nep-ppm New Economics Papers
on Project, Program and Portfolio Management
Issue of 2017‒11‒05
four papers chosen by
Arvi Kuura
Tartu Ülikool

  1. Reference Class Forecasting for Hong Kong's Major Roadworks Projects By Bent Flyvbjerg; Chi-keung Hon; Wing Huen Fok
  2. The Limits of Social Protection: The Case of Hydropower Dams and Indigenous Peoples' Land By Fadzilah Majid Cooke, Johan Nordensvard, Gusni Bin Saat, and Frauke Urban
  3. Intuitive versus Contemplative: Do Entrepreneurs differ in their Decision-Making Style from Managers and Employees? By Martin Koudstaal; Randolph (R.) Sloof; Mirjam (C.M.) van Praag
  4. Wealth Taxation, Non-listed Firms, and the Risk of Entrepreneurial Investment By Dirk Schindler

  1. By: Bent Flyvbjerg; Chi-keung Hon; Wing Huen Fok
    Abstract: Reference class forecasting is a method to remove optimism bias and strategic misrepresentation in infrastructure projects and programmes. In 2012 the Hong Kong government's Development Bureau commissioned a feasibility study on reference class forecasting in Hong Kong - a first for the Asia-Pacific region. This study involved 25 roadwork projects, for which forecast costs and durations were compared with actual outcomes. The analysis established and verified the statistical distribution of the forecast accuracy at various stages of project development, and benchmarked the projects against a sample of 863 similar projects. The study contributed to the understanding of how to improve forecasts by de-biasing early estimates, explicitly considering the risk appetite of decision makers, and safeguarding public funding allocation by balancing exceedance and under-use of project budgets.
    Date: 2017–10
  2. By: Fadzilah Majid Cooke, Johan Nordensvard, Gusni Bin Saat, and Frauke Urban
    Abstract: Hydropower dams have been criticised for their social and environmental implications. There have been attempts to create international social standards for hydropower dam projects, but these standards have had limited impact. This article uses an extended environmental justice framework to make sense of the resettlement and compensation schemes for Indigenous peoples who were resettled for the construction of the Bakun dam in Borneo, East Malaysia. The article therefore analyses the social protection measures designed for the protection of Indigenous peoples and their livelihoods. The case study is based on in-depth interviews and focus group discussions with local communities, institutional actors in Malaysia, Chinese actors and dam builders. The article concludes that the social protection policies did not protect Indigenous people and their land sufficiently, but it facilitated a commodification process of both land and people. This should also be understood as a colonisation of their land and their cultures.
    Keywords: environmental justice, indigenous groups, social protection, hydropower dams, Malaysia
  3. By: Martin Koudstaal (Rabobank); Randolph (R.) Sloof (UvA; Tinbergen Institute, The Netherlands); Mirjam (C.M.) van Praag (Copenhagen Business School)
    Abstract: We examine in a large survey (n = 1,928) how contemplative entrepreneurs, managers and employees are in their decision making styles. Besides two well-known subjective measures taken from psychology, we also build on Rubinstein (2016) by including two objective measures derived from response times and the nature of the strategic choices made. Supporting conventional wisdom, we find that entrepreneurs have a stronger subjective Faith in Intuition than others. Their actual action choices are partly in line with this: entrepreneurs make indeed more intuitive choices than managers, but are equally intuitive as employees. At the same time entrepreneurs have response times and a subjective Need for Cognition that (on average) equal those of managers. Together these findings tentatively suggest that entrepreneurs start from a stronger prior intuition, making them ceteris paribus more intuitive than others, but at the same time share with managers a higher need for cognition, and thus take more time to think things over.
    Keywords: Response times; contemplativeness; faith in intuition; need for cognition; entrepreneurs; managers; lab-in-the-field experiment
    JEL: L26 C93 D91 M13
    Date: 2017–10–26
  4. By: Dirk Schindler
    Abstract: How to incorporate hard-to-measure assets into the wealth tax? We analyze the effect of an optimal wealth tax on risk-taking behavior and welfare when investors do not only have the standard portfolio choice with a well-diversified market portfolio, but can alternatively choose to invest all their wealth into a non-diversifiable, indivisible project. The latter is interpreted as entrepreneurial investment into a small, non-listed firm for which the actual value is hard to measure and non-verifiable. For such firms, real-world wealth tax systems base the wealth tax on deterministic book values. We show that this tax treatment does not distort the choice of projects if the tax is set optimally with an imputed interest rate on book values, actually larger than the risk-free market rate of return. The market equilibrium and a proportional tax on the market portfolio will ensure an efficient risk allocation between private and public consumption and across projects. Failing to apply an imputed inflation of book values, instead, gives rise to an implicit subsidy on entrepreneurial activity and distorts investment. Our findings also have implications for taxation of hard-to-measure assets under capital-gains and inheritance taxation.
    Keywords: wealth taxation, portfolio choice, non-listed firms, risk diversification, hard-to-measure assets
    JEL: H21 D14 G11
    Date: 2017

This nep-ppm issue is ©2017 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.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.