nep-ppm New Economics Papers
on Project, Program and Portfolio Management
Issue of 2016‒10‒30
six papers chosen by
Arvi Kuura
Tartu Ülikool

  1. Micro-Economical Aspects of Public Projects: Impact Factors for Project Efficiency and Sustainability By Pulmanis, Emils
  2. Project Management in the Port Development Project in Latvia By Pulmanis, Emils
  3. Cost performance on the Norwegian continental shelf By Lorentzen, Sindre; Osmundsen, Petter
  4. Fiscal Risk and the Portfolio of Government Programs By Samuel G. Hanson; David S. Scharfstein; Adi Sunderam
  5. Quality management in inclusive business: an Egyptian milk sourcing case study By Daburon, Annabelle; Alary, Véronique; Martin, Vincent; Ali, Ahmed; Osman Abdelzaher, Mona; Awad Aziz Melak, Sherif; Hosni, Taha
  6. China as a Potential Partner for Latin American Electricity Projects By Thomas Rawski

  1. By: Pulmanis, Emils
    Abstract: Project management approach in the public administration becoming gradually applied tool for implementation of different public programs and activities. Latvia has several methodological documentations to evaluate the possible benefits from infrastructure but still there is need for improvements as the only clear defined methodology is for transport sectors and those which have been provided by the European commission, but not always have been practically used in local municipalities’ project evaluations. Public projects, and planning for such projects, generally have the following characteristics: • Such projects are inherently risky due to long planning horizons and complex interfaces. • Technology is often not standard. • Decision making and planning are often multi-actor processes with conflicting interests. • Often the project scope or ambition level will change significantly over time. • Statistical evidence shows that such unplanned events are often unaccounted for, leaving budget contingencies sorely inadequate. • As a consequence, misinformation about costs, benefits, and risks is the norm. • The result is cost overruns and/or benefit shortfalls with a majority of projects. Paper exanimates public project management applications in the context of the underlying structure that adverse dynamics and their application to specific areas for micro-economical level of project management, synthesizes the policy messages, and provides directions for future research. Public sector project management in Latvia become popular in recent years as there is different type of public funding sources available. The paper examined the application of the project management practice and its micro-economic aspects in public sector in Latvia. Public sector project management in Latvia become popular in recent years as there is different type of public funding sources available. The paper describes the public sector project management practice in Latvia. Study shows that public sector project maturity level is low and should be improved. Research period covers the time from January 2013 – March 2015.
    Keywords: project management, project planning and initialization, public sector, efficiency
    JEL: H43 H54 O22
    Date: 2015–04–16
  2. By: Pulmanis, Emils
    Abstract: Paper analyse case study of performance and compliance audit in the port development project in Latvia. Author has participated in the audit process evaluating project management application practical approach in the project implemented by the Riga Freeport Authority and co-funded by the Cohesion Fund “Development of Infrastructure on Krievu Island for the Transfer of Port Activities from the City Centre”. Despite the mass media reports that the Riga Freeport Authority has successfully completed the project, only the construction phase of the project has been completed. During the following two years the stevedore activity must be transferred to the newly built port infrastructure on Krievu Island and coal handling operations must be commenced. In order to implement these activities the stevedores have to build internal infrastructure objects, to install equipment and to restructure logistics. Furthermore, in order to obtain positive opinions from the responsible institutions on the completion of the project and attainment of the defined objectives, by March 2019 it must be proved that the project objective has been reached and the benefits must be presented. The project was initiated in 2006 when the Riga Freeport Authority made a decision on using degraded Krievu Island territories for port activities and commenced the planning estimating that the construction phase of the project would be completed by the end of 2012. In accordance with the initial plans, active cargo handling should be currently taking place in the new port territories on Krievu Island. However, the implementation of the project has delayed by almost three years (detailed project implementation timeline see as annex 1), as we see it – due to ineffective solutions to project management issues and untimely, poor communication with the parties involved in the project, such as stevedores, builders, credit institutions etc.
    Keywords: Project management, port development, Public administration, construction
    JEL: H43 O22 R11 R42
    Date: 2016–06
  3. By: Lorentzen, Sindre (UiS); Osmundsen, Petter (UiS)
