nep-ppm New Economics Papers
on Project, Program and Portfolio Management
Issue of 2010‒08‒06
five papers chosen by
Arvi Kuura
Parnu College - Tartu University

  1. The Dynamics of New Resource Projects a Progress Report By Kenneth W Clements; Simon Mongey; Jiawei Si
  2. Purely Internal Rate of Return and Investment Decisions: A Cash-Flow Perspective By Carlo Alberto Magni
  3. Decentralization, Accountability and the 2007 MPs Elections in Kenya By Roxana Gutiérrez-Romero
  4. Social Protection Package for the Retrenched Workers of State-owned Enterprises: A quick Assessment By Narayan Chandra Das; Fazlul Karim; Mehejabeen Khan; Nayma Qayum
  5. Fiscal Policy Coordination in Asia: East Asian Infrastructure Investment Fund By Abidin, Mahani Zainal

  1. By: Kenneth W Clements (UWA Business School, The University of Western Australia); Simon Mongey (UWA Business School, The University of Western Australia); Jiawei Si (UWA Business School, The University of Western Australia)
    Abstract: In its widely-cited Investment Monitor, Access Economics publishes quarterly detailed information on most Australian investment projects that cost more than $5m, including a classification of projects as “possible”, “under consideration”, “committed”, “under construction”, “deleted” or “completed”. We use these rich data to show that the evolution of projects can be conveniently understood in terms of a Markov chain. This framework provides several useful summary measures of the investment system as a whole, including estimates of the probability of a project moving from one state to another over multi-period horizons, likely bottlenecks in the system, the mean time spent in each state, the expected time taken for a project to enter a certain state such as “under construction” or “completed” and the possible implications of “speeding up” the system by regulatory reform. These measures could be of value to project proponents, capital markets and policy makers.
    Date: 2010
  2. By: Carlo Alberto Magni
    Abstract: The recent notion of Average Internal Rate of Return (AIRR) [Magni 2010, The Engineering Economist, 55(2), 150-180] completely solves the long-standing problem of the internal rate of return (IRR). While the AIRR is a return measure, this paper presents a cash-flow measure, namely the ratio of net cash flow (i.e., cash inflows minus cash outflows) to capital invested. It is a purely internal measure because, unlike the AIRR, it does not depend on the market rate, and is a return measure as well, for it can be derived from the AIRR by setting the market rate equal to zero. Therefore, it is a Purely Internal Rate of Return (PIRR). The PIRR is reliable in both accept/reject decisions and project ranking, in association with an appropriate hurdle rate, economically significant: the comprehensive cost of capital (CCOC), which takes into account not only the interest foregone on the capital actually employed, but also the interest foregone on the capital that is given up by the investor. This perspective enables one to decompose the project NPV into an excess-rate share and an excess-capital share. The traditional IRR is just a particular case of both AIRR and PIRR, but the latter approach has the advantage that the IRR’s nature (rate of return versus rate of cost) does not depend on the market rate and is unambiguously determined by the capital invested.
    Date: 2010–07–28
  3. By: Roxana Gutiérrez-Romero
    Abstract: The Kenyan Constituency Development Fund (CDF) aims to alleviate poverty by allocating resources to constituencies which MPs and residents decide how to spend. In this paper we assess whether MPs’ re-election chances were affected by their management of the CDF. For this purpose we analyse the type of projects implemented by the CDF and residents’ opinion about their MP and the CDF. We find that MPs’ re-election chances were influenced by MPs’ ethnicity and by the way MPs allocated the CDF. MPs who run the most projects on education and the least on other projects such as health or water were less likely to be re-elected.
    Keywords: Decentralization, Accountability, Elections, Africa, Kenya
    Date: 2010
  4. By: Narayan Chandra Das; Fazlul Karim; Mehejabeen Khan; Nayma Qayum
    Abstract: BRAC designed and implemented a project namely Kallyan project aiming to improve the quality of life of the retrenched workers of state-owned enterprises of Bangladesh. This study aimed to map the project’s cumulative achievements, and to assess its impact on the livelihood of the participant households. We conducted a critical review of the project’s performance for mapping the cumulative achievement on different targets, and conducted a survey on both the project participants and non-participants to analyze impacts of the project on the livelihood status of the participants. Besides, four case studies were carried out to reflect the qualitative changes taken place in the lives of the participants and barriers confronted. The review of project performance indicated that it was successful in achieving the initial targets. In some components such as employment generation, the project achievements far exceeded the targets. Impact assessment of the project showed that the participants experienced significant positive impacts on asset holding, per capita income, food security, and education. A comprehensive social protection package may be useful to facilitate socioeconomic well-being of the retrenched workers and their households. With some modifications the project can be scaled up to cover more target participants, who remained out of the project purview in Bangladesh. [Working Paper No. 10]
    Keywords: designed, implemented, Kallyan project, Bangladesh, livelihood, asset holding, per capita income, food security, education
    Date: 2010
  5. By: Abidin, Mahani Zainal (Asian Development Bank Institute)
    Abstract: East Asian countries were seriously affected by the 2008 global crisis through a steep fall in exports. This experience exposed the vulnerability of the East Asian growth model and emphasized the importance of generating regional growth by expanding domestic demand and enlarging intra-regional trade. A key factor to achieving higher regional economic growth and enlarging intra-regional trade is the better connectivity of infrastructure such as roads, ports, airports, and rail links. Although some East Asian countries have made large investments in improving their infrastructures, others still lag behind. In response to the global crisis, East Asian countries have allocated a significant proportion of their stimulus packages to infrastructure development. While these investments have improved national facilities, East Asian countries will only be well connected when there are good cross-border infrastructures in place. This requires a large amount of funding, and funds from both within and outside the region could be mobilized to fulfill these huge financing needs. Hence, an East Asian Infrastructure Investment Fund (EAIIF) is proposed to provide a mechanism to organize this funding and to be a platform for deciding on cross-border infrastructure projects. The EAIIF would be anchored to the existing Association of Southeast Asian Nations+3 mechanism with the leader's summit being the apex of the decision making process. A four-level mechanism is proposed, consisting of cooperation amongst political leadership; a steering committee and secretariat for executing the decisions of the leaders; fund mobilization; and the implementation and monitoring of projects. Projects chosen could be those with a high rate of commercial returns or those with the highest social benefits. The EAIIF would invite the private sector to participate by setting a framework for the sharing of risks between the public and private sectors. Likewise, there would also be a sharing of risks between countries.
    Keywords: East Asian Infrastructure Investment Fund; regional crossborder infrastructure investment
    JEL: E61 E63 F15 H40 H54
    Date: 2010–07–30

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