nep-ppm New Economics Papers
on Project, Program and Portfolio Management
Issue of 2010‒03‒13
six papers chosen by
Arvi Kuura
Parnu College - Tartu University

  1. Evaluation of the applicability of investment appraisal techniques for assessing the business value of IS services. By Milis, Koen; Snoeck, Monique; Haesen, Raf
  2. Industrial research versus development investment: The implications of financial constraints. By Czarnitzki, Dirk; Binz-Hottenrott, Hanna Léontine; Thorwarth, Susanne
  3. Does Global Climate Policy Promote Low-Carbon Cities? Lessons Learnt From The CDM By Sippel, Maike; Michaelowa, Axel
  4. Sustainability actions in Mediterranean Countries through cooperation partnership: the case of the project PAMLED By Tiberio Daddi; F. Farro; S. Vaglio; Giacomo Bartoli; Fabio Iraldo
  5. Long Term Versus Temporary Certified Emission Reductions in Forest Carbon-Sequestration Programs By Gregmar I. Galinato; Aaron Olanie; Shinsuke Uchida; Jonathan K. Yoder
  6. Fibonacci Hierarchies for Decision Making By Yucel, Eray; Tokel, Emre

  1. By: Milis, Koen; Snoeck, Monique; Haesen, Raf
    Abstract: There is a consensus among academics and practitioners that ICT investments should be carefully justified, measured and controlled. This is not different for the development of a service architecture or the development of particular services as such. In practice, the traditional capital investment appraisal techniques (CIAT’s) such as payback period or net present value are by far the most used techniques for assessing the feasibility of ICT investments. Nevertheless, serious doubts about the fitness of these techniques in a service based value net environment arise. Value nets have special characteristics such as high flexibility and agility, re-use of services,… that makes the use of these techniques very difficult and the reliability of the outcome most uncertain. Efforts are made to find more appropriate techniques. In the past, CIAT’s have been adjusted so that these techniques become more reliable in an ICT environment and new justification methods and techniques have been developed. However neither these adjusted techniques nor the new techniques are frequently used. This might be explained by the fact that the outcome of these techniques is difficult to interpret and to use and the fact that some significant problems (like the estimation of hidden costs) remain unsolved. Moreover, most of the new techniques are still in the conceptual phase. In this paper we evaluate these adjusted and new techniques in the light of service oriented architectures. We will argue that non of the techniques offers a good solution for assessing the business value of IS services. Despite the existence of a wealth of literature, the IS community appears to be no nearer to a solution to many problems associated with ICT appraisal. This is potentially problematic when dealing with investments in emerging technology such as IS services or service architectures. Since all techniques presented in the article have their drawbacks, it is safe to say that reliance on a sole technique may lead to sub-optimalisation or even failure. Therefore it makes sense to use a mixture of techniques, eliminating or diminishing the weaknesses of each of the techniques used. We strongly recommend a multi-layer evaluation process, or an evaluation process derived from the balanced scorecard, for the appraisal of investments in services or service architectures.
    Date: 2009–10
  2. By: Czarnitzki, Dirk; Binz-Hottenrott, Hanna Léontine; Thorwarth, Susanne
    Abstract: Previous literature provided evidence on financing constraints for investment in R&D activities due to capital market imperfections and special features of R&D investments. Moreover, it has been shown that a shift in capital structure towards more debt, results in a reduction of R&D investments. This article complements this literature by compartmentalizing R&D activities in its components, ‘R’ and ‘D’. In particular, we distinguish research from development as these activities do not only differ in their nature, but also to a large extent take place sequentially. Our results show that ‘R’ investment is more sensitive to the firms’ operating liquidity than ‘D’ indicating that firms have to rely even more on internal funds for financing their research compared to development activities. Moreover, we find that (basic) research subsidy recipients’ investment is less sensitive to internal liquidity.
    Keywords: Research and Development; Liquidity Constraints; Innovation Policy;
    Date: 2009–11
  3. By: Sippel, Maike; Michaelowa, Axel
    Abstract: An increasing proportion of greenhouse gas emissions is produced in urban areas in industrializing and developing countries. Recent research shows that per capita emissions in cities like Bangkok, Cape Town or Shanghai have already reached the level of cities like London, New York or Toronto. Large parts of the building stock and service infrastructure in cities in rapidly developing countries is built in the coming decade or two. Decisions taken in this sector today may therefore lock in a high emissions path. Based upon a survey of projects under the Clean Development Mechanism (CDM) of the Kyoto Protocol, we find that only about 1% of CDM projects have been submitted by municipalities, mostly in the waste management sector. This low participation is probably due to a lack of technical know how to develop CDM projects and an absence of motivation due to the long project cycle and the limited “visibility” of the projects for the electorate. Projects in the buildings and transport sector are rare, mainly due to heavy methodological challenges. A case study of the city network ICLEI and its experience with cities’ participation in the CDM adds insights from the practitioner side. We conclude that CDM reforms may make it easier for municipalities to engage in the CDM, and that new forms of cooperation between municipalities and project developers, potentially facilitated by ICLEI, are required to help to realize the urban CDM potential.