    Abstract: The oil and gas sector plays a crucial role in the Norwegian economy. It accounts for a very large proportion of gross domestic product, government revenues, investment and exports. A sharp fall in oil prices has had a significant impact on the economy and focused great attention on the cost side of the sector. Enhancing cost efficiency and curbing cost overruns now top the agenda. It is not difficult to find examples of projects suffering extensive cost overruns. What factors underlie these overruns? Media coverage might easily give the impression that Norway’s oil and gas sector is suffering from a lack of ability and competence to plan and execute projects to budget. Is this reputation deserved? Does the oil sector perform more poorly in Norway than in other producer nations? Can we see learning effects? How do the Norwegian and the international oil industry compare with other industries with respect to cost performance?
    Keywords: cost overrun; petroleum industry; experience; comparison
    JEL: D22 D24 G31
    Date: 2016–10–17
  4. By: Samuel G. Hanson; David S. Scharfstein; Adi Sunderam
    Abstract: In this paper, we develop a new model for government cost-benefit analysis in the presence of risk. In our model, a benevolent government chooses the scale of a risky project in the presence of two key frictions. First, there are market failures, which cause the government to perceive project payoffs differently than private households do. This gives the government a "social risk management" motive: projects that ameliorate market failures when household marginal utility is high are appealing. The second friction is that government financing is costly because of tax distortions. This creates a "fiscal risk management" motive: incremental spending that occurs when total government spending is already high is particularly unattractive. A first key insight is that the government's need to manage fiscal risk frequently limits its capacity for managing social risk. A second key insight is that fiscal risk and social risk interact in complex ways. When considering many potential projects, government cost-benefit analysis thus acquires the flavor of a portfolio choice problem. We use the model to explore how the relative attractiveness of two technologies for promoting financial stability—bailouts and regulation—varies with the government's fiscal burden and characteristics of the economy.
    JEL: E61 G11 G28 H1 H43
    Date: 2016–10
  5. By: Daburon, Annabelle; Alary, Véronique; Martin, Vincent; Ali, Ahmed; Osman Abdelzaher, Mona; Awad Aziz Melak, Sherif; Hosni, Taha
    Abstract: Worldwide, dairy products demand increases in term of quantity as well as it evolves in term of quality. Agribusiness companies consider emerging markets as new Eldorado. Some of them attempt to pump into the production of local small-scale farms through inclusive businesses (IB), often promoted in association with Non-Governmental Organization (NGO). Reaching agroindustrial quality standards is often one of the main obstacles to develop sustainable business models. Their quality management (QM) strategies often include the introduction of agricultural services (feed program, veterinary, training) and quality tests for their milk suppliers. QM is then designed based on linear product flows with little consideration for the supply chain environment: other local dairy operators or local agricultural services providers. In inclusive business, do QM strategies benefit to be limited to the supply chain connecting small farms with agro-industry? Based on an Egyptian case study, this paper aims: (i) to describe a dairy IB and the socioprofessional environment where it’s inserted using a netchain approach; (ii) to analyse the governance and social embeddedness of this netchain in a quality management perspective. Results showed a dense local socio-professional network characterized by reciprocal links. Milk Collection Centres (MCC), promoted by the project, didn’t succeed to develop this links. QM adopted by project promoters focused on vertical approach of the chain, omitting to develop reciprocal connections with the local socio-professional network. It limited the impact of the activities implemented to improve the local quality. The potential to deal with milk heterogeneity that led in this network was also neglected. To develop IB in a shared value logic, involving local socio-professional network, often also in the bottom of the pyramid, seems crucial.
    Keywords: Milk collection, Quality management, Family farms, Dairy industry, Egypt, Agricultural and Food Policy, Farm Management,
    Date: 2016
  6. By: Thomas Rawski
    Abstract: As Chinese firms ramp up participation in Latin American electricity infrastructure projects, this brief study reviews the strengths and possible shortcomings of Chinese electricity firms. Large state-controlled generation, grid and nuclear firms have made big contributions to the recent transformation of China’s power sector, which has delivered huge expansion, technological upgrading, increased reliability, universal service and many other benefits. Excess capacity throughout China’s electricity supply chain arising from an unexpected demand slowdown provides a powerful incentive to pursue international marketing opportunities. Beijing’s “go outward†campaign assures financial and policy backing for overseas investment initiatives. Potential difficulties include Chinese firms’ lack of experience with the regulatory complexity and public controversy that often surrounds Latin American infrastructure projects as well as the tendency of Chinese equipment makers to deliver products that incorporate what Chinese specialists describe as “small defects.â€
    Date: 2016–01

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