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on Project, Program and Portfolio Management |
| By: | Francetich, Alejandro; Gambardella, Alfonso |
| Abstract: | Selecting investment or research projects is a general managerial decision, which ranges from managing the portfolio of R&D or marketing campaigns within a company, to determining the very boundaries of the firm -- which units or divisions to encompass, what acquisitions or alliances to pursue. Projects are typically assessed individually. However, the different divisions of a firm share managerial resources, so managers can transfer successful practices from one unit to another unit within the firm, or to different firms within their portfolio. This introduces managerial spillovers, so the value of a portfolio is higher than the aggregate value of the isolated projects. In this paper, we analyze the problem of selecting projects in the presence of managerial spillovers, and provide a simple algorithm that implements its solution. We find that, while a project yielding negative marginal profit can be safely discarded, it may be profitable to pass on multiple projects at once even if some of them yield positive marginal profit. Thus, ignoring the spillovers across projects and focusing on marginal profit can lead to excessively diversified firms or economies, as opposed to firms or economies with fewer (albeit possibly larger-scale) projects. |
| Keywords: | Decision-making; uncertainty; optimization; corporate strategy; portfolios of real assets |
| JEL: | C44 C61 L21 M21 |
| Date: | 2018–05 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:12946&r=ppm |
| By: | Tomoatsu Shibata |
| Abstract: | This paper proposes a new product development (NPD) process and new project leaders suitable for a modular architecture development. Based on theoretical considerations and an in-depth analysis of the common module family (CMF) architecture of Nissan Motor Company Ltd., this paper argues that a modular architecture strategy requires both a two stage NPD process and module leaders. This differs from conventional overlapping processes and heavyweight (HW) project leader. This NPD process for a modular strategy comprises two stages. First, the NPD process starts by the formulation and freezing of design rules. Second, concurrent component development activity. This sequence is mandatory, with a distinct boundary between the two stages. Formulation of design rules in the first stage requires a learning process, and an organizational arrangement promoting close coordination between technical and strategic views, enabling their integration. Also, to sustain the modular strategy, not only an HW project leader responsible for each product, but a module leader responsible for managing the modular concept are necessary. Otherwise, the modular strategy may collapse due to its fragility, even if started successfully. Based on these findings, this paper proposes the framework for an effective NPD process and project leaders in terms of product architecture. |
| Date: | 2018–05 |
| URL: | http://d.repec.org/n?u=RePEc:toh:dssraa:84&r=ppm |
| By: | Xi Chen (Nanjing University, China); Yu Chen (University of Graz, Austria); Xuhu Wan (Hong Kong University of Science and Technology, Hong Kong) |
| Abstract: | This paper explores a new continuous-time principal-agent problem for a firm with both moral hazard and adverse selection. Adverse selection appears at random times. The agent finds projects sequentially by exerting costly effort. Each project brings output to the firm, subject to the agent’s private shocks. These serial shocks are i.i.d and independent of the arrival time of new projects and the agent’s efforts. The shocks and efforts constitute the agent’s asymmetric information. We provide a full characterization of optimal contracts in which moral hazard effect and adverse selection effects interact. The second-best contract with moral hazard can achieve first-best efficiency, and third-best contract with the moral hazard and adverse selection can achieve second-best efficiency under pure adverse selection, if the agent is expectably rich enough. The payment is front-loaded under pure moral hazard. When moral hazard is combined with adverse selection, the payment can be backloaded or front-loaded, depending on the level of expectable wealth. |
| Keywords: | Dynamic Contract; Continuous Time; Moral Hazard; Adverse Selection; Project Search |
| JEL: | C61 D82 D86 J30 |
| Date: | 2018–05 |
| URL: | http://d.repec.org/n?u=RePEc:grz:wpaper:2018-11&r=ppm |
| By: | Gani Aldashev; Elena Vallino |
| Abstract: | Participatory conservation projects run by NGOs in developing countries imply involvement of communities in conservation efforts, to combine economic development with environmental preservation. We build an economic model explaining the emergence of participatory conservation and its contradictions linked to the conflicting incentives of local farmers, NGOs, and donors. The tragedy of the commons in a natural area justifies an NGO intervention. Contractual incompleteness calls for participatory conservation. However, if the revenue from the conservation project is uncertain, the community abstains from conservation unless the NGO allocates resources to agriculture. The NGO must deviate from its narrow mission to reach its broad mission. If the NGO is funded by conservation-oriented donors, it struggles to justify diverting resources to agriculture. Thus, the NGO faces a “size versus efficiency” dilemma: poorly conserving a larger area (non-cooperating local community, satisfied donors) or conserving well a smaller area (local community cooperation, unsatisfied donors). |
