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on Project, Program and Portfolio Management |
| By: | Lisbeth Brøde Jepsen (Department of Environmental and Business Economics, University of Southern Denmark) |
| Abstract: | The success of NPD projects of high-cost, engineering-intensive, and custom-ized development products is largely dependent on information sharing with actors from customers regarding their specific requirements (Von Hippel, 1986). But information sharing is also necessary among actors from different departments within the organisation (Song and Swink, 2009) regarding such topics as available technical options. Project managers (PMs) are at the heart of this process and plays an essential role in orchestrating the information sharing among various intra-organisational actors (e.g. among actors within the NPD organisation) and inter-organisational actors (across organisational borders, among actors for example from a department within the NPD organisation and a supplier) (Clark and Fujimoto, 1991). Consequently, the PM ensures that varied expertise and critical information are integrated in a timely fashion into the development process (Edmondson and Nembhard, 2009). However, prior research has not simultaneously studied and addressed the differences in intra- and inter-organisational information sharing during the various phases of the NPD project (Kivimaki and Lansisalmi, 2000). Furthermore, relative to intra- or inter-organisational information sharing, comparatively less research has been conducted to investigate the role of the project manager (PM) in orchestrating the information sharing among various intra- and inter-organisational actors (Clark and Fujimoto, 1991). Research has shown that heavily burdened PMs require assistance in the information sharing process not only from project team members (Sarin & O'connor, 2009) but also from other intra-organisational actors e.g. from a specific department within the NPD organisation (Clark & Fujimoto, 1991). However, research on so-called core intra- organisational actors’ relationships with whom the PM establishes relationships with during the NPD phases remains quite limited, and to my knowledge, no other research has studied the role of the inter-organisational actors from this perspective. Therefore, aim of this paper is to provide additional theoretical insights into how the PM through relationships with core actors orchestrates information sharing among other intra- or inter-organisational actors during the progression of an NPD project. In other words, this study emphasises the importance of the PM’s relationships on a day-to-day basis in information sharing among intra- and inter-organisational actors during the phases of an NPD project. This study is an analysis of longitudinal objective email data, and is based on the email exchange (consisting of 4658 emails) to and from intra-organisational actors during the progression of a large NPD project lasting more than two years. The email data were analysed using UCINET software (Borgatti et al., 2002). Normally, such data regarding development projects are quite difficult to access because such projects extend over long periods of time and involve highly complex and sensitive information. Thus, by building on email data that represent the activities that have actually occurred, this paper contributes to the existing literature by exploring the day-to-day practices of both the PM and other core actors during a NPD project. The main conclusion of the study is that the information sharing process during an NPD project is a complex, dynamic process, involving a large number of actors (in this case 373 actors) of diverse functions from different organisations. The results reveal changes in both the structure and intensity of information sharing with intra- and inter-organisational actors. Significant changes in the structure of simultaneous intra-and inter-organisational information sharing are detected when comparing the two early NPD phases with the two later phases. The intensity in information sharing is found to increase during the last two NPD phases. Further, the findings show that to orchestrate the information sharing during the NPD project, the PM relies on relationships with several core intra-organisational actors who are particularly important to the orchestrating of information sharing during the early phases of the NPD project. Unexpectedly, the study found that the PM also receives assistance from core inter-organisational actors from the customer company when orchestrating the intra- and inter-organisational information sharing, especially during the later phases of the NPD project. The findings contribute to the understanding of the different types of relationships by which the PM orchestrates information sharing among actors within and outside of the organisation on a day-to-day basis. The findings indicate that support from both intra- and inter-organisational core actors is crucial to NPD project managers. Additionally, the results regarding the importance of various core actors across the life cycle of the NPD project can be used to identify relationship requirements when planning stakeholder management activities across the phases of a project. |
