Improving Project Selection Using Expected Net Present Value Analysis

Flaig, John J.

doi:10.1080/08982110500250990

Cited by 14 publications

(9 citation statements)

References 1 publication

Supporting

Mentioning

Contrasting

Order By: Relevance

“…However, reported existing methodologies rarely mention about it. Flaig (2005) argued that classical net present value (NPV) approach falls short of capturing some of the project's major effects in process improvement including quality and yield rate. Also, probability of completion is not considered in classical NPV.…”

Section: Discussionmentioning

confidence: 99%

“…Loo (2002) included effective scope management as a critical success factor. Flaig (2005) and Knill (2000) noted that a project's effects on adjacent business processes should be considered in its evaluation although this aspect is widely ignored in practice. Because supply chain projects typically contain multiple interdependent business processes, cross-impact documentation is imperative.…”

Section: Useful Practices In Scm Project Selectionmentioning

confidence: 98%

“…Risks should be quantified and prioritized. Flaig (2005) discussed importance of including probabilities of accruing benefits and incurring costs based on project risk in a modified NPV analysis. A number of other studies also mention about the significance of considering risk in project evaluation (Ringuest et al 2000;Badri et al 2001;Kulak et al 2005;Lawson et al 2006).…”

Section: Useful Practices In Scm Project Selectionmentioning

confidence: 99%

See 2 more Smart Citations

The selection of supply chain management projects: A case study approach

Mathieu

Pal

2011

Oper Manag Res

View full text Add to dashboard Cite

Organizations undertake strategic supply chain initiatives through project implementation. However, selecting the right supply chain projects can be difficult due to high levels of organizational risk and technical complexity. Although the literature is rich in quantitative and qualitative methods for project management, prior research into best management practices specific to supply chain management (SCM) project selection is limited. This paper examines the methods used in evaluating and selecting SCM projects used by the management at three publically held multinational organizations. The primary objective of this research is to identify a set of generalizable good practices in the selection and evaluation of SCM projects. Nine useful business practices in SCM project selection have been identified based on cross-case comparisons and a close examination of the literature. Eight practices had been previously identified, but were scattered throughout the literature on ERP, IT management, and R&D management. A new practice calls for the consideration of supply chain partners' return-on-investment (ROI) in the project selection process. Highest preference should be given to winwin projects for the organization and its partner(s). The practices identified here sho`uld provide the foundation of practical guidelines that can be used during the planning stage of SCM projects. This paper reduces the knowledge gap in SCM project management by analyzing organizations with significant supply chain experience and synthesizing these results with the current related literature.

show abstract

Section: Discussionmentioning

confidence: 99%

Section: Useful Practices In Scm Project Selectionmentioning

confidence: 98%

Section: Useful Practices In Scm Project Selectionmentioning

confidence: 99%

See 1 more Smart Citation

The selection of supply chain management projects: A case study approach

Mathieu

Pal

2011

Oper Manag Res

View full text Add to dashboard Cite

show abstract

“…Effectively, all cash inflows and outflows are discounted for presentation at a fixed point in time. The use of NPV in projects has been widely addressed and reported in the literature (Flaig 2005;Mullen and Donnelly 2006). The NPV method evaluates the present value of estimated future cash flows on the assumption that future benefits are subject to a discount factor that takes into account the cost of money and project risk.…”

Section: Quantitative Project Evaluation Methodsmentioning

confidence: 98%

Evaluation Methods for Hospital Projects

2010

View full text Add to dashboard Cite

The authors report the findings of a survey of hospital managers on the utilization of various project selection and evaluation methodologies. The focus of the analysis was the empirical relationship between a portfolio of project evaluation(1) methods actually utilized for a given project and several measures of perceived project success. The analysis revealed that cost-benefit analysis and top management support were the two project evaluation methods used most often by the hospital managers. The authors' empirical assessment provides evidence that top management support is associated with overall project success.

show abstract

“…a widely recognized metric that combines the revenue, cost, and time value drivers with the associated risks of getting to market and reflects the risk-adjusted NPV. [30][31][32][33][34][35][36][37][38] ENPV is assessed by considering each possible path (ie, failing at different points in development or achieving regulatory approval) and estimating for each path taken ( Figure 1). The present value of the costs and revenues (or just costs if failure occurs before launch) for each path is multiplied by the probability of that path occurring.…”

Section: Intangiblesmentioning

confidence: 99%

Assessing the Financial Value of Patient Engagement: A Quantitative Approach from CTTI’s Patient Groups and Clinical Trials Project

Levitan

Getz²,

Eisenstein

et al. 2018

Ther Innov Regul Sci

122

104

View full text Add to dashboard Cite

Background:While patient groups, regulators, and sponsors are increasingly considering engaging with patients in the design and conduct of clinical development programs, sponsors are often reluctant to go beyond pilot programs because of uncertainty in the return on investment. We developed an approach to estimate the financial value of patient engagement.Methods:Expected net present value (ENPV) is a common technique that integrates the key business drivers of cost, time, revenue, and risk into a summary metric for project strategy and portfolio decisions. We assessed the impact of patient engagement on ENPV for a typical oncology development program entering phase 2 or phase 3.Results:For a pre–phase 2 project, the cumulative impact of a patient engagement activity that avoids one protocol amendment and improves enrollment, adherence, and retention is an increase in net present value (NPV) of $62MM ($65MM for pre–phase 3) and an increase in ENPV of $35MM ($75MM for pre–phase 3). Compared with an investment of $100,000 in patient engagement, the NPV and ENPV increases can exceed 500-fold the investment. This ENPV increase is the equivalent of accelerating a pre–phase 2 product launch by 2½ years (1½ years for pre–phase 3).Conclusions:Risk-adjusted financial models can assess the impact of patient engagement. A combination of empirical data and subjective parameter estimates shows that engagement activities with the potential to avoid protocol amendments and/or improve enrollment, adherence, and retention may add considerable financial value. This approach can help sponsors assess patient engagement investment decisions.

show abstract

Improving Project Selection Using Expected Net Present Value Analysis

Cited by 14 publications

References 1 publication

The selection of supply chain management projects: A case study approach

The selection of supply chain management projects: A case study approach

Evaluation Methods for Hospital Projects

Assessing the Financial Value of Patient Engagement: A Quantitative Approach from CTTI’s Patient Groups and Clinical Trials Project

Contact Info

Product

Resources

About