| Keywords: | Participatory conservation, NGOs, local development, land use |
| Date: | 2018–06 |
| URL: | http://d.repec.org/n?u=RePEc:eca:wpaper:2013/271490&r=ppm |
| By: | Fiala, Nathan; Premand, Patrick |
| Abstract: | Corruption and mismanagement of public resources can affect the quality of government services and undermine growth. Can citizens in poor communities be empowered to demand better-quality public investments? We look at whether providing social accountability training and information on project performance can lead to improvements in local development projects. The program we study is unique in its size and integration in a national program. We find that offering communities a combination of training and information on project quality leads to significant improvements in household welfare. However, providing either social accountability training or project quality information by itself has no welfare effect. These results are concentrated in areas that are reported by local officials as more corrupt or mismanaged, suggesting local agents have significant information about where corruption and mismanagement is worse. We show evidence that the impacts come in part from community members increasing their monitoring of local projects, making more complaints to local and central officials and increasing cooperation. We also find modest improvements in people's trust in the central government. The results suggest that government-led, large-scale social accountability programs can strengthen communities' ability to address corruption and mismanagement as well as improve services. |
| Keywords: | social accountability,community training,scorecards,corruption,service delivery |
| JEL: | D7 H4 O1 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:rwirep:752&r=ppm |
| By: | Christopher Ksoll; Kristine Bos; Arif Mamun; Anthony Harris; Sarah Hughes |
| Abstract: | The evaluation design report for Mathematica Policy Research’s evaluation of two activities of MCC’s Benin II Energy Compact. The evaluation of these two projects involves a comprehensive mixed-methods approach, which will seek to measure the impacts of and understand the changes related to the Electricity Generation and Distribution Projects. |
| Keywords: | Benin, power, electricity, MCC |
| JEL: | F Z |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:9f8974513ee745aaac3b5c62e2f0b71f&r=ppm |
| By: | David Rietzke (Lancaster University); Yu Chen (University of Graz, Austria) |
| Abstract: | We study a principal-agent model wherein the agent is better informed of the prospects of the project, and the project requires both an observable and unobservable input. We characterize the optimal contracts, and explore the trade-offs between high and low-powered incentive schemes. We discuss the implications for push and pull programs used to encourage R&D activity, but our results are relevant in other contexts. |
| Keywords: | Pay for Performance; Moral Hazard; Adverse Selection; Observable Action; Principal-Agent Problem |
| JEL: | D82 D86 O31 |
| Date: | 2018–05 |
| URL: | http://d.repec.org/n?u=RePEc:grz:wpaper:2018-12&r=ppm |
| By: | Kitesa, Rahel (Tilburg University, School of Economics and Management) |
| Abstract: | This doctoral dissertation consists of three chapters on the design and implementation of environmental conservation mechanisms using economic experiments. The first chapter examines how variations in information and context affect the outcomes of valuation using field experiment. The chapter shows the evidence that people’s contributions increase significantly and substantially if attention is drawn to their own responsibility in the deforestation and desertification process, suggesting, the ‘responsibility effect’ is important in the valuation-an extension of the previous examination on the role of behavior in valuation. The second chapter revisits Payment for Ecosystem Services (PES) and the determination of the optimal price by comparing the performance of Uniform Price Auctions (UPA) and Take-it-or-leave (TILI) mechanism. Using both laboratory and field experiments it is found that given the same level of price, the sign-up rate to a PES project differs between the two mechanisms. More subjects are willing to sign-up in TILI than was predicted in UPA. The findings also suggest that this disparity can be explained by the hypothesis of more deliberate decision making in UPA than TILI. The third chapter examines how trust and trustworthiness evolve in the community (engaged in public good provision) to predict the sustainability of common good conservation. The chapter deals with trust and trustworthiness, as important social norms, between the cooperators and non- cooperator in common good provision. The findings of the chapter support the hypothesis that higher trust is placed on the cooperators than non-cooperators with payoff consequences-contrary to standard economic prediction. The cooperator type receives more money, but sends and returns less to non-cooperators which allow the cooperator type to receive a consistently higher payoff- which was predicted by the Ostrom’s theory of collective actions. |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:tiu:tiutis:cda8497d-6dcf-4092-b815-1d8e5c5c6631&r=ppm |