nep-ppm New Economics Papers
on Project, Program and Portfolio Management
Issue of 2010‒01‒30
five papers chosen by
Arvi Kuura
Parnu College - Tartu University

  1. The Mirroring Hypothesis: Theory, Evidence and Exceptions By Lyra J. Colfer; Carliss Y. Baldwin
  3. A Review of Build-Operate-Transfer for Infrastructure Development- Some Lessons for Policy Reform By Gilberto M. Llanto
  4. Carbon Emission Values in Cost Benefit Analyses By Mandell, Svante
  5. Paradigms of Decentralization, Institutional Design and Poverty- Drinking Water in the Philippines By Satyajit Singh

  1. By: Lyra J. Colfer (Harvard Business School); Carliss Y. Baldwin (Harvard Business School, Finance Unit)
    Abstract: The mirroring hypothesis asserts that the organizational patterns of a development project (e.g. communication links, geographic collocation, team and firm co-membership) will correspond to the technical patterns of dependency in the system under development. Thus the hypothesis predicts that developers with few or no organizational linkages will design independent system components, while developers with rich organizational linkages will co-design highly interdependent system components. (The hypothesis claims a correspondence between organizational structure and technical architecture, but allows causality to flow in either direction.) Scholars in a range of disciplines have argued that mirroring is either a necessary or highly desirable feature in the design of development projects, but empirical research shows that some projects deviate from strict mirroring, seemingly without harmful effects. In this paper, we formally define the mirroring hypothesis, describe its theoretical underpinnings and systematically review the empirical evidence for and against it. Our review includes 129 studies spanning three levels of organization: within a single firm, across firms, and open community-based development. Across these levels, the hypothesis was supported in 69% of the relevant cases, but not supported in 31%. It was most strongly supported within firms, less strongly across firms, and often violated in community-based development settings. The exceptions in turn were of two types: In four cases, closely collaborating teams within single firms created modular systems comprised of independent components. More surprisingly, in 28 cases, independent and dispersed contributors made highly interdependent contributions to the design of a single technical system (or sub-system). Based on a detailed analysis of the latter 28, we introduce the concept of actionable transparency as a means of achieving coordination without mirroring. Contributors achieve actionable transparency by embedding their design in a centralized system with a shared design language and near-real-time updating, where everyone with an interest in improving the design has the right and the means to act on it. We present examples from practice and then describe the more complex organizational patterns that emerge in lieu of genuine mirroring when actionable transparency allows people to "break the mirror."
    Date: 2010–01
  2. By: Robin Boadway (Policy Research Institute)
    Abstract: This paper summarizes the procedure for the economic evaluation of government projects and policy reforms. It begins with the social welfare function underpinnings of cost-benefit analysis including the role of distributive weights and the choice of numeraire. It then turns to the conduct of a social cost-benefit analysis using the net present value criterion. This includes the shadow pricing of market products and inputs affected by the project, indirect welfare effects, the opportunity cost of project finance, the evaluation of non-marketed inputs and outputs, and the opportunity cost of risk. Issues involved in selecting a discount rate are discussed, especially those arising from imperfect capital markets. Finally, since many public projects have long-term consequences, the principles that might be used to take account of effects of projects on future generations are outlined. Techniques for accounting for these effects, such as generational accounting, are summarized and its shortcomings highlighted.
    Keywords: evaluation, government projects, policy reforms, imperfect capital markets, generational accounting, shadow pricing, welfare effects
    JEL: I31 L13 D43
    Date: 2010–01
  3. By: Gilberto M. Llanto (Philippine Institute for Development Studies)
    Abstract: The Philippines has used the BOT law, as amended to motivate private sector provision of infrastructure. Using examples from selected BOT projects in the country, the paper pointed out key issues constraining the successful implementation of the BOT approach to infrastructure provision. It also indicated several factors that were instrumental in forging an effective publicprivate partnership in BOT projects. The paper pointed out the need to address various issues, starting from the legal framework to the level of responsibilities of the government institutions that are involved in the project cycle, i.e., from project entry level to implementation and completion. Improvements should be introduced at the policy, legal and institutional frameworks in order to improve the usefulness of this approach to infrastructure development.
    Keywords: Build-operate-transfer, public-private partnership in infrastructure, contracts, risk-sharing, subsidy, guarantees, arbitration, dispute settlement
    JEL: H54 H50 O14
    Date: 2010–01
  4. By: Mandell, Svante (vti – Swedish National Road and Transport Research Institute)
    Abstract: New infrastructure projects may affect CO2 emissions and, thus, cost benefit analyses for these projects require a value to apply for CO2. The value may be based on the marginal social cost associated with emissions or on the shadow price resulting from present and future policies geared towards CO2 emissions. In the present paper it is argued that the social cost approach should be seen as preceding the shadow price approach. Both are thus necessary, but for cost benefit analysis of infrastructure projects we argue for the shadow price approach as the primary tool. There is a series of complications involved when applying this principle in practice. Several of these are discussed in the paper, including non-marginal projects that affect permit prices, non-transparent permit markets, different instruments capturing different aspects of a CO2-value, multiple policies present simultaneously etc.
    Keywords: Climate change; policy; cost-benefit analysis; carbon value
    JEL: H54 Q51 R42
    Date: 2010–01–20
  5. By: Satyajit Singh (Philippine Institute for Development Studies)
    Abstract: This paper looks at the different paradigms of decentralization for drinking water supply in the Philippines and its effectiveness in poverty alleviation. As centralization and decentralization are not definitive concepts, but defining features, there are bound to be different pathways to decentralization. Indeed, within a defined national path, there could be different ideological constructs of decentralization. These different paradigms create different institutional arrangements that are situated in the specific ideological construct of the time and place of its creation. With a shift in paradigm, say from one that can be classified as deconcentration to another that can be called democratic devolution; there would be key changes in the institutional designs for service provision. These different institutional designs of decentralization have different outcomes in the common quest of poverty alleviation. Empirical evidence points out that while new institutions would come up for fresh projects, the existing programs and projects that were crafted from an earlier paradigm continue at the same time. If the paradigm change has moved forward on the decentralization axis, then the adoption of newer institutions would have a better outcome in poverty alleviation. This paper calls for due attention of policy makers to address the concern of institutional transformation as one moves towards more progressive decentralization paradigms. The empirical evidence is provided from the Central Visayas Water and Sanitation Project from the province of Oriental Negros.
    JEL: O12 O17 O10
    Date: 2010–01

This nep-ppm issue is ©2010 by Arvi Kuura. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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