nep-ppm New Economics Papers
on Project, Program and Portfolio Management
Issue of 2016‒02‒17
nine papers chosen by
Arvi Kuura
Tartu Ülikool

  1. Don't Kill the Goose that Lays the Golden Eggs: Strategic Delay in Project Completion By Katolnik, Svetlana; Schöndube, Jens Robert
  2. Estimating the Local Average Treatment Effect of R&D Subsidies in a Virtual Common Pot By Hünermund, Paul; Czarnitzki, Dirk
  3. Advance-Purchase Financing of Projects with Few Buyers By Sahm, Marco
  4. Ex-post Optimal Knapsack Procurement By Jarman, Felix; Meisner, Vincent
  5. Direct and Cross-Scheme Effects in a Research and Development Subsidy Program By Hottenrott, Hanna Leontine; Lopes-Bento, Cindy; Veugelers, Reinhilde
  6. The Impact of Wind Power Support Schemes on Technology Choices By May, Nils Günter
  7. Joint R&D subsidies, related variety, and regional innovation By Broekel, Tom; Brachert, Matthias; Duschl, Matthias; Brenner, Thomas
  8. Aid on Demand: African Leaders and the Geography of China s Foreign Assistance By Fuchs, Andreas; Dreher, Axel; Hodler, Roland; Parks, Bradley C.; Raschky, Paul
  9. Determinants of drinking water treatment and hygiene habits in provincial towns in Yemen By Rieckmann, Johannes

