nep-ppm New Economics Papers
on Project, Program and Portfolio Management
Issue of 2011‒10‒15
ten papers chosen by
Arvi Kuura
Parnu College - Tartu University

  1. Research output from university-industry collaborative projects By Albert Banal-Estañol; Inés Macho-Stadler; David Pérez-Castrillo
  2. Technical Guidelines for Evaluating the Impacts of Tourism Using Simulation Models By J. Edward Taylor
  3. Contracting for Infrastructure Projects as Credence Goods By Uwe Dulleck; Jianpei Li
  4. Contractors’ Strategic Approaches to Risk Assessment Techniques at Project Planning Stage By Ahmad Zaini, Afzan; Endut, Intan Rohani; Takim, Roshana
  5. Adopting Contractors’ Risk Management (CIRIM) Framework using Multi Dimensional Theories By Ahmad Zaini, Afzan; Endut, Intan Rohani; Takim, Roshana; Mohammad , Mohammad Fadhil
  6. Notes on Applying Real Options to Climate Change Adaptation Measures, with examples from Vietnam By Leo Dobes
  7. Protecting the Booroolong Frog in the Namoi Catchment: A Cost-Benefit Analysis By Tertius Greyling; Jeff Bennett
  8. Measuring the contribution of extractive industries to local development : the case of oil companies in Nigeria By Kâ Diongue, Abdou; Giraud, Gael; Renouard, Cécile
  9. The Equivalency Principle for Discounting the Value of Natural Assets: An Application to an Investment Project in the Basque Coast By Aline Chiabai; Ibon Galarraga; Anil Markandya; Unai Pascual
  10. Cost-Benefit Analysis of the Protection of Malleefowl in the Lachlan Catchment By Tertius Greyling; Jeff Bennett

  1. By: Albert Banal-Estañol (Universitat Pompeu Fabra & City University); Inés Macho-Stadler (Universitat Autonoma de Barcelona); David Pérez-Castrillo (Universitat Autonoma de Barcelona)
    Abstract: We study collaborative and non-collaborative projects that are supported by government grants. First, we propose a theoretical framework to analyze optimal decisions in these projects. Second, we test our hypotheses with a unique dataset containing academic publications and research funds for all the academics at the major engineering departments in the UK. We find that the type of the project (measured by its level of appliedness) is increasing in the type of both the university and firm partners. Also, the quality of the project (number and impact of the publications) increases with the quality of the researcher and firm, and with the affinity in the partners’ preferences. The collaboration with firms increases the quality of the project only when the firms’ characteristics make them valuable partners.
    Keywords: industry-science links, research collaborations, basic versus applied research
    JEL: O32 I23
    Date: 2011
  2. By: J. Edward Taylor
    Abstract: The purpose of this guideline is to make practitioners aware of simulation approaches for the evaluation of tourism projects. Simulation approaches are particularly useful when experimental or economic approaches for project evaluation are not feasible. For example, it usually is not possible to roll out a tourism-promotion program for a randomly chosen "treatment group" while excluding the program's benefits for a "control group" at the tourist destination. The guideline explains why a simulation approach is useful for tourism impact analysis, what a simulation model for the economic analysis of tourism impacts looks like, and data requirements. With the help of an illustrative two-island model, the guideline shows how to construct different kinds of simulation models and how to use simulations to quantify the costs and benefits of tourism and tourism projects. The guideline concludes by discussing some specific IDB projects in which this methodology has been used for tourism impact analysis. The primary goal of this paper is to make development practitioners aware of simulation approaches for tourism impact analysis and of how to integrate these approaches into their project proposals, budgets, and terms of reference for expert consultants.
