Major projects optimal capacity and timing with time-to-build and investment cost dependency on capacity
by Skander Ben Abdallah; Alexandre Croutzet; Janosch Ortmann
International Journal of Applied Decision Sciences (IJADS), Vol. 13, No. 4, 2020

Abstract: This paper acknowledges the dependency of the project schedule, known also as the time-to-build, on the project capacity and proposes a real options model to determine the project optimal capacity, timing and value. In particular, we show that the dependency of the time-to-build on the capacity implies that the optimal capacity depends on the project time-to-build even in the waiting region. We also show that a greater sensitivity of the time-to-build to project capacity leads to a lower optimal capacity. Moreover, as the underperformance of major projects in terms of costs and schedule is frequent, we quantify the loss associated with the late completion of a major project. By doing so, we provide practitioners with a tool to evaluate the expected losses associated with project underperformance consistent with the reality of major projects.

Online publication date: Mon, 26-Oct-2020

The full text of this article is only available to individual subscribers or to users at subscribing institutions.

Existing subscribers:
Go to Inderscience Online Journals to access the Full Text of this article.

Pay per view:
If you are not a subscriber and you just want to read the full contents of this article, buy online access here.

Complimentary Subscribers, Editors or Members of the Editorial Board of the International Journal of Applied Decision Sciences (IJADS):
Login with your Inderscience username and password:

    Username:        Password:         

Forgotten your password?

Want to subscribe?
A subscription gives you complete access to all articles in the current issue, as well as to all articles in the previous three years (where applicable). See our Orders page to subscribe.

If you still need assistance, please email