The Korea Spatial Planning Review 2023 KCI Impact Factor : 1.2
-
pISSN : 1229-8638
- https://journal.kci.go.kr/krihs
KJCKorea
Journal Central
Financial Feasibility Analysis of Project Finance Considering Strategic Decision-making
- The Korea Spatial Planning Review
- 2009, 61(), pp.25-39
- DOI : 10.15793/kspr.2009.61..002
- Publisher : 국토연구원
- Research Area :
Jun Jae Bum 1, Kim, Sungil 2
1국토연구원 건설경제전략센터
2국토연구원
Accredited
ABSTRACT
Many countries in the world have attracted private participation, in providing infrastructures, to overcome limited funds and reduce risks involved in those projects. And, project finance is considered effective to accomplish this public-private partnerships. In general, there exist lots of complicated uncertainties in project finance due to long-term concession and huge project size. Among these uncertainties, the strategic decision-making of investment time delay has been problematic, even if it seems to have an impact on project value, because traditional capital budgeting theory, NPV analysis, fails to assess its contingency. Therefore, the purpose of this paper is to provide a theoretical framework in evaluating this strategic decision-making in project finance. To understand the impact of time delay on project value, real option framework based on financial option pricing theory is applied. In turn, the quantitative value of time delay obtained by real option framework is compared and analyzed with that of NPV analysis. At last, because the value of strategic decision-making appears significant against project value, it needs to be taken into account when implementing financial feasibility analysis.
Statistics
-
369 Viewed
-
170 Downloaded
Tools
Issue List
Citation status
* References for papers published after 2023 are currently being built.
[book]
Amram,M.
/ 1999
/ Real Options: Managing Strategic Investment in an Uncertain World
/ Harvard Business School Press
[book]
Augenblick, M
/ 1990
/ The Build, Operate and Transfer(“BOT”) Approach to Infrastructure Projects in Developing Countries
/ The World Bank
[journal]
Black,F.
/ 1973
/ The Pricing of Options and Corporate Liabilities
/ Journal of Political Economy
/ Univ. of Chicago
81
: 637~654
[book]
Boer,F.P
/ 2003
/ Risk-Adjusted Valuation of R&D Projects
/ Research Technology Management Sep
: 50~58
[journal]
Boyle,P.P
/ 1988
/ A Lattice Framework for Option Pricing with Two State Variables
/ Journal of Financial and Quantitative Analysis
/ Univ.of Washington
23
: 1~12
[journal]
Brennan,M.J.
/ 1978
/ Finite Difference Methods and Jump Processes Arising in the Pricing of Contingent Claims:A Synthesis
/ Journal of Financial and Quantitative Analysis
/ Univ.of Washington
13
: 461~474
[book]
Brigham,E.F.
/ 2004
/ Fundamentals of Financial Management
/ Thomson South-Western
[journal]
Cox,J.C.,
/ 1979
/ Option Pricing:A Simplified Approach
/ Journal of Financial Economics
/ Univ.of Rochester
7
: 229~263
[journal]
Dias Jr.A.
/ 1995
/ Debt Capacity and Optimal Capital Structure for Privately Financed infrastructure Projects
/ Journal of Construction Engineering and Management
/ American Society of Civil Engineers
121
: 404~414
[book]
Dixit,A.K.
/ 1994
/ Investment under Uncertainty.Princeton,
/ Princeton Univ.Press
[book]
Hull, J
/ 1997
/ Options, Futures, and Other Derivatives. 3rd ed
/ Prentice Hall
[journal]
Hull,J.
/ 1990
/ Valuing Derivative Securities Using the Explicit Finite Difference Method
/ Journal of Financial and Quantitative Analysis
/ Univ. of Washington
25(1)
: 87~100
[book]
Insley,M.C.
/ 2006
/ Contrasting Two Approaches in Real Options Valuation-Contingent Claims versus Dynamic Programming
/ Univ. of Waterloo.
[thesis]
Jun,Jae Bum
/ 2008
/ Valuation of Governmental Guarantee in BOT Project Finance with Real Option Analysis
/ 박사
/ A&M Univ.
