Analyzing the Barriers Influencing the Application of Real Options in the Construction Industry

Andalib, Mohammad Saied; Tavakolan, Mehdi; Gatmiri, Behrouz

doi:10.1061/9780784479827.182

Cited by 3 publications

(1 citation statement)

References 33 publications

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“…Meanwhile, it is not clear whether or not RED appraisers and other stakeholders (especially in emerging economies) have adequate knowledge of this method. Moreover, in developed markets where the appraisers appear to be aware of ROA, there is a low level of adoption (Andalib et al, 2016). This perhaps may still be the result of an inadequate level of knowledge regarding the inherent advantages of the ROA .…”

Section: Introductionmentioning

confidence: 99%

Management of Uncertainty in Real Estate Development Appraisals: A Literature Review

Ayodele

Olaleye²

2018

JARER

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This paper provides an in-depth examination of various concepts related to the forms and sources of uncertainty, as well as the management of uncertainty in real estate development (RED). The study also examines factors influencing the adoption of Real Option Analysis (ROA) in RED given the need to improve the knowledge of stakeholders in RED appraisal, and to ensure best practices. Based on desktop analysis of past authors' perspectives, orientations and submissions regarding the management of uncertainty in RED appraisal, the findings reveal that while there are varying forms and sources of uncertainty in RED appraisals, there are also diverse methods used to manage the uncertainty of it. It is, however, noted that the methods employed are dependent on RED appraisers and other institutional factors. The consensus from previous studies favours ROA in managing uncertainty in RED. This paper adds to the debate for the need to embrace ROA in managing the effects of uncertainty in RED appraisal.

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Section: Introductionmentioning

confidence: 99%

Management of Uncertainty in Real Estate Development Appraisals: A Literature Review

Ayodele

Olaleye²

2018

JARER

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Factors influencing the adoption of real option analysis in RED appraisal: an emergent market perspective

Ayodele

2019

International Journal of Construction Management

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A novel stochastic modeling framework for coal production and logistics through options pricing analysis

Alfeus

Collins

2023

Financ Innov

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We propose a novel stochastic modeling framework for coal production and logistics using option pricing theory. The problem of valuing the inherent real optionality a coal producer has when mining and processing thermal coal is modelled as pricing spread options of three assets under the stochastic volatility model. We derive a three-dimensional Fast Fourier Transform (“FFT”) lower bound approximation to value the inherent real optionality and for robustness check, we compare the semi-analytical pricing accuracy with the Monte Carlo simulation. Model parameters are estimated from the historical monthly data, and stochastic volatility parameters are obtained by matching the Kurtosis of the low-ash diff data to the Kurtosis of the stochastic volatility process which is assumed to follow Cox–Ingersoll–Ross (“CIR”) model.

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Analyzing the Barriers Influencing the Application of Real Options in the Construction Industry

Cited by 3 publications

References 33 publications

Management of Uncertainty in Real Estate Development Appraisals: A Literature Review

Management of Uncertainty in Real Estate Development Appraisals: A Literature Review

Factors influencing the adoption of real option analysis in RED appraisal: an emergent market perspective

A novel stochastic modeling framework for coal production and logistics through options pricing analysis

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