Title: Integrated method for assessing and planning uncertain technology investments

Authors: Joao Claro, Richard De Neufville, Samir Mikati, Raffaella Turatto, Nicola De Blasio

Addresses: Faculdade de Engenharia da Universidade do Porto, Rua Dr. Roberto Frias, s/n, 4200-465 Porto, Portugal. ' Engineering Systems Division, MIT Room E40-245, Massachusetts Institute of Technology, Cambridge, MA 02139, USA. ' Bain & Company Middle East, Inc., Media One Tower, Level 35, P.O. Box 502810, Dubai, United Arab Emirates. ' eni SpA, Piazza Marcello Boldrini 1, 20097 San Donato Milanese (Milano) Italy. ' eni SpA, Piazza Marcello Boldrini 1, 20097 San Donato Milanese (Milano) Italy

Abstract: We propose a method for assessment and planning of uncertain technology investments, in the context of corporate venture capital. It addresses three main issues. It is an integrated approach that starts from the technology, and proceeds to exhaustively cover the entire process that precedes valuation; it explicitly supports the identification of synergies between parent corporation and technology venture; it provides an improved treatment of uncertainty, adopting a broader view on the identification of uncertainty and sources of managerial flexibility, and starting to address it sooner, in the opportunity development phase. It is facilitated by a suite of practical tools. We provide a detailed description of the method and demonstrate its application with an illustrative case study.

Keywords: technology investment; uncertainty; corporate venture capital; project assessment; project planning; managerial flexibility; options thinking; opportunity development; entrepreneurship; engineering economics; uncertain investments.

DOI: 10.1504/IJEME.2010.034598

International Journal of Engineering Management and Economics, 2010 Vol.1 No.1, pp.3 - 30

Available online: 12 Aug 2010 *

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