[other]
Jun,Jae Bum
/ 2008
/ Valuation of Governmental Guarantee in BOT Infrastructure Project with Real Option Analysis
/ ACSP-AESP Joint Congress. ACSP-AESP Joint Conference. Marriott Hotel, Chicago,
[journal]
Leviӓkangas,P
/ 2002
/ Profitability Evaluation of Intelligent Transport System Investments
/ Journal of Transportation Engineering
/ American Society of Civil Engineers
128(3)
: 276~286
[journal]
Luehrman,T
/ 1997
/ What’s it Worth? A General Managers Guide to Valuation
/ Harvard Business Review
/ Harvard Business Publishing
75(3)
: 132~142
[journal]
Mello,A.S.
/ 2003
/ Real Options with Market Risks and Private Risks
/ Journal of Applied Corporate Finance
/ Financial Management Association
15(2)
: 89~101
[book]
Meredith,J.R.
/ 1995
/ Project Management: A Managerial Approach
/ John Wiley & Sons, Inc.
[journal]
Miller,L.T
/ 2002
/ Decision Making under Uncertainty-Real Options to the Rescue
/ The Engineering Economist
/ American Society for Engineering Education
47(2)
: 105~150
[book]
Moon,J
/ 2002
/ Real Options Analysis: Tools and Techniques for Valuing Strategic Investments and Decision
/ John Wiley & Sons.
[book]
Myers,S.C
/ 1976
/ Using Simulation for Risk Analysis in Modern Developments in Financial Management
/ Dryden Press
[journal]
Myers,S.C
/ 1977
/ Determinants of Corporate Borrowing
/ Journal of Financial Economics
/ Univ. of Rochester
5
: 147~175
[journal]
Myers,S.C
/ 1984
/ Finance Theory and Financial Strategy
/ Interfaces
/ Informs
14(1)
: 126~137
[journal]
Ng,F.P.,
/ 2004
/ Valuing a Price Cap Contract for Material Procurement as a Real Option
/ Construction Management and Economics
/ Taylor & Francis, Books and Journals
22(2)
: 141~150
[journal]
Park,C.S.
/ 2000
/ Exploiting Uncertainty-Investment Opportunities as Real Options: A New Way of Thinking in Engineering Economics
/ The Engineering Economist
/ American Society for Engineering Education
45(1)
: 1~36
[journal]
Pindyck,R.S
/ 1991
/ Irreversibility, Uncertainty, and Investment
/ Journal of Economic Literature
/ American Economic Association
29(3)
: 11120~1148
[other]
Sick,G
/ 1990
/ Capital Budgeting with Real Options. Monograph Series in Finance and Economics
/ Salomon Brothers Center for the Study of Financial Institutions, Stern School of Business, New York Univ
[journal]
Smith,J.E.
/ 1998
/ Valuing Oil Properties: Integrating Option Pricing and Decision Analysis Approaches
/ Operations Research.
/ Informs
46(2)
: 198~217
[journal]
Tiong,R.L.K.,
/ 1992
/ Critical Success Factors in Winning BOT Contracts
/ Journal of Construction Engineering and Management.
/ American Society of Civil Engineers
118
: 217~228
[journal]
Tiong,R.L.K
/ 1995
/ Impact of Financial Package versus Technical Solution in a BOT Tender
/ Journal of Construction Engineering and Management
/ American Society of Civil Engineers
121
: 304~311
[journal]
Tiong,R.L.K
/ 1997
/ Final Negotiation in Competitive BOT Tender
/ Journal of Construction Engineering and Management.
/ American Society of Civil Engineers
123
: 6~10
[book]
Trigeorgis,L
/ 1999
/ Real Options-Managerial Flexibility and Strategy in Resource Allocation
/ The MIT Press.
[book]
Walker,C.
/ 1995
/ Privatized Infrastructure–The BOT Approach
/ Thomas Telford.
[other]
Wey,L
/ 1993
/ Effects of Mean-Reversion on the Valuation of Offshore Oil Reserves and Optimal Investment Rules
/ Massachusetts Institute of Technology.
[journal]
Yao,J.
/ 2003
/ Combining Real Options and Decision Tree: An Integrative Approach for Project Investment Decisions and Risk Management
/ The Journal of Structured and Project Finance Fall.
/ Institutional Investor, Inc. Journals Group
: 53~59
[journal]
Ye,S.and Tiong,R.L.K
/ 2000
/ NPV-at-risk Method in Infrastructure Project Investment Evaluation
/ Journal of Construction Engineering and Management
/ American Society of Civil Engineers
126(3)
: 227~233
[journal]
Zhang,X
/ 2005
/ Critical Success Factors for Public–private Partnerships in Infrastructure Development
/ Journal of Construction Engineering and Management
/ American Society of Civil Engineers
131(1)
: 3~14