    Keywords: Environment & Natural Resources :: Sustainable Tourism, Economics :: Economic Development & Growth
    JEL: C81 L83 O12 O18 O22 R11 R58
    Date: 2010–12
  3. By: Uwe Dulleck (QUT); Jianpei Li (University of International Business and Economics)
    Abstract: Large infrastructure projects are a major responsibility of government, who usually lacks expertise to fully specify the demanded projects. Contractors, typically experts on such projects, advise of the needed design in their bids. Producing the right design is nevertheless costly. We model the contracting for such infrastructure projects taking into account this credence goods feature and examine the performance of commonly used contracting methods. We show that when building costs are public information, multistage competitive bidding involving shortlisting of two contractors and contingent compensation of both contractors on design efforts outperforms sequential search and the traditional Design-and-Build approach. While the latter leads to minimum design effort, sequential search suffers from a commitment problem. If building costs are the private information of the contractors and are revealed to them after design cost is sunk, competitive bidding may involve sampling more than two contractors. The commitment problem under sequential search may be overcome by the procurer’s incentive to search for low building cost if the design cost is sufficiently low. If this is the case, sequential search may outperform competitive bidding.
    Keywords: Credence Goods, Design-Build, Competitive Bidding, Sequential Search, Infrastructure Projects
    JEL: L14 D82 D44 R50
    Date: 2011–10–05
  4. By: Ahmad Zaini, Afzan; Endut, Intan Rohani; Takim, Roshana
    Abstract: Abstract — The construction industry is still plagued by poor quality, poor workmanship, poor safety and health environment, and poor practices. The current main problem in the Malaysian Construction Industry is delayed projects under the Ninth Malaysia Plan. The idea of introducing formal risk assessment among Malaysian contractors during the project planning stage is a proactive approach to achieve project objectives. Therefore, this research intends to achieve the following objectives: (1) to investigate the contractors’ approaches of risk assessment techniques at the project planning stage, (2) to investigate the consequences of risk assessment techniques at the project planning stage, and (3) to determine the appropriate risk assessment techniques in dealing with the potential risk factors at the project planning stage. The research methodology applied for this research includes literature reviews and questionnaires. Findings from this research show that the application of risk assessment techniques in the Malaysian Construction Industry is still moderate. Hence, it is suggested that these contractors should try to implement formal risk assessment techniques during the project planning stage in order to achieve the project objectives.
    Keywords: Keywords - Risk; Risk Assessment; Contractors; Project Planning Stage; Construction Industry
    JEL: G3 L7
    Date: 2011–09–25
  5. By: Ahmad Zaini, Afzan; Endut, Intan Rohani; Takim, Roshana; Mohammad , Mohammad Fadhil
    Abstract: In general, many contractors in Malaysia are found to have a limited expertise in developing an appropriate strategy to mitigate project risks. Consequently, this has led contractors struggling to complete the project on schedule, within the client’s budget and quality parameters. This was proven by the current issues on the delayed projects reported in the Ninth Malaysian Plan. Currently in Malaysia, there is no existing risk management framework specifically designed for contractors. Thus, the idea of introducing CIRIM among the Malaysian contractors is a proactive approach to achieve better project objectives. This paper therefore proposes to introduce the CIRIM framework to be adopted by the Malaysian contractors. The research methodology applied in the main research includes literature reviews, questionnaires and interviews. It is found that although there are some forms of risk management systems being used in the Malaysian construction industry, most of them are not well structured, documented and implemented in a formal manner. Therefore, the idea of establishing the CIRIM framework among Malaysian contractors is paramount and justified.
    Keywords: Keywords: Risk Management; Contractors; CIRIM; Construction; Malaysia
    JEL: N6 L7
    Date: 2011–09–25
  6. By: Leo Dobes (Crawford School of Economics and Government, The Australian National University)
    Abstract: A factor common to all adaptation measures is the uncertainty that is the hallmark of climate change. The timing, intensity and location of climate change impacts is not known to any degree of precision. Because most deterministic analyses and policy prescriptions ignore this uncertainty, their recommendations are likely to waste community resources. Except by chance, adaptation measures will either be over-engineered, or they will be inadequate and result in harm. Applying real options thinking allows an incremental and flexible approach. Adaptation measures are implemented only as better knowledge becomes available over time. Several examples are given of real options in the Mekong Delta, with a comparison of net present values of two housing alternatives. It is essential to undertake net present value calculations when comparing different projects to ensure that the value of any options is weighed against other costs and benefits.
