Managing risk and uncertainty in complex capital projects

Alessandri, Todd M.; Ford, David N.; Lander, Diane M.; Leggio, Karyl B.; Taylor, Marilyn L.

doi:10.1016/j.qref.2004.05.010

Cited by 87 publications

(58 citation statements)

References 27 publications

Supporting

Mentioning

Contrasting

Unclassified

Order By: Relevance

“…Ford and others use system dynamics to operationalize real options theory in projects for risk management. Case studies (Ford and Ceylan, 2002;Alessandri et al, 2004;Johnson et al, 2006) and comparisons with other approaches (Cao et al, 2006) establish a basis for the feedback role in managerial real options. System dynamics model structures specify real options decision making and test option valuation theory (Bhargav and Ford, 2006).…”

Section: Change Management Risk Management and Project Controlmentioning

confidence: 99%

System dynamics applied to project management: a survey, assessment, and directions for future research

Lyneis

Ford

2007

System Dynamics Review

Self Cite

332

305

View full text Add to dashboard Cite

One of the most successful areas for the application of system dynamics has been project management. Measured in terms of new system dynamics theory, new and improved model structures, number of applications, number of practitioners, value of consulting revenues, and value to clients, "project dynamics" stands as an example of success in the field. This paper reviews the history of project management applications in the context of the underlying structures that create adverse dynamics and their application to specific areas of project management, synthesizes the policy messages, and provides directions for future research and writing. Copyright © 2007 John Wiley & Sons, Ltd. Syst. Dyn. Rev. 23, 157-189, (2007 ContextProjects abound in industry, public service, and many other endeavors. As a series of activities or tasks that (1) have a specific objective (scope) to be completed within certain specifications (requirements); (2) have defined start and end dates; (3) have funding limits; and (4) consume and/or utilize resources (Project Management Institute, 2000), projects have proven challenging to plan and manage. This is largely because project conditions and performance evolve over time as a result of feedback responses, many involving nonlinear relationships, and to accumulations of project progress and resources. This has made the application of system dynamics to project management a fertile and productive field of study. This paper surveys the large body of system dynamics work on projects, evaluates its progress, and suggests directions for future development.Many different types of models have been developed to improve project management. These models include some of the system features and characteristics addressed by system dynamics. For example, basic project models such as the critical path method explicitly model causally linked development activities and phases and cost control models use forecasted performance gaps (e.g., budget deficits) to allocate funds. More advanced models, such as the computational models developed by Levitt et al. (1999) and others, are quite system dynamics-like, as they include linked development activities as well as feedback. Another body of work models multiple projects, using system dynamics as well as other approaches. Surveying all of these works is beyond the scope of a single article. Therefore, we focus here on models of single projects built using the system dynamics methodology. But even models of single projects are too numerous to describe their structures or applications in detail. Therefore, in this article we focus on the most important and general model structures in conceptual form, and provide references to additional details. Our work is based primarily on the published literature and our experience using system dynamics to model projects. In particular, we describe contributions resulting from work we have done that has not, and very likely never will be, published or otherwise made available.The literature on system dynamics models of pro...

show abstract

Section: Change Management Risk Management and Project Controlmentioning

confidence: 99%

System dynamics applied to project management: a survey, assessment, and directions for future research

Lyneis

Ford

2007

System Dynamics Review

Self Cite

332

305

View full text Add to dashboard Cite

show abstract

“…Consequently, Hartmann and Hassan (2006: 353) emphasize that ''academia is challenged to develop more adequate models to boost acceptance,'' and they emphasize the potential of binomial approaches. Binomial real options approaches do not require sophisticated continuous-time stochastic calculus (Lander and Pinches 1998) but allow scenario planning techniques to be integrated to determine possible development paths for the value of the underlying R&D project (Alessandri et al 2004;Miller and Waller 2003). As scenario planning is one of the most common long-term planning tools in corporate practice, binomial approaches have the potential to be implemented in corporate practice.…”

mentioning

confidence: 99%

Modeling sequential R&D investments: a binomial compound option approach

Hauschild

Reimsbach

2014

Bus Res

View full text Add to dashboard Cite

In this paper, we propose a binomial approach to modeling sequential R&D investments. More specifically, we present a compound real options approach, simplifying the existing valuation methodology. Based upon the same set of assumptions as prior models, we show that the number of computational steps for valuing any compound option can be reduced to a single step. We demonstrate the applicability of our approach using the real-world example of valuing a new drug application. Overall, our work provides a heuristic framework for fostering the adoption of binomial compound option valuation techniques in R&D management.

