Search results

1 – 10 of over 58000
To view the access options for this content please click here
Article
Publication date: 1 October 2006

Jing Chen

The paper seeks to develop an analytical theory of project investment.

Abstract

Purpose

The paper seeks to develop an analytical theory of project investment.

Design/methodology/approach

The authors derive a partial differential equation that the variable cost of a project should satisfy, determine a proper initial condition through a thought experiment, and solve the equation.

Findings

A formula of variable cost as an analytical function of fixed cost, uncertainty of the environment and the duration of a project is obtained.

Practical implications

The analytical formula enables systematic comparison of returns of different investment under different market conditions to be made. This refines the insights from real option theory in many ways. Since all production systems need fixed investment to lower variable costs, by providing an analytical theory about the relation among fixed costs, variable costs and uncertainty, this theory contributes a new foundation to investment theory and other different fields.

Originality/value

An analytical theory of project investment about the relation among fixed costs, variable costs, uncertainty of the environment and the duration of a project, which is the core concern in most business decisions, does not exist in the current literature.

Details

International Journal of Managerial Finance, vol. 2 no. 4
Type: Research Article
ISSN: 1743-9132

Keywords

To view the access options for this content please click here
Book part
Publication date: 20 October 2017

Martijn Schoute and Tjerk Budding

Purpose: This study examines whether changes in environmental and funding uncertainty during the first three years after the outbreak of the global financial crisis (which…

Abstract

Purpose: This study examines whether changes in environmental and funding uncertainty during the first three years after the outbreak of the global financial crisis (which we presume to have increased significantly) are associated with changes in cost system design and intensity of use.

Design/methodology/approach: A dataset of survey responses from 56 Dutch municipalities is used for the empirical analyses. In the questionnaire, a senior-level financial manager reflected on the changes that he or she had perceived during the three years prior to the study (which was conducted at the end of 2010).

Findings: The results show that during these years, on average, ­environmental and funding uncertainty have indeed significantly increased, whereas cost system design and intensity of use have shown little change. The results further indicate that change in environmental uncertainty is positively related to changes in cost system complexity and cost system inclusiveness for activities and/or programs, whereas change in funding uncertainty is positively related to change in cost system intensity of use for product costing purposes. Also, change in cost system complexity is positively related to changes in cost system intensity of use for both operational control and product costing purposes.

Originality/value: Whereas previous large-scale research tends to focus on how the level of cost system design and/or intensity of use characteristics is related to the level of contextual factors, this study focuses on how changes in cost system design and intensity of use characteristics are related to changes in contextual factors. Also distinctive is that this study focuses on local government organizations experiencing a fiscal crisis.

To view the access options for this content please click here
Article
Publication date: 3 February 2020

Pankaj Dutta and Himanshu Shrivastava

This paper aims to design an optimal supply chain network and to develop a suitable distribution planning under uncertainty for perishable product's supply chain. The…

Abstract

Purpose

This paper aims to design an optimal supply chain network and to develop a suitable distribution planning under uncertainty for perishable product's supply chain. The ultimate goal is to help in making decisions under uncertain environments.

Design/methodology/approach

In this paper, stochastic programming is used under conditions of demand, supply and process uncertainties, and a non-linear mathematical model is developed for perishable product’s supply chain. Authors’ study considers disruptions in transportation routes and also within the facilities and investigates optimal facility location and shipment decisions while minimising the total supply chain cost. A scenario-based approach is used to model these disruptions. The retailer level uncertainty due to demand-supply mismatch is handled by incorporating the newsvendor model into the last echelon of supply chain network. In this paper, two policies are proposed for making decisions under uncertain environments. In the first one, the expected cost of the supply chain is minimised. To also consider the risk behaviour of the decision maker, authors propose the second policy through a conditional value-at-risk approach.

Findings

Authors discuss the model output through various examples that are provided via a case study from the milk industry. The supply chain design and planning of the disruption-free model are different from those of the resilient model.

