Estimating a project's profitability: A longitudinal approach

Chen, Hong Long; Chen, Chun-I; Liu, Che-Hung; Wei, Nai-Chieh

doi:10.1016/j.ijproman.2012.09.009

Cited by 14 publications

(6 citation statements)

References 69 publications

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“…This result was unexpected because cost impacts profitability and margins at a minimum. This result is at odds with Chen et al. (2013), who provide evidence that these practices affect project profitability.…”

Section: Resultsmentioning

confidence: 92%

“…This result was unexpected because cost impacts profitability and margins at a minimum. This result is at odds with Chen et al (2013), who provide evidence that these practices affect project profitability. On the other hand, business success comprises several other indicators related to market performance, such as sales and market share, that existing research has not analyzed with P and M.…”

Section: Discussionmentioning

confidence: 92%

“…Effective project planning, control and monitoring enhance PP (Chen et al, 2013) by minimizing or avoiding delay and cost problems in construction projects (Frimpong et al, 2003).…”

Section: 4mentioning

confidence: 99%

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How absorptive capacity influences project performance

Dultra-de-Lima

Brito

2022

IJMPB

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PurposeThe absorptive capacity (AC) leads to firm performance and influences the development and evolution of capabilities and routines, but the influence of AC in projects remains unclear. Therefore, this study aims to investigate the effect of AC on project performance (PP) in the construction industry of Sao Paulo State, Brazil.Design/methodology/approachThe authors conducted a survey questionnaire with project managers and collected 157 responses in the construction sector. They also used confirmatory factor analysis (CFA) and multiple linear regression techniques to assess the data.FindingsThe study provides empirical evidence that realized absorptive capacity (RAC) has a direct and indirect positive effect on PP. Conversely, the potential absorptive capacity (PAC) only indirectly impacts PP through project management practices (PMPs). PAC and RAC positively influence PMPs that in turn positively influence PP. The findings reinforce the relevance of AC to the development of internal knowledge for processes and routines, thereby enhancing PP.Practical implicationsThe findings provide practical implications: the AC influences PP by refining and adapting routines. Moreover, the consistent application of accepted practices is not enough for PP, but the ability to adapt, adjust and transform the relevant knowledge into routines.Originality/valueThis paper provides empirical evidence that the knowledge application of PMPs improves organizational performance through PP. However, despite what the literature has discussed, this paper proved that AC has no effect as a moderating factor between PMPs and performance; however, AC's role significantly impacts PP through PMPs.

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Section: Resultsmentioning

confidence: 92%

Section: Discussionmentioning

confidence: 92%

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How absorptive capacity influences project performance

Dultra-de-Lima

Brito

2022

IJMPB

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“…This study defines the major factors that affect the project profitability according to 15 factors based on the pro forma income statement shown in Figure 2 of the risk factors of overseas projects, as shown in Table 2. The relationships between the profitability impact factors and the associated risk factors is linked to the references on overseas projects [48][49][50][51]; furthermore, these relationships are utilized in the problem-solving of this paper. This paper presents a method which is applicable to an increase in the NPV α , which is an important indicator of investment decisions based on the relationships between the profitability factors and the associated major risk factors.…”

Section: O1mentioning

confidence: 99%

A Probabilistic Alternative Approach to Optimal Project Profitability Based on the Value-at-Risk

Kim

2018

Sustainability

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This paper focuses on an investment decision-making process for sustainable development based on the profitability impact factors for overseas projects. Investors prefer to use the discounted cash-flow method. Although this method is simple and straightforward, its critical weakness is its inability to reflect the factor volatility associated with the project evaluation. To overcome this weakness, the Value-at-Risk method is used to apply the volatility of the profitability impact factors, thereby reflecting the risks and establishing decision-making criteria for risk-averse investors. Risk-averse investors can lose relatively acceptable investment opportunities to risk-neutral or risk-amenable investors due to strict investment decision-making criteria. To overcome this problem, critical factors are selected through a Monte Carlo simulation and a sensitivity analysis, and solutions to the critical-factor problems are then found by using the Theory of Inventive Problem Solving and a business version of the Project Definition Rating Index. This study examines the process of recovering investment opportunities with projects that are investment feasible and that have been rejected when applying the criterion of the Value-at-Risk method. To do this, a probabilistic alternative approach is taken. To validate this methodology, the proposed framework for an improved decision-making process is demonstrated using two actual overseas projects of a Korean steel-making company.

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“…This may involve multiple attribute weightings using fuzzy rather than crisp data (Li, ; Hwang and Yoon, ). Profitability estimation is difficult because of the inherent uncertainty involved in estimations, but various forecasting models have been developed, which show that it is feasible (Varila and Sievanen, ; Wagner et al ., ; Chen et al ., ). It seems likely that a large number of independent estimates of profitability would effectively integrate out the high levels of variation and noise inherent in these estimates, in a similar way to integration in the bee swarm (Seeley and Visscher, ).…”

Section: The Innovation Systemmentioning

confidence: 99%

A Self‐organizing System for Innovation in Large Organizations

Foss

2017

Syst. Res

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Technological innovation is almost certainly the key driver of long‐term economic growth. Yet for many years, not only have discoveries depended on serendipity and happenstance but also selection and development of the innovations has been managed by over‐centralized bureaucracies that are more concerned with stability and error reduction than with adaptation to a changing world. This paper uses bee swarm logic to suggest a different way forward. The novel system proposed would consist of a designed collective intelligence platform co‐ordinating the work of a number of competing, self‐organizing research groups, each using evolutionary algorithms to optimize their potential solution to a given innovation problem. Each research group would compete to recruit supporters in strict proportion to the independently estimated profitability of its solution. The first solution to accumulate a quorum level of support would win the competition, and its supporters would then be able to develop the solution through implementation. Copyright © 2017 John Wiley & Sons, Ltd.

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Estimating a project's profitability: A longitudinal approach

Cited by 14 publications

References 69 publications

How absorptive capacity influences project performance

How absorptive capacity influences project performance

A Probabilistic Alternative Approach to Optimal Project Profitability Based on the Value-at-Risk

A Self‐organizing System for Innovation in Large Organizations

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