Embedded strategic flexibility may have a significant impact on the net worth of a software development project. Disregarding the additional value of flexibility may make a project look less attractive than it actually is. In this position paper we show how strategic flexibility in software projects can be valued in a practical and methodical manner using the concept of real options. The valuat...

Recent research efforts in options pricing have shown that real options approaches are more appropriate for R&D project valuation because they account for the value of managerial flexibility to react to arising contingencies during R&D development. This technique allows for strategic decision-making in the context of hedging opportunities present in the financial markets by tracking the uncerta...

Value-based IT portfolio management requires the consideration of intertemporal interdependencies that may exist among IT projects. Therefore, several papers suggest adopting the real options approach in order to include intertemporal interdependencies within the valuation of IT projects. However, this paper shows that the standard Black-Scholes model, which is often used for valuating real opt...

In a project that has been funded by the German Ministery of Research and Technology (BMFT) fundamental questions of noise valuation have been addressed by an interdisciplinary research consortium. The aim of the project was to provide knowledge that will lead to a new, binaural and aurally-adequate measurement technique which can especially be used for the valuation of the effects of noise for...

The rationale for using NPV for project evaluation appears weaker than ever. Authoritative texts in attempting to extend NPV by the inclusion of options, strategy and games far from enriching the model present evermore loosely argued rationales that are becoming contradictory. A brief review helps to understand how this state of affairs has arisen and how future analysis might develop. As an ad...

Real option valuation has traditionally been concerned with investment under project value uncertainty while assuming the agent has perfect confidence in a specific model. However, agents do not generally have perfect confidence in their model and this model uncertainty affects their decisions. In this work, we introduce a simple model for real option valuation to account for the agent’s aversi...

The precise estimation of the time effort of the project is one of the key limits of its success. One of the ways how to achieve a correct valuation of the project is developing of a detailed analysis, which output is a structured solution that uses use cases. This paper focuses on developing a methodology for estimating working time effort of the project for one particular company. An importan...

In the literature it is suggested that the number of protest responses can depend on the valuation method. Choice Experiments (CE) are said to generate a lower number of protest responses than Contingent Valuation (CV). In a project about forest biodiversity both CE and CV were used and protest beliefs of all respondents irrespective of their willingness to pay determined. According to our anal...