Practical implications

Authors’ research benefits the perishable products industries which encounter the disruption problems in their transportation routes as well as in the facilities. Authors have demonstrated the research through a real-life case in a milk industry.

Originality/value

The major contribution of authors’ work is the design of the supply chain network under disruption risks by incorporating aspects of product perishability. This work provides insight into areas such as the simultaneous consideration of demand, supply and process uncertainties. The amalgamation of newsvendor model and the approximation of the non-linearity of retailer level cost function especially in the context of supply chain under uncertainty is the first of its kind. We provide a comprehensive statistical study of uncertainties that are present in the supply chain in a unique manner.

To view the access options for this content please click here
Article
Publication date: 6 June 2016

Lei Guo, Huimin Li, Peng Li and Chengyi Zhang

The purpose of this paper is to find how those uncertainty factors influence transaction costs generated and to identify ways to minimize the transaction costs borne by…

Abstract

Purpose

The purpose of this paper is to find how those uncertainty factors influence transaction costs generated and to identify ways to minimize the transaction costs borne by the construction owner.

Design/methodology/approach

The literature indicates that there is no consensus on a standard definition of transaction costs in the construction industry. A detailed literature review of research work on transaction costs in construction is conducted in order to identify the determinants of transaction costs in construction projects. A structural equation model is tested on data collected by means of a survey administered to construction owners.

Findings

The findings indicate that the transaction costs borne by the owner can be minimized if the owner minimizes the uncertainties inherent in the construction project by making sure the engineering design is as complete as possible before bids are sought from contractors; harmonious relationships between project participants; fair risk allocation; have experience in similar type projects; and contractor selection practices that routinely detect irregular behavior.

Research limitations/implications

The data used in this research are primarily based on the experiences of public owners and the markets in which they operate; a larger representation of private owners could make the conclusions more general. Another limitation of the study is that it relies on a survey of opinions rather than actual records of costs and other hard data.

Practical implications

No empirical study has ever been conducted of transaction-related issues in the construction industry because of the lack of a common understanding of transaction cost. This paper provides the groundwork for such a study.

Originality/value

This paper attempts to reconcile the many determinants of transaction costs in construction projects under uncertainty considered by different researchers in a multitude of research studies.

Details

Kybernetes, vol. 45 no. 6
Type: Research Article
ISSN: 0368-492X

Keywords

To view the access options for this content please click here
Article
Publication date: 24 September 2019

Farman Afzal, Shao Yunfei, Mubasher Nazir and Saad Mahmood Bhatti

In the past decades, artificial intelligence (AI)-based hybrid methods have been increasingly applied in construction risk management practices. The purpose of this paper…

Abstract

Purpose

In the past decades, artificial intelligence (AI)-based hybrid methods have been increasingly applied in construction risk management practices. The purpose of this paper is to review and compile the current AI methods used for cost-risk assessment in the construction management domain in order to capture complexity and risk interdependencies under high uncertainty.

Design/methodology/approach

This paper makes a content analysis, based on a comprehensive literature review of articles published in high-quality journals from the years 2008 to 2018. Fuzzy hybrid methods, such as fuzzy-analytical network processing, fuzzy-artificial neural network and fuzzy-simulation, have been widely used and dominated in the literature due to their ability to measure the complexity and uncertainty of the system.

Findings

The findings of this review article suggest that due to the limitation of subjective risk data and complex computation, the applications of these AI methods are limited in order to address cost overrun issues under high uncertainty. It is suggested that a hybrid approach of fuzzy logic and extended form of Bayesian belief network (BBN) can be applied in cost-risk assessment to better capture complexity-risk interdependencies under uncertainty.

Research limitations/implications

This study only focuses on the subjective risk assessment methods applied in construction management to overcome cost overrun problem. Therefore, future research can be extended to interpret the input data required to deal with uncertainties, rather than relying solely on subjective judgments in risk assessment analysis.

Practical implications

These results may assist in the management of cost overrun while addressing complexity and uncertainty to avoid chaos in a project. In addition, project managers, experts and practitioners should address the interrelationship between key complexity and risk factors in order to plan risk impact on project cost. The proposed hybrid method of fuzzy logic and BBN can better support the management implications in recent construction risk management practice.