    Date: 2010–11
  7. By: Tertius Greyling (Crawford School of Economics and Government, The Australian National University); Jeff Bennett (Crawford School of Economics and Government, The Australian National University)
    Abstract: The Booroolong frog project in the Namoi Catchment represents an environmental investment to protect the species and around 10.7 kilometres of its habitat in the catchment. The project’s benefit-cost ratio (BCR) of 8.6 indicates that the benefits outweigh the costs by a significant margin. The measures introduced by landholders, at relatively low cost, should therefore result in a significant return on investment upon project completion in 10 years time. The benefits are estimated using a choice modelling study which was recently developed for the valuation of investment in natural resource management in the Namoi Catchment. As this is a largely ex ante cost-benefit analysis, the BCR is subject to uncertainty associated with assumptions which had to be made for some variables. However, sensitivity analysis indicates that the project benefits outweigh the costs by a significant margin even under conservative conditions
    Date: 2011–03
  8. By: Kâ Diongue, Abdou (Saint Louis University, Senegal); Giraud, Gael (CNRS, Paris School of Economics, ESCP-Europe); Renouard, Cécile (ESSEC Business School)
    Abstract: Extractive industries face two main challenges in terms of CSR and poverty reduction: 1) recognize that societal activity is part of their core business; 2) take part in socio-economic projects that contribute to their stakeholders' empowerment and not only to their living conditions. Based on surveys achieved in Nigeria in 2008, the paper presents two societal performance indices meant to be complementary: the Poverty Exit Index (PEI) and the Relational Capability Index (RCI). We show that, while they have fostered the PEI of the local communities, the development projects of the oil companies had a rather negative impact on their RCI. We then identify key variables that can influence positively the RCI and on which a sensible development policy should focus.
    Keywords: development indices; capability approach; relational capability; development; poverty; impact assessment
    JEL: C43 D21 F21 L71 O12 O55
    Date: 2011–10–05
  9. By: Aline Chiabai; Ibon Galarraga; Anil Markandya; Unai Pascual
    Abstract: Making decisions about optimal investments in green infrastructure necessitates setting social discount rates. This paper suggests a practical way for determining the discount rate for projects or programmes in which one of the options is to maintain or improve land in its natural state. We propose an “equivalency principle†to derive a simple rule that sets the discount rate. The rule is based on the premise that the long term value of a naturally preserved land track ought to be at least the same as the value of an identical land track in the vicinity to which permission has been granted for development. We illustrate this principle with various case studies and we apply it to a contentious investment project in the Basque Country associated with the regeneration of a large scale harbour in the province of Gipuzkoa (North of Spain) that involves reclaiming natural land that has important ecological value, including for the conservation of a marine ecosystem.
    Keywords: Economic valuation, discounting, equivalency principle, Basque Country
    Date: 2011–10
  10. By: Tertius Greyling (Crawford School of Economics and Government, The Australian National University); Jeff Bennett (Crawford School of Economics and Government, The Australian National University)
    Abstract: A cost-benefit analysis (CBA) of an investment in the protection of malleefowl and associated native vegetation in the Lachlan Catchment’s central-west yielded a benefitcost ratio of 1.4. The CBA is based on project expenditures over the past four years coupled with benefit estimates from a recent Choice Modelling study in the Lachlan Catchment. The project targets the protection of malleefowl on private land which has not yet been surveyed but where the species is known to be present. The CBA is subject to significant uncertainty due to a lack of available data. Nonetheless, sensitivity analysis indicates that the BCR is consistently larger than unity, if marginal in some cases. This suggests that the project is a worthwhile investment at this early stage. Furthermore, greater gains may be achieved by addressing the numerous threats facing the species and its habitat. The increased cost of such an investment may be more than offset by the gains in benefits due to relatively conservative assumptions associated with the benefit calculations in the BCA.
    Date: 2011–03

This nep-ppm issue is ©2011 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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