A real options approach to project management

Robert Boute, E. Demeulemeester*, W. Herroelen

*Corresponding author for this work

Research output: Contribution to journalReview article

25 Scopus citations

Abstract

When scheduling an uncertain project, project management can wait for additional (future) information to serve as the basis for rescheduling the project. This flexibility enhances the project's value by improving its upside potential while limiting downside losses relative to the initial expectations. Using traditional techniques such as net present value (NPV) or decision tree analysis (DTA) can often lead to misleading results. Instead, a real options analysis should be preferred. The potentials of a real options approach to project management are discussed with an example and future research directions are highlighted.

Original languageEnglish (US)
Pages (from-to)1715-1725
Number of pages11
JournalInternational Journal of Production Research
Volume42
Issue number9
DOIs
StatePublished - May 1 2004

ASJC Scopus subject areas

  • Strategy and Management
  • Management Science and Operations Research
  • Industrial and Manufacturing Engineering

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