the equilibria that are "socially efficient", and (3) the equilibria that maximize the total expected bureaucrat's bribe income. We compare these results with those for the case in which entrepreneurs apply directly to the bureaucrats.
    Date: 2007

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