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Control process development on the ground of project value dynamics laws

Author

Listed:
  • Bugrov Olexander

    (Kyiv National University of Construction and Architecture)

  • Bugrova Olena

    (National University of «Kyiv-Mohyla Academy»)

Abstract

The object of research is a conceptual approach to the process of controlling the dynamics of the financial and economic efficiency of a construction project as a result of engineering has been developed. Acceleration of scientific and technological progress underlines the relevance of this topic. It is established that the theory of the project value dynamics is based on three laws. The first law of the project value dynamics emphasizes that a qualitative, dynamic growth of value occurs only through innovation or rationalization, and the rest of the design changes is static. Charts of isovalue demonstrate the potential state of the financial and economic performance of the project in the four-dimensional space «time-benefits-costs-risks». Each subsequent line of isovalue, which runs farther from the origin, reflects a higher level of intense project value. The second law of value dynamics indicates that entropy is gradually decreasing as a result of the project. Thus, the earlier engineering sessions take place (within the project life cycle) for introducing innovations, the higher the potential for influencing the dynamics of the project value. The third law of the project value dynamics provides that the absolute maximum value cannot be achieved. So, innovation, unlike other factors of financial and economic growth, is an inexhaustible source of increasing the value of projects. The change in the «benefit-cost ratio» (BCR) adequately reflects the project value dynamics. This indicator clearly takes into account all four factors (measurements) of project effectiveness and captures precisely dynamic, qualitative changes in value. BCR is very similar to the definition of value, which is used in functional value and hierarchical analysis. This promotes mutual understanding and convergence in communications between project stakeholders (in the integrated Crystal model, value management). The process of controlling the project value dynamics directs the work of the engineering team to achieve project results that are best suited to the interests of investors, subject to a careful attitude to nature.

Suggested Citation

  • Bugrov Olexander & Bugrova Olena, 2020. "Control process development on the ground of project value dynamics laws," Technology audit and production reserves, Socionet;Technology audit and production reserves, vol. 2(4(52)), pages 11-19.
  • Handle: RePEc:nos:ddldem:26
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    File URL: http://journals.uran.ua/tarp/article/view/200995
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    References listed on IDEAS

    as
    1. Iurii Bazhal, 2017. "The Political Economy of Innovation Development," Springer Books, Springer, number 978-3-319-54852-4, June.
    2. Cruz Rambaud, Salvador & Sánchez Pérez, Ana María, 2017. "The option to expand a project: its assessment with the binomial options pricing model," Operations Research Perspectives, Elsevier, vol. 4(C), pages 12-20.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    project value; benefit-cost ratio; cash flow; value dynamics; isovalue;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation

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