Project Valuation Using Real Options: A Practitioner's Guide [Hardcover]

Prasad Kodukula (Author), Chandra Papudesu (Author)

Book Description

ISBN-10: 1932159436 | ISBN-13: 978-1932159431 | Publication Date: July 10, 2006

"To invest or not to invest?" Business leaders frequently are faced with this question on new and ongoing projects. The challenge lies in deciding what projects to choose, expand, contract, defer, or abandon. The project valuation tools used in this process are vital to making the right decisions. Traditional tools such as discounted cash flow/net present value assume a "fixed" path ahead. But real world projects face uncertainties, forcing you to change the path often. This book introduces a more practical approach to project valuation known as real options analysis. Derived from options theory in modern finance, this approach is based on the Nobel Prize–winning work of three MIT economists.

Project Valuation Using Real Options provides a systematic approach to project valuation that will enable you to minimize investment risks, exercise flexibility in decision making, and maximize returns.

Key Features

• Discusses why traditional valuation methods such as discounted cash flow, net present value and decision tree analysis are not sufficient in today's uncertain world
• Explains the real options approach in a step-by-step manner which is easily understood and does not require an extensive financial background on the part of the reader
• Shows you how to make the correct investment decisions, achieve strategic alignment of projects, increase project flexibility, and sustain competitive advantage
• Presents multiple scenarios and real world examples from technology, telecommunications, pharmaceuticals, and other industries to illustrate success stories, challenges, and the true value of real options analysis
• WAV offers free downloadable assessment tools and solutions to problems presented in the book — available from the Web Added Value™ Download Resource Center

Editorial Reviews

Review

"This book is an important addition to the current literature on project valuation tools — a must read!" --Steven C. Rollins, Chairman, PMI Metrics SIG and President, ALLPMO Network

About the Author

Dr. Prasad Kodukula, PMP, is an award-winning educator, accomplished engineer, author, and inventor with 20 years of professional experience. Dr. Kodukula is co-founder and president of Constant Compliance, Inc., a Chicago-based technology company that specializes in developing and commercializing environmental and homeland defense technologies. His clients include 15 of the Fortune 100 companies and the U.S. government. He has managed many research/development and engineering projects and project teams while working as a senior project manager at a multi-national engineering consulting firm and a global chemical company. He is a contributing author on four books and has co-authored two books and more than 40 technical articles.

Mr. Chandra Papudesu, M.S., is a senior project manager involved in directing complex software implementation projects and new business development at a software development company. His professional experience includes both financial and real options and he has developed a trading application aimed at the energy trading market and spreadsheet models to calculate real options. Mr. Papudesu has degrees from the Indian Institute of Technology and Massachusetts Institute of Technology.

Product Details

• Hardcover: 256 pages
• Publisher: J. Ross Publishing (July 10, 2006)
• Language: English
• ISBN-10: 1932159436
• ISBN-13: 978-1932159431
• Product Dimensions: 9 x 6.3 x 0.8 inches
• Shipping Weight: 1.2 pounds (View shipping rates and policies)
• Average Customer Review: 4.4 out of 5 stars  See all reviews (7 customer reviews)
• Amazon Best Sellers Rank: #1,023,295 in Books (See Top 100 in Books)

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Customer Reviews

Most Helpful Customer Reviews

9 of 10 people found the following review helpful:

5.0 out of 5 stars Picking a Project that adds Value, October 26, 2006

By 

Lee Lambert "PMP1" (Columbus) - See all my reviews
(REAL NAME)   

This review is from: Project Valuation Using Real Options: A Practitioner's Guide (Hardcover)

This is the book for those serious about improving project selection results. This is the only book of its kind for today's project management professional. Finally, I feel I understand how to use this unique approach to evaluate all the options available in selecting projects that will significantly contribute to an organization's bottom line.

Lee R. Lambert, A Founder of PMP

3 of 4 people found the following review helpful:

5.0 out of 5 stars Valuable guide for managers, February 28, 2008

By 

Charles R. Stack MPH - See all my reviews
(REAL NAME)   

This review is from: Project Valuation Using Real Options: A Practitioner's Guide (Hardcover)

Dr. Kodukula and his associate have written a concise, understandable and interesting book discussing project valuation. I routinely recommend this book to my associates and students, and higly recommend it for students in the MBA tract.

4 of 6 people found the following review helpful:

5.0 out of 5 stars Real options analysis made simple, October 8, 2007

By 

Natesa G. Sabapathy - See all my reviews
(REAL NAME)   

This review is from: Project Valuation Using Real Options: A Practitioner's Guide (Hardcover)

Starting with an introduction to the real options analysis the authors take us through the traditional project valuations tools (which is a bonus) to the process used to value projects using real options analysis, on the way explaining the methods and computational techniques employed to solve real option problems and how real options analysis supplements the traditional tools.

The detailed solutions provided for the various examples using ample figures and tables really help in understanding the application of real options analysis technique to project valuation.

This book will be of great help to corporate executives, senior managers, portfolio, program and project managers who want to go beyond the application of traditional tools of project valuation, searching for newer techniques.