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Application of Duration Measure in Quantifying the Sensitivity of Project Returns to Changes in Discount Rates

Author

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  • Vahidreza Yousefi

    (University of Tehran, 1417466191 Tehran, Iran)

  • Siamak Haji Yakhchali

    (University of Tehran, 1417466191 Tehran, Iran
    These authors contributed equally to this work.)

  • Jolanta Tamošaitienė

    (Faculty of Civil Engineering, Vilnius Gediminas Technical University, Saulėtekio al. 11, LT-10223 Vilnius, Lithuania
    These authors contributed equally to this work.)

Abstract

In this research, the concept of Duration with a new application in project management has been defined. The Duration of each project provides the project manager with a combined measure containing concepts of return, cost and time of the project. Further in this article, the changes in project return, based on different assumptions such as discount rate, have been examined. To examine the effect of the changes in these factors, the Monte Carlo simulation has been used. The relationship between these factors is nonlinear which reflects the great importance of investment on appropriate risk management systems. The data from a set of construction projects have been used in order to verify the results of this study. Similar relationships can be expected to exist in other industries as well.

Suggested Citation

  • Vahidreza Yousefi & Siamak Haji Yakhchali & Jolanta Tamošaitienė, 2019. "Application of Duration Measure in Quantifying the Sensitivity of Project Returns to Changes in Discount Rates," Administrative Sciences, MDPI, vol. 9(1), pages 1-14, February.
    • Handle: RePEc:gam:jadmsc:v:9:y:2019:i:1:p:13-:d:202879
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    Cited by:

    1. Jolanta Tamošaitienė & Vahidreza Yousefi & Hamed Tabasi, 2021. "Project Portfolio Construction Using Extreme Value Theory," Sustainability, MDPI, vol. 13(2), pages 1-13, January.

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