IDEAS home Printed from https://ideas.repec.org/a/ids/ijelfi/v1y2006i1p68-93.html
   My bibliography  Save this article

Real-world real options: a powerful decision technology tool for managing risk and flexibility in capital investment projects

Author

Listed:
  • Sameer Kumar
  • Lisa Turner

Abstract

Traditional methods of capital investment project evaluation do not provide the flexibility for strategic decision making on new business ventures. However, real options tools encourage proactive strategic management and, when used properly, can significantly improve decision making in regard to capital investments. Historical perspective on the use of real options is presented and a summary of available tools for invoking this approach. Three examples of real-life capital-intensive high-risk new business ventures in the Architecture, Engineering, Construction (AEC) and Real Estate Development industries are chosen to show how real options can be used to more accurately determine the value of flexibility on projects.

Suggested Citation

  • Sameer Kumar & Lisa Turner, 2006. "Real-world real options: a powerful decision technology tool for managing risk and flexibility in capital investment projects," International Journal of Electronic Finance, Inderscience Enterprises Ltd, vol. 1(1), pages 68-93.
    • Handle: RePEc:ids:ijelfi:v:1:y:2006:i:1:p:68-93
    as

    Download full text from publisher

    File URL: http://www.inderscience.com/link.php?id=8838
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ids:ijelfi:v:1:y:2006:i:1:p:68-93. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sarah Parker (email available below). General contact details of provider: http://www.inderscience.com/browse/index.php?journalID=171 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.