nep-ppm New Economics Papers
on Project, Program and Portfolio Management
Issue of 2010‒02‒13
four papers chosen by
Arvi Kuura
Parnu College - Tartu University

  1. Average internal rate of return and investment decisions: A new perspective By Carlo Alberto Magni
  2. The Informed and Oriented Transport System User By Peter Zimmermann
  3. Geographical distance of innovation collaborations By Jeroen de Jong; Mark Freel
  4. Natural Gas Situation and LNG Supply/Demand Trends in Asia-Pacific and Atlantic Markets By Yoshikazu Kobayashi

  1. By: Carlo Alberto Magni
    Abstract: The internal rate of return (IRR) is often used by managers and practitioners for investment decisions. Unfortunately, it has serious flaws: (i) multiple real-valued IRRs may arise, (ii) complex-valued IRRs may arise, (iii) the IRR is, in general, incompatible with the net present value (NPV) in accept/reject decisions (iv) the IRR ranking is, in general, different from the NPV ranking, (v) the IRR criterion is not applicable with variable costs of capital. The efforts of economists and management scientists in providing a reliable project rate of return have generated over the decades an immense bulk of contributions aiming to solve these shortcomings. This paper offers a solution to this long-standing issue by changing the usual perspective: the IRR equation is dismissed and the evaluator is allowed to describe the project as an investment or a borrowing at his discretion. This permits to show that any arithmetic mean of the one-period return rates implicit in a project reliably informs about a project profitability and correctly ranks competing projects. With such a measure, which we name ”Average Internal Rate of Return”), complex-valued numbers disappear and all the above mentioned problems are wiped out. The traditional IRR notion may be found back as a particular case.
    Date: 2010–01–31
  2. By: Peter Zimmermann
    Abstract: The German Ministry of Transport, Building and Urban Affairs has set up a vision which shall improve the situation of the transport system user (in Germany). In order to make use of all resources an intensive co-ordination with the Ministry of Economics and Technology (transport research programme) was undertaken. Originally the project was called Meta-Data-Platform. In course of time the vision of a benefit for an oriented and informed transport system user developed. The Meta-Data-Platform shall enable data exchange of various sources, shall provide common interfaces and protocols, shall allow for exchange of geographical data of different formats and enable business processes between service and content provider organizations. Traffic data shall become more reliable, be of higher quality and access to real time data shall be possible. State authorities for controlling traffic, broadcasting stations for traffic warning news, service providers for individual route recommendations and content owners can make use of the system. The services of the meta data platform can be used as a virtual internet portal. Centralized services for judgment of data quality transfer of different interfaces and protocols and transfer of different geographical formats will be offered separately. Despite having intermodal transport in mind, there will be separate platforms for road and public transport. The realization has been splitted into a bunch of individual projects. Some of the projects have just been started. For some of them call for tenders are presently prepared. Development will take approximately four years. At the end of the development there will be test fields used for validation. Validation will be done with model services.
    Date: 2009–12
  3. By: Jeroen de Jong; Mark Freel
    Abstract: This paper explores the geographical distance of innovation collaborations in high tech small firms. We test if absorptive capacity is a key determinant. Drawing on survey data from a sample of 316 Dutch high-tech small firms, engaging in 1.245 collaborations, we find most partners to be ‘local’. However, controlling for a variety of potential influences, higher R&D expenditure is positively related to collaboration with more distant organisations.  
    Date: 2010–02–01
  4. By: Yoshikazu Kobayashi (The Institute of Energy Economics, Japan)
    Abstract: Since the autumn of 2008, the global LNG supply/demand balance has eased substantially. Demand-side factors including the impact of the financial crisis on global natural gas consumption, and supply-side factors such as launchings of new projects and progress in unconventional natural gas development in North America are behind the LNG supply/demand balance change. For the immediate future, the LNG supply/demand balance is likely to remain easy. While the LNG situation is changing dramatically, key points to which we should pay attention over a short term with regard to a future LNG supply/demand outlook include LNG demand trends in the United States and China and destinations for exports from new LNG facilities launching operations by 2011. Factors that are expected to have great influences on future LNG supply and demand over a edium to long term may include the impact of the financial market credit crunch on investment in new medium to long-term gas development projects, gas shortages in the Middle East, and industrial nations’ ongoing efforts toward a low-carbon society.
    Keywords: liquid natural gas, LNG, energy supply, energy demand,
    JEL: Q40 Q41 Q43
    Date: 2010

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