nep-ppm New Economics Papers
on Project, Program and Portfolio Management
Issue of 2008‒08‒21
seven papers chosen by
Arvi Kuura
Parnu College - Tartu University

  1. Risk Analysis in Investment Appraisal By Savvides, Savvakis C.
  2. Governance Processes, Employee Voice and Performance Outcomes in the Construction of Heathrow Terminal 5 By Simon Deakin; Aristea Koukiadaki
  3. An Economic Model of the Planning Fallacy By Markus K. Brunnermeier; Filippos Papakonstantinou; Jonathan A. Parker
  4. Recent Developments in the Econometrics of Program Evaluation By Guido M. Imbens; Jeffrey M. Wooldridge
  5. GAMESMANSHIP, third parties and arbitration: reflecting on the paradigm of PPP disputes By Dimitrios, Athanasakis
  6. Licensing and Business Models By Onetti Alberto; Verma Sameer
  7. Evaluating Voluntary Climate Programs in the United States By Pizer, William A.; Morgenstern, Richard; Shih, Jhih-Shyang

  1. By: Savvides, Savvakis C.
    Abstract: The methodology and uses of Monte-Carlo simulation technique are presented as applied to the analysis and assessment of risk in the evaluation of investment projects. The importance of risk analysis in investment appraisal is highlighted and the stages in the process introduced. The results generated by a risk analysis application are interpreted, including the investment decision criteria and measures of risk based on the expected value concept. Conclusions are drawn regarding the usefulness and limitations of risk analysis in investment appraisal.
    Keywords: risk analysis; investment appraisal; Monte Carlo simulation; project evaluation; measures of risk; investment decision criteria
    JEL: G31 G32 M21
    Date: 1994–03
  2. By: Simon Deakin; Aristea Koukiadaki
    Abstract: The Major Projects Agreement (MPA) is a framework agreement designed to improve performance in large mechanical and electrical engineering projects. It is built on integrated team working and includes the trade union as a partner in strategic, organizational and employment decisions. The agreement was recently implemented in the construction of Heathrow Terminal 5 (T5). The use of the MPA at T5 illustrates how the promotion of a framework that legitimizes a role for unions in continuing dialogue with employers can positively affect organizational outcomes in large construction projects. While serving as a reminder that mechanisms exist within UK corporate governance for the representation and articulation of the interests of non-shareholder constituencies, T5 may be a unique case: the currently uncertain future of the MPA is indicative of wider constraints on the adoption of the partnership model in Britain.
    Keywords: corporate governance, labour-management relations, partnership, stakeholder theory
    JEL: J52 K12 K31 L14
    Date: 2008–06
  3. By: Markus K. Brunnermeier; Filippos Papakonstantinou; Jonathan A. Parker
    Abstract: People tend to underestimate the work involved in completing tasks and consequently finish tasks later than expected or do an inordinate amount of work right before projects are due. We present a theory in which people underpredict and procrastinate because the ex-ante utility benefits of anticipating that a task will be easy to complete outweigh the average ex-post costs of poor planning. We show that, given a commitment device, people self-impose deadlines that are binding but require less smoothing of work than those chosen by a person with objective beliefs. We test our theory using extant experimental evidence on differences in expectations and behavior. We find that reported beliefs and behavior generally respond as our theory predicts. For example, monetary incentives for accurate prediction ameliorate the planning fallacy while incentives for rapid completion aggravate it.
    JEL: D10 D80 E21
    Date: 2008–08
  4. By: Guido M. Imbens; Jeffrey M. Wooldridge
    Abstract: Many empirical questions in economics and other social sciences depend on causal effects of programs or policiy interventions. In the last two decades much research has been done on the econometric and statistical analysis of the effects of such programs or treatments. This recent theoretical literature has built on, and combined features of, earlier work in both the statistics and econometrics literatures. It has by now reached a level of maturity that makes it an important tool in many areas of empirical research in economics, including labor economics, public finance, development economics, industrial organization and other areas of empirical micro-economics. In this review we discuss some of the recent developments. We focus primarily on practical issues for empirical researchers, as well as provide a historical overview of the area and give references to more technical research.
    JEL: C01
    Date: 2008–08
  5. By: Dimitrios, Athanasakis