| Keywords: | Intra- and Inter-organisational information sharing, internal and external core actors, project management, new product development, project phases, in-depth case study with objective data. |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:sdk:wpaper:115&r=ppm |
| By: | Chantal C. Cantarelli; Bent Flybjerg; Eric J. E. Molin; Bert van Wee |
| Abstract: | Managing large-scale transportation infrastructure projects is difficult due to frequent misinformation about the costs which results in large cost overruns that often threaten the overall project viability. This paper investigates the explanations for cost overruns that are given in the literature. Overall, four categories of explanations can be distinguished: technical, economic, psychological, and political. Political explanations have been seen to be the most dominant explanations for cost overruns. Agency theory is considered the most interesting for political explanations and an eclectic theory is also considered possible. Nonpolitical explanations are diverse in character, therefore a range of different theories (including rational choice theory and prospect theory), depending on the kind of explanation is considered more appropriate than one all-embracing theory. |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1307.2176&r=ppm |
| By: | Chantal C. Cantarelli; Bert van Wee; Eric J. E. Molin; Bent Flyvbjerg |
| Abstract: | Cost overruns on Dutch transportation infrastructure are substantially lower than in other countries. This paper examines three independent variables and their relation with cost overrun in order to decide whether this is different for Dutch infrastructure projects compared to worldwide findings. The three independent variables are project type (road, rail, and fixed link projects), project size (measured in terms of estimated costs) and the length of the project implementation phase. For Dutch projects, average cost overrun is 10.6% for rail, 18.6% for roads and 21.7% for fixed links. This is the opposite of worldwide findings where rail has the largest overrun. For project size, small Dutch projects have the largest average percentage cost overruns but in terms of total overrun, large projects have a larger share. Worldwide research showed that cost overruns are large for all project sizes. The length of the implementation phase and especially the length of the pre-construction phase are important determinants of cost overruns in the Netherlands. With each additional year of pre-construction, percentage cost overrun increases by five percentage points. In contrast, the length of the construction phase has hardly any influence on cost overruns. This is an important contribution to current knowledge about cost overruns, because the period in which projects are most prone to cost overruns is narrowed down considerably, at least in the Netherlands. This means that period can be focused on to determine the causes and cures of overruns. Regarding the three determinants, it was again concluded that Dutch projects perform differently compared to the worldwide pattern, showing again the risk of ecological fallacy. It is therefore important to consider individual countries and to compare countries. |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1307.2179&r=ppm |
| By: | Chantal C. Cantarelli; Bent Flyvbjerg; S{\o}ren L. Buhl |
| Abstract: | Cost overruns in transport infrastructure projects know no geographical limits, overruns are a global phenomenon. Nevertheless, the size of cost overruns varies with location. In the Netherlands, cost overruns appear to be smaller compared to the rest of the world. This paper tests whether Dutch projects perform significantly better in terms of cost overruns than other geographical areas. It is concluded that for road and tunnel projects, the Netherlands performs similarly to the rest of the world. For rail projects, Dutch projects perform considerably better, with projects having significantly lower percentage cost overruns in real terms (11%) compared to projects in other North West European countries (27%) and in other geographical areas (44%). Bridge projects also have considerably smaller cost overruns: 7% in the Netherlands compared with 45% in other NW European countries and 27% in other geographical areas. In explaining cost overruns, geography should therefore clearly be taken into consideration. |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1307.2181&r=ppm |
| By: | Chantal C. Cantarelli; Bent Flybjerg; Bert van Wee; Eric J. E. Molin |
| Abstract: | Lock-in, the escalating commitment of decision-makers to an ineffective course of action, has the potential to explain the large cost overruns in large scale transportation infrastructure projects. Lock-in can occur both at the decision-making level (before the decision to build) and at the project level (after the decision to build) and can influence the extent of overruns in two ways. The first involves the methodology of calculating cost overruns according to the formal decision to build. Due to lock-in, however, the real decision to build is made much earlier in the decision-making process and the costs estimated at that stage are often much lower than those that are estimated at a later stage in the decision-making process, thus increasing cost overruns. The second way that lock-in can affect cost overruns is through practice. Although decisions about the project (design and implementation) need to be made, lock-in can lead to inefficient decisions that involve higher costs. Sunk costs (in terms of both time and money), the need for justification, escalating commitment, and inflexibility and the closure of alternatives are indicators of lock-in. In this paper, two case studies, of the Betuweroute and the HSL-South projects in the Netherlands, demonstrate the presence of lock-in and its influence on the extent of cost overruns at both the decision-making and project levels. This suggests that recognition of lock-in as an explanation for cost overruns significantly contributes to the understanding of the inadequate planning process of projects and allows development of more appropriate means. |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1307.2177&r=ppm |
