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Additional Value in Project Portfolio Selection: Doing the right things by right valuation – Gains of real options portfolio theory
Blekinge Institute of Technology, School of Management.
2016 (English)Independent thesis Basic level (degree of Bachelor), 10 credits / 15 HE creditsStudent thesis
Abstract [en]

Purpose: The purpose of this thesis is to address the, by scholars and managers alike, expressed need of development in the project portfolio selection. The research will aim to investigate how the selection of innovation projects portfolios could change if flexibility, and with it uncertainty, were added to the project portfolio selection. The aim is further to investigate how options value can be incorporated as additional value to a portfolio selection decision, with the goal to choose projects that maximize the goal function of the firm.

Method: This thesis takes a qualitative approach as such approach is favourable when studying social science. The empirical research is carried out at a large international company conducting in an extensive amount of R&D as well working with innovation projects. The data is collected by unstructured and semi structured interviews with management at the company subjected to the study.

Results: The results show, that by adapting the real options framework to a static way of selecting projects, the incorporation of flexibility to the selection process can add economic value by accounting for options value and handle uncertainty. The real options framework will substantiate a dynamic approach to the selection process of innovation projects, as flexibility is changing the selection process from individual project selection to the selection of portfolios.

Abstract [sv]

Syfte: Syftet med följande uppsats är belysa och utveckla det, av forskare och chefer, uttryckta behov av utveckling av projektportföljval. Uppsatsen syftar till att undersöka hur valet av innovationsprojekt genom portföljvalsmodeller kan förändras om flexibilitet och osäkerhet adderas till beslutsprocessen. Syftet är vidare att undersöka hur ytterligare värde kan inkorporeras i ett beslut, med målet att välja den portfölj som maximerar företagets målfunktion.

Metod: Denna uppsats tar en kvalitativ metodansats då ett sådant tillvägagångssätt är fördelaktigt i studier av samhällsvetenskap. Den empiriska undersökningen har bedrivits på ett stort internationellt företag vilket deltar i ett omfattande FoU arbete, samt i stor skala arbetar med innovationsprojekt. Data har samlats in genom ostrukturerade samt semistrukturerade intervjuer med ledningen på företaget.

Slutsatser: Resultaten visar att genom att inkorporera reella optioner, i en statisk beslutsprocess, så kan ett bättre beslutsunderlag genereras genom inkluderandet av osäkerhet och värdet av optioner. Ett sådant beslutsunderlag genereras genom att real options adderar flexibilitet till urvalsprocessen. Genom att inkorporera flexibilitet kommer en statisk metod att välja individuella projekt på, skifta till fördel för en dynamisk metod att välja portföljer.

Place, publisher, year, edition, pages
2016. , 61 p.
Keyword [en]
Project portfolio selection, Project portfolio management, Real options, Innovation project, Dynamic capabilities, R&NPD, ENPV
National Category
Business Administration
Identifiers
URN: urn:nbn:se:bth-12795OAI: oai:DiVA.org:bth-12795DiVA: diva2:945379
Subject / course
FE1453 Bachelor's Thesis in Business Administration
Educational program
FEGIA Business Administration for Innovation and Business Development
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Examiners
Available from: 2016-07-11 Created: 2016-07-01 Last updated: 2016-07-11Bibliographically approved

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