    Abstract: Disputes occurring in PPP projects pervade three interfacing levels of agreements: internal, downstream, and peripheral. PPP disputes have been free from arbitral dispute resolution and their legal environment is uncertain and deregulated. While project partners appear to have a natural monopoly of joining parties in the supply chain to their pending disputes, their decision is often driven by diversified expectations and conflict agendas. Analysis will investigate parameters of risk exposure as a business imperative of the parties’ choice of multiparty arbitration. Emphasis throughout is put on the game-playing capabilities of original and third project parties and the concomitant formulation of pairs, prior to their participation in a single arbitral setting. The impact of their synergistic interplay on the outcome of multiparty arbitration is also explored. The aim is to test the responsiveness of English law and institutionalised practice to the idiosyncrasies of PPP disputes. The results of this study seek to conceptualise multiparty arbitration as part of the parties’ informed business plans and alert legal researchers and industry practitioners to workable institutional arrangements.
    Keywords: joinder; multiparty arbitration; risk
    JEL: K33 D74 K22 F21 K41
    Date: 2007–09
  6. By: Onetti Alberto (Department of Economics, University of Insubria, Italy); Verma Sameer (Associate Professor in Information Systems – San Francisco State University – College of Business)
    Abstract: License affects software companies’ business activities. While proprietary software vendors create custom licenses, open source companies have less flexibility. The Open Source Initiative (OSI) defines a list of 72 licenses as open source (“OSI approved”). For a project to follow open source licensing, it has to pick licenses from this set. Logically, we expect that an open source company defines its business model around the license that it selects. Thus, we can assume that business model decisions follow license choice. In our research we find that in some cases open source companies remove these license constraints for business reasons. We observed cases of open source companies moving from one OSI-approved license to another or companies innovating by adding additional terms. In all these cases, the decision of change is based on the license being a poor fit with their business goals. Not all open source companies are entitled to change the license because this option is available only to companies that own intellectual property. If they do not, they can try to reshape their business model, but that remains a suboptimal option. Whether cognizant of it or not, organizations are implicitly choosing a business model when they select a license. Therefore, it is very important to address licensing and business model decisions as one system instead of a disjointed two-step process. For this purpose we introduce (1) an evolutionary model where license selection and business model impact each other and (2) a taxonomy that addresses both licensing and business models. Our approach helps practitioners include revenue considerations in the licensing choice and researchers to more accurately study the antecedents and consequences of license choice.
    Date: 2008–07
  7. By: Pizer, William A.; Morgenstern, Richard (Resources for the Future); Shih, Jhih-Shyang (Resources for the Future)
    Abstract: Despite the growing importance of voluntary programs as tools for environmental management, they have been subject to quite limited evaluation. Program evaluation in the absence of randomized experiments is difficult because the decision to participate may not be random and, in particular, may be correlated with the outcomes. The present study is designed to overcome these problems by gauging he environmental effectiveness of two voluntary climate change programs—the U.S. Environmental Protection Agency’s Climate Wise program and the U.S. Department of Energy’s Voluntary Reporting of Greenhouse Gases Program, or 1605(b)—with particular attention to the participation decision and how various assumptions affect estimates of program outcomes. For both programs, the analysis focuses on manufacturing firms and uses confidential census data to create a comparison group and to measure outcomes (expenditures on fuel and electricity). Overall, we find that that the effects from Climate Wise and 1605(b) on fuel and electricity expenditures are no more than 10 percent and probably less than 5 percent. Virtually no evidence suggests a statistically significant effect of either Climate Wise or 1605(b) on fuel costs. Some evidence suggests that participation in Climate Wise led to a slight (3–5 percent) increase in electricity costs that vanished after two years. Stronger evidence suggests that participation in 1605(b) led to a slight (4–8 percent) decrease in electricity costs that persisted for at least three years. Classification-JEL: Q2, Q4
    Keywords: voluntary, regulation, energy, climate change
    Date: 2008–07–01

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