  1. By: Katolnik, Svetlana; Schöndube, Jens Robert
    Abstract: It's puzzling that most projects fail to complete within the predetermined timeframe given that timing considerations rank among the major goals in project management. We argue that when managers can extract private benefits from working on a project, project delay becomes optimal. We introduce a continuous-time framework for project management activities that incorporates this feature. A manager's unobserved effort cumulatively increases the project's success probability, but decreases the expected duration of the project and with it the expected flow of on-the-job benefits. A strict deadline limits incentives for effort delay, but also decreases the probability that the project will be terminated in due time. In this trade-off, the optimal deadline balances the increase in expected project value against the expected increase in project duration and costs. Because the manager does not want to ``kill the golden goose'' prematurely, he always prefers a stricter deadline compared to the principal. As a result, project completion is threatened by both effort provision over time \textit{and} contractual agreements on time.
    JEL: D82 M52 M55
    Date: 2015
  2. By: Hünermund, Paul; Czarnitzki, Dirk
    Abstract: We investigate the additionality effects of Eurostars, Europe's largest multilateral subsidy program for R&D-performing small and medium sized enterprises. A specific budget allocation rule serves as an instrument and allows us to identify the local average treatment effect of public R&D grants. This rule, referred to as Virtual Common Pot (VCP), is designed to avoid cross-subsidization between participating countries. We compare the program's effect under a VCP with the counterfactual situation under a Real Common Pot (RCP), where project authorities allocate a single budget according to uniform project evaluation criteria. Our estimates suggest a large positive impact on job creation whereas there is no treatment effect on patenting. In addition, we find a relative inefficiency of 19.4% more jobs which could be created by the program under a RCP.
    JEL: O38 H25 C31
    Date: 2015
  3. By: Sahm, Marco
    Abstract: I investigate a simple model of advance-purchase contracts as a mode of financing costly projects. The analysis can easily be reinterpreted as a model of monopolistic provision of excludable public goods under private information. An entrepreneur has to meet some capital requirement in order to start production and sell the related good to a limited number of potential buyers who are privately informed about their willingness to pay. I find that advance-purchase arrangements allow to finance more costly projects than traditional funding sources. The entrepreneur is able to use advance-purchase surcharges as a price discrimination device. However, the discriminatory power is limited by the problem of free-riding which aggravates for an increasing number of potential buyers. I apply the model to research and development activities in the health industry discussing the availability of new drugs and vaccines in poor countries.
    JEL: D42 H41 L12
    Date: 2015
  4. By: Jarman, Felix; Meisner, Vincent
    Abstract: We consider a budget-constrained mechanism designer who wants to select an optimal subset of projects to maximize her utility. Project costs are private information and the value the designer derives from their provision may vary. In this allocation problem the choice of projects - both which and how many - is endogenously determined by the mechanism. The designer faces hard ex-post constraints: The participation and budget constraint must hold for each possible outcome while the mechanism must be implementable in dominant strategies. We derive the class of optimal mechanisms and show that it allows an implementation through a descending clock auction. Only in the case of symmetric projects, price clocks do descend synchronously such that always the cheapest projects are executed. The asymmetric case, where values or costs are asymmetrically distributed, features a novel tradeoff between quantity and quality. Interestingly, this tradeoff mitigates the distortion due to the informational asymmetry compared to environments where quantity is exogenous.
    JEL: D44 D45 D82
    Date: 2015
  5. By: Hottenrott, Hanna Leontine; Lopes-Bento, Cindy; Veugelers, Reinhilde
    Abstract: This study investigates the effects of an R&D subsidy scheme on participating firms net R&D investment. Making use of a specific policy design in Belgium that explicitly distinguishes between research and development grants, we estimate direct and cross-scheme effects on research versus development intensities in recipients firms. We find positive direct effects from research (development) subsidies on net research (development) spending. This direct effect is larger for research grants than for development grants. We also find cross-scheme effects that may arise due to complementarity between research and development activities. Finally, we find that the magnitude of the treatment effects depends on firm size and age and that there is a minimum effective grant size, especially for research projects. The results support the view that public subsidies induce higher additional investment particularly in research where market failures are larger, even when the subsidies are targeting development.
    JEL: O38 O32 C14
    Date: 2015
  6. By: May, Nils Günter
    Abstract: Germany has been a leader in governmental support for renewable energies, which now represent about 27 % of electricity generation. In 2012 (voluntary) / 2014 (obligatory), the country changed from a xed Feed-In Tari (FIT) to a Market Premium Scheme (MPS) for wind power projects. One aim of this adjustment was to align the supply of generated wind electricity with the demand for it, e.g. through more system-friendly wind turbine technology choices. However, based on a wind investment model, I show that the MPS fails to convey strong enough incentives to project developers to alter their investment decision. Furthermore, I analyze an additional change in the reference location model, as it plays an integral part in both the xed FIT and the MPS. The investment model indicates that such a policy manages to incentivize the deployment of more system-friendly wind power technologies. Additionally, I consider a policy approach that is optimized with respect to a future energy system. This policy provides investors with even stronger incentives to adapt their technology choices.
    JEL: Q42 Q55 O38
    Date: 2015
  7. By: Broekel, Tom; Brachert, Matthias; Duschl, Matthias; Brenner, Thomas
    Abstract: Subsidies for R&D are an important tool of public R&D policy, which motivates extensive scientific analyses and evaluations. The paper adds to this literature by arguing that the effects of R&D subsidies go beyond the extension of organizations monetary resources invested into R&D. It is argued that collaboration induced by subsidized joint R&D projects yield significant effects that are missed in traditional analyses. An empirical study on the level of German labor market regions substantiates this claim showing that collaborative R&D subsidies impact regions innovation growth when providing access to related variety and embedding regions into central positions in cross- regional knowledge networks.
    JEL: L14 O31 R12
    Date: 2015
  8. By: Fuchs, Andreas; Dreher, Axel; Hodler, Roland; Parks, Bradley C.; Raschky, Paul
    Abstract: We investigate whether the political leaders of aid-receiving countries use foreign aid inflows to further their own political or personal interests. Aid allocation biased by leaders selfish interests arguably reduces the effectiveness of aid, negatively affecting development outcomes. We examine whether more Chinese aid is allocated to the political leaders birth regions and regions populated by the ethnic group to which the leader belongs, controlling for objective indicators of need. We have collected data on 117 African leaders birthplaces and ethnic groups and geocoded 1,955 Chinese development finance projects across 3,553 physical locations in Africa over the 2000-2012 period. The results from various fixed-effects regressions show that current political leaders birth regions receive substantially larger financial flows than other regions. We do not find evidence that leaders shift aid to regions populated by groups who share their ethnicity.
    JEL: D73 F35 P33
    Date: 2015
  9. By: Rieckmann, Johannes
    Abstract: Development projects focusing mainly on the supply side of infrastructure repeatedly turn out to yield poor impact when being rigorously evaluated. This is also the case for an intervention connecting urban households in Yemen to piped water and improved sewerage networks. This study investigates the determinants of drinking water handling and hygiene behaviour. It aims at helping to improve retroactively outcomes, and to avoid pitfalls in the design of future projects. I use multivariate regression to identify the drivers of drinking water treatment and four hygiene habit measures. Connection of households is one of those drivers; however not the most influential one. Conducive water handling and hygiene behaviour appear to be responsive especially to training, access to information and communication technology (ICT), and school education. This paper contributes to the literature by a case study showing the importance of demand side aspects of infrastructure provision. Pipe and sewer grid construction must be flanked with enhancing point-of-use maintenance or restoration of drinking water safety. Future impact evaluations of programmes promoting good water handling and hygiene practices will be particularly useful when intervention assignments can be randomized, and baseline surveys provided for.
    JEL: Q53 I38 I12
    Date: 2015

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