Originality/value

This study addresses the applications of AI-based methods in complex construction projects. A proposed hybrid approach could better address the complexity-risk interdependencies which increase cost uncertainty in project.

Details

International Journal of Managing Projects in Business, vol. 14 no. 2
Type: Research Article
ISSN: 1753-8378

Keywords

To view the access options for this content please click here
Article
Publication date: 14 October 2014

John Ahmet Erkoyuncu, Rajkumar Roy, Essam Shehab and Elmar Kutsch

In the light of challenges experienced in cost estimation at the bidding stage of complex engineering services in the defence industry (e.g. contracting for availability)…

Abstract

Purpose

In the light of challenges experienced in cost estimation at the bidding stage of complex engineering services in the defence industry (e.g. contracting for availability), the purpose of this paper is to present a framework to manage the influence of uncertainty on cost estimates.

Design/methodology/approach

The research applied the Soft Systems Methodology and benefitted from interaction with four major organisations in the defence industry through document sharing, semi-structured interviews, workshops, and case studies.

Findings

The framework is composed of seven stages to plan, identify, prioritise, classify, and manage cost uncertainties. Through the validation of three case studies some of the key benefits of the framework were realised in project planning, uncertainty visualisation, and capability management.

Research limitations/implications

The research has been applied in the defence sector in the UK and focuses on the bidding stage. Further research needs to be applied to confirm that the findings are applicable across industries and across the life cycle.

Originality/value

The paper builds on the theory behind risk and uncertainty management and proposes an innovative framework that avoids the assumption of “perfect” knowledge by raising questions about the validity of the input data.

To view the access options for this content please click here
Article
Publication date: 4 October 2019

Seyed Jafar Sadjadi, Zahra Ziaei and Mir Saman Pishvaee

This study aims to design a proper supply chain network for the vaccine industry in Iran, which considers several features such as uncertainties in demands and cost

Abstract

Purpose

This study aims to design a proper supply chain network for the vaccine industry in Iran, which considers several features such as uncertainties in demands and cost, perishability of vaccines, wastages in storage, limited capacity and different priorities for demands.

Design/methodology/approach

This study presents a mixed-integer linear programming (MILP) model and using a robust counterpart approach for coping with uncertainties of model.

Findings

The presented robust model in comparison with the deterministic model has a better performance and is more reliable for network design of vaccine supply chain.

Originality/value

This study considers uncertainty in the network design of vaccine supply chain for the first time in the vaccine context It presents an MILP model where strategic decisions for each echelon and tactical decisions among different echelons of supply chain are determined. Further, it models the difference between high- and low-priority demands for vaccine.

To view the access options for this content please click here
Article
Publication date: 20 July 2015

Önder Ökmen and Ahmet Öztaş

Actual costs frequently deviate from the estimated costs in either favorable or adverse direction in construction projects. Conventional cost evaluation methods do not…

Abstract

Purpose

Actual costs frequently deviate from the estimated costs in either favorable or adverse direction in construction projects. Conventional cost evaluation methods do not take the uncertainty and correlation effects into account. In this regard, a simulation-based cost risk analysis model, the Correlated Cost Risk Analysis Model, previously has been proposed to evaluate the uncertainty effect on construction costs in case of correlated costs and correlated risk-factors. The purpose of this paper is to introduce the detailed evaluation of the Cost Risk Analysis Model through scenario and sensitivity analyses.

Design/methodology/approach

The evaluation process consists of three scenarios with three sensitivity analyses in each and 28 simulations in total. During applications, the model’s important parameter called the mean proportion coefficient is modified and the user-dependent variables like the risk-factor influence degrees are changed to observe the response of the model to these modifications and to examine the indirect, two-sided and qualitative correlation capturing algorithm of the model. Monte Carlo Simulation is also applied on the same data to compare the results.