show abstract

“…Especially for the evaluation of accounting SID, there is a need to pay more attention to scenario-based techniques (Cornelius et al, 2005;Alessandri et al, 2004;Miller & Waller, 2003). Thus, SID have a greater need to pay attention to probability of occurrence (Martzoukos & Trigeorgis, 2002).…”

Section: Introductionmentioning

confidence: 99%

Explanatory variables on south-west spot electricity markets integration

Figueiredo¹,

Silva²

Assessment Methodologies: Energy, Mobility and Other Real World Application

View full text Add to dashboard Cite

A navegação consulta e descarregamento dos títulos inseridos nas Bibliotecas Digitais UC Digitalis, UC Pombalina e UC Impactum, pressupõem a aceitação plena e sem reservas dos Termos e Condições de Uso destas Bibliotecas Digitais, disponíveis em https://digitalis.uc.pt/pt-pt/termos.Conforme exposto nos referidos Termos e Condições de Uso, o descarregamento de títulos de acesso restrito requer uma licença válida de autorização devendo o utilizador aceder ao(s) documento(s) a partir de um endereço de IP da instituição detentora da supramencionada licença.Ao utilizador é apenas permitido o descarregamento para uso pessoal, pelo que o emprego do(s) título(s) descarregado(s) para outro fim, designadamente comercial, carece de autorização do respetivo autor ou editor da obra. Na medida em que todas as obras da UC Digitalis se encontram protegidas pelo Código do Direito de Autor e Direitos Conexos e demais legislação aplicável, toda a cópia, parcial ou total, deste documento, nos casos em que é legalmente admitida, deverá conter ou fazer-se acompanhar por este aviso. Assessment Methodologies: energy, mobility and other real world application Autor(es):Godinho, Pedro; Dias, Joana The use of assessment methodologies is becoming increasingly important in the decision making process under very different environments. There are increasing concerns about making the best possible use of the limited available resources.There is also an increasing will of justifying the decisions in a sound way. This is even more important when considering public spending, public scrutiny and governance accountability. The use of recognized assessment techniques is actually mandatory in many situations, considering environmental, social, economic and sustainability concerns.This book gathers contributions from several authors, advancing the state-of- m e a s u r i n g T e c h n i c a l e f f i c i e n c y o f e u r o P e a n c o u n T r i e s u s i n g D aTa e n v e l o P m e n T a n a ly s i s e n e r g y e f f i c i e n c y g ov e r n a n c e i n T h e e u r o P e a n u n i o n m e m b e r s TaT e s -a n a ly s i s o n c u r r e n T s TaT We also want to thank Imprensa da Universidade de Coimbra, in particular Maria João Padez, for supporting us in the publication process. The use of assessment methodologies is becoming increasingly important in the decision making process under very different environments.There are increasing concerns about making the best possible use of the limited available resources. There is also an increasing will of justifying the decisions in a sound way. This is even more important when considering public spending, public scrutiny and governance accountability. Energy is strongly intertwined with mobility, with transportation systems accounting for a significant share of energy consumption across the world. Therefore, it is important to address energy and mobility strategies in an integrated fashion, taking into account their mutually influencing aspects. Energy and mobility strategies should contribute to sustain...

show abstract

Managing risk and uncertainty in complex capital projects

Cited by 87 publications

References 27 publications

System dynamics applied to project management: a survey, assessment, and directions for future research

System dynamics applied to project management: a survey, assessment, and directions for future research

Modeling sequential R&D investments: a binomial compound option approach

Explanatory variables on south-west spot electricity markets integration

Contact Info

Product

Resources

About