nep-ppm New Economics Papers
on Project, Program and Portfolio Management
Issue of 2010‒12‒18
six papers chosen by
Arvi Kuura
Parnu College - Tartu University

  1. A First Stochastic General Framework to Model the Project Finance Cash Flows under Monopolistic Situations By Gea Carrasco, Cayetano; Isla Couso, Lorenzo
  2. A Portfolio Approach to Venture Capital Financing By Pascal François; Georges Hübner
  3. ICT and e-Governance for Rural Development By T.P. Rama Rao
  4. ICT for Social Development: Some Experiences and Observations By T.P. Rama Rao
  5. Egovernment: Lessons from Implementation in Developing Countries By Prof. Subhash Bhatnagar
  6. What Determines the Innovation Capability of Firm Founders? By Spyros Arvanitis; Tobias Stucki

  1. By: Gea Carrasco, Cayetano; Isla Couso, Lorenzo
    Abstract: The main aim of this work is to model the cash flows and cost dynamics for a Project Finance. Large scale capital-intensive projects usually require substantial investments up front and only generate revenues to cover their costs in the long term. The abandonment flexibility affects each project independently. This is the only one that we consider in this study and it is quite different from the idea to abandon due to a common (specific) catastrophic event. This option is exercised under those situations of expected costs to completion higher than the expected cash flow, that is, during the investment period in the development phase. Including this flexibility in project finance is the same as valuing a project with an implicit American put option.
    Keywords: Project Finance; Cash Flows; Stochastic; Real Options
    JEL: G2
    Date: 2010–11
  2. By: Pascal François; Georges Hübner
    Abstract: This paper studies the contracting choices between an entrepreneur and venture capital investors in a portfolio context. We rely on the mean-variance framework and derive the optimal choices for an entrepreneur with and without the presence of different kinds of venture capitalists. In particular, we show that the entrepreneur always has the incentive to share the risk and benefits of the venture whenever possible. On the basis of their objectives and characteristics, we distinguish the situations of the corporate, independent, and bank-sponsored venture capital funds. Our framework enables us to derive the optimal contract design for the entrepreneur, featuring the choice of investor, the entrepreneur’s investment in the venture, and her dilution in the project’s equity as a function of her bargaining power. This result allows us to characterize the choice of the investor depending on her cost of equity and debt capital. In addition to project size and risk, entrepreneur’s risk aversion turns out to be a critical determinant of VC investor choice –a finding which is strongly supported by a panel analysis of VC fund flows for 5 European countries over the 2002-2009 period.
    Keywords: Venture capital, Portfolio choice, Entrepreneur, Risk aversion
    JEL: G11 G32 G39
    Date: 2010
  3. By: T.P. Rama Rao
    Abstract: Rural e-Governance applications in the recent past have demonstrated the important role the Information and Communication Technologies (ICT) play in the realm of rural development. Several e-Governance projects have attempted to improve the reach, enhance the base, minimize the processing costs, increase transparency, and reduce the cycle times.
    Keywords: Rural, e-Governance, Information, Communication Technologies, projects, cycle times
    Date: 2010
  4. By: T.P. Rama Rao
    Abstract: It is widely acknowledged that Information and Communication Technologies (ICT) have potential to play a vital role in social development. Several projects have attempted to adopt these technologies to improve the reach, enhance the base, minimize the processing costs, and reduce the cycle times. Studies and experiences of Center for Electronic Governance at Indian Institute of Management, Ahmedabad (CEG-IIMA) indicate that significant efforts are required to internalize these technological solutions through well managed reengineering of back-end processes and capacity building efforts to ensure sustainability. Suitable public-private partnership models have to be adopted to ensure rapid development and cost-effective solutions.
    Keywords: Information, Communication Technologies, potential, vital role, social development, projects
    Date: 2010
  5. By: Prof. Subhash Bhatnagar
    Abstract: E-government applications from a large number of developing countries are reviewed. Different models of electronic delivery of services are compared. Delivery through conveniently located service centers where citizens are served by operators working on-line seems to be emerging as a popular model in countries with low penetration of Internet. Various elements that constitute readiness in implementing e-government are identified. It is argued that trial through a few quick strike , is important, as the benefits need to be demonstrated to citizens and civil servants.
    Keywords: E-government, developing countries, service centers, popular model, projects
    Date: 2010
  6. By: Spyros Arvanitis (KOF Swiss Economic Institute, ETH Zurich, Switzerland); Tobias Stucki (KOF Swiss Economic Institute, ETH Zurich, Switzerland)
    Abstract: Innovative start-ups, not start-ups in general, seem to be important drivers of economic growth. However, little is known about how such firms look like. As activities of start-ups are strongly related to firm founders, we investigate this question focusing on the innovation capability of firm founders. We find that the combination of different founder characteristics such as university education (at best a combination of technical and commercial education), prior experience in R&D, and strong motivation to realize own innovative ideas increases innovative activities of start-ups by more than 40%.
    Keywords: Start-ups, innovation, founder characteristics
    JEL: M13 L26 O30
    Date: 2010–09

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