nep-ppm New Economics Papers
on Project, Program and Portfolio Management
Issue of 2020‒05‒25
four papers chosen by
Arvi Kuura
Tartu Ülikool

  1. Défis et embûches dans l’évaluation des PPP : Pour un secteur public efficace et efficient By Boyer, Marcel
  2. Expected Profits and The Scientific Novelty of Innovation By David Dranove; Craig Garthwaite; Manuel I. Hermosilla
  3. Methodological Manual: Developing Thematic Interregional Partnerships for Smart Specialisation By Ruslan RAKHMATULLIN; Fatime Barbara HEGYI; Katerina CIAMPI STANCOVA; Javier GOMEZ PRIETO; Krzysztof MIESZKOWSKI
  4. The 2018 Reform of EU ETS: Consequences for Project Appraisal By Johansson, Per-Olov

  1. By: Boyer, Marcel
    Abstract: The choice of the mode of realization of large public investment projects, including large infrastructure projects, between the conventional mode (PSC - public sector comparator) and the PPP mode (public-private partnership), involves two major groups of challenges and pitfalls. These are not the only major challenges and pitfalls, but they are the most pervasive. First, the evaluation of the investments themselves: the (uncertain) forecast of the costs and benefits of the project, the identification and management of real and financial risks, the cost of capital and the discount rate. Then, the evaluation of "contracts" or more generally of the "governance" PSC vs. PPP in imperfect and incomplete information contexts: the role and power of incentives for performance, effectiveness and efficiency. Many documents and reports reveal a serious misunderstanding of the economic analysis of the value of a public project, an inadequate or even erroneous understanding of the rules of modern finance, in addition to errors in analytical logic that make reports fatally flawed.
    Keywords: Health, Education, Infrastructures, Evaluation of public projects, mode of realization, PSC, PPP, incentive contract, incomplete information.
    Date: 2020–05
  2. By: David Dranove; Craig Garthwaite; Manuel I. Hermosilla
    Abstract: Innovation policy involves trading off monopoly output and pricing in the short run in exchange for incentives for firms to develop new products in the future. While existing research demonstrates that expected profits fuel R&D investments, little is known about the novelty of the projects funded by these investments. Relying on data that describe the scientific approaches used by a large sample of experimental drug projects, we expand on this literature by examining the scientific novelty of pharmaceutical R&D investments following the creation of the Medicare Part D program. We find little evidence that the positive demand shock implied by this program prompted firms to undertake scientifically novel R&D activity, as measured by whether the specific scientific approach had been used before. However, we find some evidence that firms invested in products involving novel combinations of scientific approaches. These estimates can inform economists and policymakers assessing the tradeoffs associated with marginal changes in commercial returns from newly developed pharmaceutical products.
    JEL: I1 O3
    Date: 2020–05
  3. By: Ruslan RAKHMATULLIN (European Commission - JRC); Fatime Barbara HEGYI (European Commission - JRC); Katerina CIAMPI STANCOVA (European Commission - JRC); Javier GOMEZ PRIETO (European Commission - JRC); Krzysztof MIESZKOWSKI
    Abstract: Starting in 2015, the European Commission has been working hard with the thematic partnerships helping them to figure out how to go best about initiating and managing interregional thematic S3 partnerships. By preparing this manual, the European Commission is able to document not just the overall methodological journey taken by the thematic partnerships, but also the many good practices observed over the past few years. This manual refers to this combined body of as the thematic S3 approach to interregional partnerships. Qualified partnerships are encouraged to follow this methodology in line with a specific structure (workflow) that takes these new partnerships through a number of steps. This workflow follows an iterative and non-linear process, which can be understood as a dynamic flow of activities that result in living documents and activities that require continuous monitoring and review. This workflow approach is an evolved adaptation of the 4-step approach defined by the Vanguard Initiative. In addition to the 4 steps defined by the Vanguard Initiative, the current approach adds 'Scale-Up' as an additional step. In addition, the approach described in this manual includes a further layer of outcomes expected throughout the overall process. Even if some formalised outcomes are likely to be associated with specific phases, many of these go well beyond the boundaries of any one phase. Chapters of this manual will follow the logic of this 5-phase workflow approach. Chapter 1 is built around the Learn phase with Chapter 2 focusing on the Connect phase. Phases 3, 4 and 5 are not covered in the current version of this methodological manual. Putting in place a solid monitoring and evaluation mechanism (MEM) can prove to be an important tool in the development of every thematic partnership. In addition to being able to assess its own progress or challenges, such a solid MEM helps each partnership validate its earlier decisions and actions while keeping an eye on the overall effectiveness of its governance structure. To help interested partnerships monitor their progress, the S3 Platform proposes a simple yet comprehensive evaluation framework that covers the entire workflow in line with the thematic approach to S3 described in this Manual. Preparation and management of interregional S3 projects may appear challenging at first. However, breaking the task into a series of defined steps and processes (many of which also apply to traditional collaborative projects) can greatly simplify it (see Figure 1). Equally, public authorities in any one region cannot be expected to have all the necessary resources in-house; legal, technical, financial, environmental, and other advisers are frequently used throughout the process. The challenge is to select the right advisers across partner regions and to manage them effectively.
    Keywords: smart specialisation, thematic smart specialisation platforms, smart specialisation platform on industrial modernisation, smart specialisation platform on agri-food, smart specialisation platform on energy, learn, connect, mapping, mapping of competences, scoping, matching, matchmaking
    Date: 2020–04
  4. By: Johansson, Per-Olov (CERE - the Center for Environmental and Resource Economics)
    Abstract: The European Union's Emissions Trading System is the largest system in the world for trade in greenhouse gases. It used to be a cap-and-trade scheme with a fixed supply of permits. However, a recent reform of the system "punctures the waterbed" by making the supply of permits endogenous. The current paper discusses how to handle permits in economic evaluations. It considers both schemes with a fixed cap and schemes with an endogenous cap. The paper also derives a rule when the project causes an induced intertemporal change in the supply of permits under an endogenous cap. An induced reduction in emissions, what we term a "permit multiplier", is associated with benefits but comes at a cost as production is displaced when the number of available permits decreases. The permit multiplier implies that emissions within the EU ETS are valued differently from emissions occurring elsewhere even under an endogenous cap. A further novel result is that an endogenous cap could increase the social profitability of abatement efforts. By replacing purchases of permits, abatement could cause a reduction in the endogenous supply of permits and hence emissions.
    Keywords: Cost-benefit analysis; permits; waterbed puncture; endogenous cap; ETS; climate gases; social cost of carbon
    JEL: H23 H43 Q51 Q54
    Date: 2020–05–11

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