| By: | Chantal C. Cantarelli; Eric J. E. Molin; Bert van Wee; Bent Flyvbjerg |
| Abstract: | Using a methodology similar to that used the in the worldwide research, the cost performance of Dutch large-scale transport infrastructure projects is determined. In the Netherlands, cost overruns are as common as cost underruns but because cost overruns are larger than cost underruns projects on average have a cost overrun of 16.5%. The focus on one country further enabled to consider cost overruns during different project development phases. It turned out that in the Netherlands the majority of the cost overrun occurs in the pre-construction phase (the period between the formal decision to build and the start of construction). The frequency as well as the magnitude of pre-construction cost overrun is significantly higher than in the construction phase. The used methodology of calculating cost overruns does however not take lock-in into account. This phenomenon shows that the real decision to build was taken much earlier in the decision-making process. Since estimated costs are usually lower during these earlier stages, the cost overruns based on this real decision to build are likely to be much higher. Cost overruns presented in studies are therefore often underestimated and the problem of cost overruns is much larger than we think. |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1307.2178&r=ppm |
| By: | Chantal C. Cantarelli; Caspar G. Chorus; Scott W. Cunningham |
| Abstract: | Strategic behaviour is one of the main explanations for cost overruns. It can theoretically be supported by agency theory, in which strategic behaviour is the result of asymmetric information between the principal and agent. This paper gives a formal account of this relation by a signalling game. This is a game with incomplete information which considers the way in which parties anticipate upon other parties' behaviour in choosing a course of action. The game shows how cost overruns are the result of an inappropriate signal. This makes it impossible for the principal to distinguish between the types of agents, and hence, allows for strategic behaviour. It is illustrated how cost overruns can be avoided by means of two policy measures, e.g. an accountability structure and benchmarking. |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1307.2180&r=ppm |
| By: | Igor Letina |
| Abstract: | When firms decide to invest in R&D, they have to choose not only the amount of resources to invest, but also which research projects to develop. This paper investigates the market portfolio of research projects. Contrary to most of the literature, which focuses only on the level of investment in innovation, this model captures both the variety of research projects undertaken and the amount of duplication of research. A characterization of the equilibrium market portfolio is provided. It is shown that an increase in the number of firms increases the variety of developed projects and increases the amount of duplication of research. An increase in the intensity of competition among firms leads to an increase in the variety of developed projects and a decrease in the amount of duplication of research. A characterization of the socially optimal portfolio is provided. It is shown under which conditions the market invests suboptimally in the variety and duplication of research projects. Market underinvestment in the variety of R&D projects is demonstrated for a large class of product market models. |
| Keywords: | Innovation, competition, R&D portfolio, market structure |
| JEL: | L13 L22 O31 |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:zur:econwp:127&r=ppm |
| By: | McClintock, Anthea; Malcolm, Bill; Crean, Jason; Jackson, Tom; Heath, James |
| Abstract: | Information deficiencies make selecting investments in R,D & E projects a difficult and uncertain task. Gardner (2004) likened the challenges and uncertainties of choosing the right mix of R,D&E projects to that of recruiting football players or breeding racehorses. In this paper approaches are examined to improving the odds of selecting, from a myriad of choices, more of the investments that are likely to deliver sound economic, social and environmental outcomes in primary industries. Pragmatism rules. The approaches proposed are a pragmatic way of evaluating R,D&E investment opportunities ex ante under the conditions where research opportunities are almost unlimited and budgets limited and falling. |
| Keywords: | Ex ante evaluation, project selection, Research and Development/Tech Change/Emerging Technologies, Research Methods/ Statistical Methods, |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aare13:152169&r=ppm |