    Keywords: CDM; cities; energy; climate policy; mitigation; transport; waste; local authorities
    JEL: Q5 H7 Q42 O13 Q4
    Date: 2009–11
  4. By: Tiberio Daddi (Sant’Anna School of Advanced Studies, Italy); F. Farro (Department for the Relations with the European Union, Municipality of Prato, Italy); S. Vaglio (Laboratory of Anthropology and Ethnology, University of Florence, Italy); Giacomo Bartoli (Sant’Anna School of Advanced Studies, Italy); Fabio Iraldo (Sant’Anna School of Advanced Studies, Pisa, Italy - Institute for Environmental and Energy Policy and Economics, Bocconi University, Milan.)
    Abstract: In the recent years the involvement of the third countries in achieving the environmental Policy objectives set up by the European Union are becoming more and more important. Several Programs of cooperation co-fund activities and actions to improve the state of the Environment of third Mediterranean partners in order to achieve a global improvement of the environment. This paper aims to present the results of the project PAMLED co-funded by the Med-Pact Programme of the EU. The project will complete its course at the end of April and it aims to develop and strengthen the capabilities of three Mediterranean cities (City of Marrakech - Morocco, Sin El Fil – Lebanon and Bodrum -Turkey) in managing and promoting their local sustainable development, as well as implementing innovative different action fields. The strengthening of the capabilities of these Mediterranean partners was mainly based on the ‘collective learning’, achieved by the constitution of a partnerships with five European partners (Municipalities of: Prato, Lucca, Brtonigla, Rio Marina and Skopje). Needs and priorities of each Mediterranean partner were identified and pilot actions were specifically elaborated in order to promote the sustainable development and the exploitation of local resources, with particular respect to environmental protection, the enhancement of local tangible and intangible assets, economic support and an overall sustainable development The paper will show the outputs of several pilot actions carried out in the three Mediterranean cities involved. The Municipality of Bodrum carried out innovative pilot actions in the field of urban waste management; Sin El Fil developed a pilot project titled “Youth development plan”, while the City of Marrakech carried out a pilot project aimed at sensitizing the local communities and the actors of the touristic sector (e.g. hotels, hammams) on the importance to reduce water consumption.
    Date: 2010–01–01
  5. By: Gregmar I. Galinato; Aaron Olanie; Shinsuke Uchida; Jonathan K. Yoder (School of Economic Sciences, Washington State University)
    Abstract: Under the Clean Development Mechanism (CDM) of the Kyoto Protocol, forest projects can receive returns for carbon sequestration via two credit instruments: temporary (tCERs) or long-term certified emission reductions (lCERs). This article develops a theoretical model of optimal harvesting strategies that compares private optimal harvest decision under these two instruments. We find that risk neutral landowners are likely to prefer instituting lCERs over tCERs to maximize surplus. A particular type of early harvest penalty implemented under the lCERs is critical in determining the length of rotation intervals and the carbon credit supply. When this penalty is an increasing function of the difference in biomass before and after harvesting across verification periods, the landowner may choose longer or shorter rotation intervals compared to the Faustmann rotation. The resulting supply curve may have a backward bending region over a range of carbon prices.
    Keywords: forest rotation, long term certified emission reductions (lCERs), carbon sequestration
    JEL: Q2 Q54 Q23
    Date: 2009–12
  6. By: Yucel, Eray; Tokel, Emre
    Abstract: All decisions are practically made within a chainwise social setup named a decision-making chain (DMC). This paper considers some cases of an idea (a project proposal) propagating through an organizational DMC. Survival of a proposal through successive links of the DMC depends on the relative power of those links, in addition to proposal’s intrinsic value. Then it is not impossible to reject a good proposal or to fail to reject a bad proposal, either of which may generate undesired, though not detrimental, outcomes. We consider here a simple metric to assess quality of decision-making. The notion of quality here derives from “not declining (not accepting) a project that is of high (poor) intrinsic value”. As Fibonacci series establish the mathematical basis of our proposed metric, metric is simply named a Fibonacci metric.
    Keywords: Decision making chains; Innovation; Fairness metric; Fibonacci series
    JEL: Z1 C00 A1
    Date: 2010–02–25

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.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.