Findings

The findings have shown that the Correlated Cost Risk Analysis Model is capable of capturing the correlation between the costs and between the risk-factors, and operates in accordance with the theoretical expectancies.

Originality/value

Correlated Cost Risk Analysis Model can be preferred as a reliable and practical method by the professionals of the construction sector thanks to its detailed evaluation introduced in this paper.

Details

Engineering, Construction and Architectural Management, vol. 22 no. 4
Type: Research Article
ISSN: 0969-9988

Keywords

To view the access options for this content please click here
Article
Publication date: 8 October 2018

Adel Alshibani and Mohammad A. Hassanain

The purpose of this paper is to introduce a new general approach for estimating the maintenance cost of constructed facilities. The proposed approach consists of four…

Abstract

Purpose

The purpose of this paper is to introduce a new general approach for estimating the maintenance cost of constructed facilities. The proposed approach consists of four components, including: facility work breakdown structure; historical maintenance cost and cost contingency data of actual completed projects; feedback obtained from the post-occupancy evaluation (POE); and fuzzy set theory (FST) to define the uncertainty associated with the maintenance cost and cost contingency as an alternative approach to simulation.

Design/methodology/approach

Literature review of the existing methods used for estimating maintenance cost of constructed facilities was conducted to highlight the limitations of the existing methods and models. The paper then introduced a new approach in which the results obtained from POE are integrated with the estimator’s judgment in estimating maintenance cost of constructed facility. As a proof of concept, the developed approach is tested on a private school facility in the city of Khobar, Saudi Arabia. The application of the proposed approach in this case project demonstrates its applicability and features in comparison with the existing practice.

Findings

The application of the developed approach on a school case project demonstrated that the developed approach can provide a reliable facility maintenance cost estimate, narrow the uncertainties and vagueness associated with the estimated cost, and provide the estimator with the necessary information to conduct risk analysis with less effort, less computations and less complexity comparing with that provided by complex simulation. The results also showed that integrating POE in the estimating process can provide more accurate cost estimate with high level of confidence.

Originality/value

The paper presents a new approach for estimating facility maintenance cost. The developed approach introduced a new concept that assists maintenance contractors in preparing facility maintenance estimate with improved accuracy while satisfying the facility user’s needs. The proposed approach integrates the estimator’s judgment with POE to model the uncertainties associated with cost using FST as an alternative approach for complex simulation.

Details

Journal of Quality in Maintenance Engineering, vol. 24 no. 4
Type: Research Article
ISSN: 1355-2511

Keywords

To view the access options for this content please click here
Article
Publication date: 9 May 2016

Xinming He, Zhibin Lin and Yingqi Wei

This paper aims to provide a transaction cost analysis (TCA) perspective to exporting firms' selection of foreign markets and the performance consequences of this…

Abstract

Purpose

This paper aims to provide a transaction cost analysis (TCA) perspective to exporting firms' selection of foreign markets and the performance consequences of this international market selection (IMS) decision. This paper proposes a conceptual framework that hypothesizes the relationship between transaction cost factors, IMS and export performance.

Design/methodology/approach

This paper tests the proposed framework with a database of Chinese manufacturing firms using regression models and controlling for possible endogeneity. The endogeneity issue may arise due to IMS being influenced by unobserved industrial/firm attributes.

Findings

The results show that transaction cost factors are able to explain IMS. Furthermore, firms whose decisions have incorporated transaction cost factors perform significantly better than their rivals.

Research limitations/implications

Understanding transaction costs helps decision-makers formulate more efficient IMS strategy to achieve superior export performance. Future research on IMS may examine “passive exporting”, i.e. exporting initiated by overseas buyers, consider the role of institutional distance and use other approaches toward cultural distance-based IMS.

Originality/value

This study adds a new theoretical underpinning for IMS by developing a framework based on TCA, and thus broadens the applications of TCA into IMS. Our empirical results support this extension.

Details

European Journal of Marketing, vol. 50 no. 5/6
Type: Research Article
ISSN: 0309-0566

Keywords

1 – 10 of over 58000