| By: | Allain, Marie-Laure; Henry, Emeric; Kyle, Margaret |
| Abstract: | The sale of R&D projects through licensing facilitates the division of labor between research and development activities. This vertical specialization can improve the overall efficiency of the innovative process. However, these gains depend on the timing of the sale: the buyer of an R&D project should assume development at the stage at which he has an efficiency advantage. We show that in an environment where the seller is overconfident about the value of the project, she may delay the sale to the more efficient firm in order to provide verifiable information about its quality, though this delay implies higher total development costs for the project. We obtain a condition for the equilibrium timing of licensing and examine how factors such as the intensity of competition between potential buyers influence it. We show that a wide array of different explanations, based on differences in information, beliefs or risk profiles, lead to the same qualitative results. We present empirical evidence from pharmaceutical licensing contracts that is consistent with our theoretical predictions. |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:27399&r=ppm |
| By: | Pikulina, E.S.; Renneboog, L.D.R.; Horst, J.R. ter; Tobler, P.N. (Tilburg University, Center for Economic Research) |
| Abstract: | Abstract: The theoretical finance literature predicts that overconfident managers overinvest in risky projects and exert more effort to learn about potentially value-enhancing projects in comparison with their unbiased peers. We test this prediction experimentally. We demonstrate that strong overconfidence results in overinvestment and excess effort levels, moderate overconfidence leads to accurate decisions, and underconfidence induces underinvestment and insufficient effort. Our results can be generalized as they are based on different subject types (financial professionals and students), various media (computer-, paper-, and web-based designs), and different types of effort costs (real effort and monetary investment costs). |
| Keywords: | Self-confidence;Overconfidence;Judgmental Bias;Better-than-Average;Overinvestment;Investment Choice;Effort. |
| JEL: | G11 J22 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:kubcen:2013035&r=ppm |
| By: | Llanto, Gilberto M.; Zen, Fauziah |
| Abstract: | This paper discusses governmental fiscal support for financing long-term infrastructure projects in ASEAN countries. More specifically, it discusses the role of guarantees and subsidies in promoting public-private partnership (PPP) projects. It draws on case studies of Philippine and Indonesian PPPs, and information from secondary sources to highlight the critical role of such fiscal support in making feasible the financing of long-term infrastructure projects that may be economically beneficial but commercially or financially unviable without such support. The paper points out the need for a strong fiscal position and analyzes the implications of guarantees and subsidies on fiscal management. An important insight is the need to secure budgets for long-term infrastructure projects, which may be done through a medium-term expenditure framework. Based on the analysis of Philippine and Indonesian case studies, it provides specific recommendations to improve the implementation of PPP projects. |
| Keywords: | infrastructure, subsidy, government guarantee, Philippines, public-private partnership (PPP), concessions, fiscal space, contingent liabilities, affermage, turnkey contracts, medium-term expenditure framework |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:phd:dpaper:dp_2013-08&r=ppm |
| By: | Llanto, Gilberto M. |
| Abstract: | The paper argues the case for developing more innovative financing schemes for the water supply sector. The use of traditional ODA-dependent financing channeled through government lending institutions has a somewhat moderate success record in developing and improving the water supply sector. There are limitations to the use of public funds and public institutions in financing water delivery systems and it will be helpful to think of PPP or PSP arrangements or schemes that can come up with innovative solutions to address the issues in this sector. The Philippine Water Revolving Fund (PWRF) is one such innovative financing model and there could be others but developing and establishing such models will require the collaborative effort of the concerned stakeholders. Government lending institutions must be forced by policymakers to collaborate with the private sector in solving the long-standing water supply problem for a very large segment of the population. Those government lending institutions have the advantage of ODA funds, which they traditionally use to lend to target borrowers. The ODA funds can be blended with private sector resources, including credit guarantees that have been demonstrated as good credit enhancements, to lower the cost of financing water supply projects. |
| Keywords: | Philippines, waterless municipalities, local government units, water supply systems, LWUA, MDFO, government financial institutions, output-based aid, MDG |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:phd:dpaper:dp_2013-34&r=ppm |
