Setbacks, Shutdowns, and Overruns

Feng, Felix Zhiyu; Taylor, Curtis R.; Westerfield, Mark M.; Zhang, Feifan

doi:10.2139/ssrn.3775340

Cited by 4 publications

(3 citation statements)

References 32 publications

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“…All proofs have been relegated to Appendices. Appendices C and D are found in the Supplementary Material (Feng, Taylor, Westerfield, and Zhang (2024)).…”

Section: Introductionmentioning

confidence: 99%

Setbacks, Shutdowns, and Overruns

Feng,

Taylor,

Westerfield

et al. 2024

ECTA

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We investigate optimal project management in a setting plagued by an indefinite number of setbacks that are discovered en route to project completion. The contractor can cover up delays in progress due to shirking either by making false claims of setbacks or by postponing the reports of real ones. The sponsor optimally induces work and honest reporting via a soft deadline and a reward for completion that specifies a bonus for early delivery. Late‐stage setbacks trigger randomization between minimally feasible project extension and (inefficient) cancellation. Because extensions may be granted repeatedly, arbitrarily large overruns in schedule and budget are possible after which the project may still be canceled.

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“…All proofs have been relegated to Appendices. Appendices C and D are found in the Supplementary Material (Feng, Taylor, Westerfield, and Zhang (2024)).…”

Section: Introductionmentioning

confidence: 99%

Setbacks, Shutdowns, and Overruns

Feng,

Taylor,

Westerfield

et al. 2024

ECTA

View full text Add to dashboard Cite

show abstract

“…Such inputs include information (Lee and Zhang, 2017) and perhaps most prominently, human capital (Brown et al, 2009;Dal Bó et al, 2013;Acemoglu et al, 2015;Bolton et al, 2016). 8 Finally, several theoretical models address the design of long-term policies (e.g., Battaglini et al, 2012;Callander and Raiha, 2017;Chen et al, 2023), with a growing literature focusing on the optimal provision of dynamic incentives for multistage projects (e.g., Toxvaerd, 2006;Green and Taylor, 2016;Feng et al, 2021;Foarta and Sugaya, 2021). We abstract from incentive problems in order to explore project design in anticipation of transitions of control.…”

Section: Introductionmentioning

confidence: 99%

Organizational Capacity and Project Dynamics

Foarta¹,

Ting

2023

SSRN Journal

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“…(2017), Varas (2018), Marinovic and Varas (2019), Szydlowski (2019), Gryglewicz, Mayer, and Morellec (2020), Mayer (2022), Feng and Westerfield (2021), and Feng et al. (2021). We contribute to this literature by adding an intermediary.…”

mentioning

confidence: 99%

Dynamic Contracting with Intermediation: Operational, Governance, and Financial Engineering

Gryglewicz¹,

Mayer

2023

The Journal of Finance

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Private equity funds intermediate investment and affect portfolio firm performance by actively engaging in operational, governance, and financial engineering. We study this type of intermediation in a dynamic agency model in which an active intermediary raises funds from outside investors and invests in a firm run by an agent. Optimal contracting addresses moral hazard at the intermediary and firm levels. The intermediary's incentives to affect firm performance are strongest after poor performance, while the agent's incentives are strongest after good performance. We also show how financial engineering, that is, financial contracting with outside investors, interacts with operational and governance engineering.

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Setbacks, Shutdowns, and Overruns

Cited by 4 publications

References 32 publications

Setbacks, Shutdowns, and Overruns

Setbacks, Shutdowns, and Overruns

Organizational Capacity and Project Dynamics

Dynamic Contracting with Intermediation: Operational, Governance, and Financial Engineering

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