| By: | Decio Coviello (University of Montreal); Luigi Moretti (University of Padova); Giancarlo Spagnolo (University of Roma "Tor Vergata"); Paola Valbonesi (University of Padova) |
| Abstract: | Disputes on the penalties enforceable for breach of contract are often solved in court. Using a large dataset on Italian public procurement contracts, we study the effects of the inefficiency of the local law courts on the delay with which contractors deliver public works. First we sketch a simple model to see how inefficient law courts - i.e. those characterized by longer average duration of trials - may induce public buyers to refrain from enforcing penalties for late delivery in order to avoid costly disputes in court. Then our empirical findings show that, where the local law courts are inefficient: i) public works are delivered with longer delays, and this applies particularly to higher-value contracts - i.e. complex projects; ii) contracts are more often awarded to larger firms; and iii) on average, a higher share of final payment in contracts is adopted. These results are not driven by omitted environmental variables, since we show that delays in the completion of contracted works are still a selected by the eefficiency of the local law courts after including province-related fixed effects in the model and considering other possible explanations for our findings. |
| Keywords: | "efficiency" of the law courts, enforcement of contract obligations, public procurement contracts, time incentives. JEL: H57, L33, K41. |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:pad:wpaper:0164&r=ppm |
| By: | Magazzini Laura (Department of Economics, University of Verona); Fabio Pammolli (IMT Lucca Institute for Advanced Studies Author-Name: Massimo Riccaboni; IMT Lucca Institute for Advanced Studies) |
| Abstract: | : We analyse the consequences of the increasing complexity of R&D on within- and between-patent competition in the pharmaceutical industry. The intensity of competition is measured by jointly considering the timing from market launch to patent expiry, the strength of between-patent competition as well as competition introduced by generic producers. A simple model is proposed that predicts the shrinking of product lifetimes in the presence of correlated parallel R&D projects and market portfolios. The model is tested using data on pharmaceutical products sold in Europe and in the US. Based on our model we are able to estimate the impact of R&D complexity and relatedness among R&D portfolios on the value of innovative drugs. |
| Keywords: | Patent value, innovation, R&D competition, Pharmaceutical industry. |
| JEL: | D23 D83 O34 O31 L13 |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:ial:wpaper:3/2013&r=ppm |
| By: | Ballesteros, Marife M.; Egana, Jasmine V. |
| Abstract: | This paper examines the effectiveness and efficiency of implementation of the National Housing Authority (NHA) resettlement programs. The review focuses on the recent operations of NHA covering the period between 2003 and 2011, which covers one of the largest resettlement projects of NHA involving about 93,000 families for the North and South Rail infrastructure project. During this period, the resettlement program received about 85 percent of NHA budget. NHA has executed the development of 88 resettlement projects nationwide of which 45 project sites are located in Metro Manila and the peripheral areas (or the Greater Manila Area) and 43 in the regions. The dominant scheme in GMA is the Completed Housing Project (CHP) with more than 70 percent (32 sites) of total projects developer constructed. The balance consists of Incremental Housing Projects (IHP) (6 sites) and mixed projects (7 sites), which combined the CHP and IHP methods. By location, there are more in-city projects (68 sites) than off-city projects (20 sites). However, in-city projects are dominant only in the regions and provinces outside Metro Manila. In the highly urbanized cities of Metro Manila, large-scale resettlement was not provided due to land constraints. Based on actual cost per unit, it costs less to produce a unit of housing using the CHP scheme than IHP by about 17 percent or about PHP 25,000 per unit, on the average. However, cost benefit ratio analysis shows that IHP is more cost effective considering the value of developments and the greater participation and investments of households and community in maintenance of housing estates. Between in-city and off-city CHP projects, the average total project cost is higher for in-city projects compared to off-city projects mainly due to higher cost of land but in-city projects are more sustainable and acceptable to both households and local government units (LGUs). It is recommended that the most effective and efficient approach to resettlement is a combined approach of in-city and incremental housing. However, there are necessary conditions that require specific actions not only from NHA but other stakeholders as well to implement this approach such as: (1) land for socialized housing has to be made available by the LGU or national government especially in highly urbanized cities such as Metro Manila; (2) the feasibility of vertical developments in-city should be considered; and (3) the need for the NHA to improve the production process for incremental housing. |
| Keywords: | Philippines, housing, resettlement program |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:phd:dpaper:dp_2013-28&r=ppm |