Location via proxy:   [ UP ]  
[Report a bug]   [Manage cookies]                
Logo PTI Logo FedCSIS

Proceedings of the 19th Conference on Computer Science and Intelligence Systems (FedCSIS)

Annals of Computer Science and Information Systems, Volume 39

Real options analysis framework for agile projects

DOI: http://dx.doi.org/10.15439/2024F8169

Citation: Proceedings of the 19th Conference on Computer Science and Intelligence Systems (FedCSIS), M. Bolanowski, M. Ganzha, L. Maciaszek, M. Paprzycki, D. Ślęzak (eds). ACSIS, Vol. 39, pages 429–441 ()

Full text

Abstract. The literature proves that agile projects have a higher success rate in stakeholder satisfaction and overall success than projects managed with a plan-driven methodology such as waterfall. However, there is little corresponding literature and explanations that success extends to the target benefits. This study identifies the mechanisms---actions, decisions, or entities---that enable agile and plan-driven projects to deliver target benefits. It uses Real Options Analysis to quantify and model the differences between project methods and builds a management decision-making framework. The framework includes real option types, mechanisms, and locations; project roles and processes; risk scores and failure rates; a computational model; and a binomial tree for visual analysis. The study contributes a novel framework to the project management literature on agile projects and benefits realization.

References

  1. O. Zwikael, Y.-Y. Chih, and J. R. Meredith, “Project benefit management: Setting effective target benefits,” International Journal of Project Management, vol. 36, no. 4, pp. 650–658, 2018.
  2. C. Marnewick and A. L. Marnewick, “Benefits realisation in an agile environment,” International Journal of Project Management, vol. 40, no. 4, pp. 454–465, 2022.
  3. P. Serrador and J. K. Pinto, “Does agile work? — a quantitative analysis of agile project success,” International Journal of Project Management, vol. 33, no. 5, pp. 1040–1051, 2015.
  4. A. Gemino, B. Horner Reich, and P. M. Serrador, “Agile, traditional, and hybrid approaches to project success: Is hybrid a poor second choice?” Project Management Journal, vol. 52, no. 2, pp. 161–175, 2021.
  5. R. A. Lundin and A. Söderholm, “A theory of temporary organization,” Scandinavian Journal of Management, vol. 11, no. 4, pp. 437–455, 1995.
  6. K. Beck, M. Beedle, A. v. Bennekum, A. Cockburn, W. Cunningham, M. Fowler, J. Grenning, J. Highsmith, A. Hunt, R. Jeffries, J. Kern, B. Marick, R. C. Martin, S. Mellor, K. Schwaber, J. Sutherland, and D. Thomas, “Manifesto for agile software development,” Dec 2001.
  7. J. Binder, L. I. V. Aillaud, and L. Schilli, “The project management cocktail model: An approach for balancing agile and ISO 21500,” Procedia Social and Behavioral Sciences, vol. 119, pp. 182–191, 2014.
  8. D. F. Rico, “What is the roi of agile vs. traditional methods? an analysis of xp, tdd, pair programming, and scrum (using real options),” unpublished, 2008.
  9. T. Mikaelian, D. J. Nightingale, D. H. Rhodes, and D. E. Hastings, “Real options in enterprise architecture: A holistic mapping of mechanisms and types for uncertainty management,” IEEE Transactions on Engineering Management, vol. 58, no. 3, pp. 457–470, 2011.
  10. R. Gunther McGrath and A. Nerkar, “Real options reasoning and a new look at the R&D investment strategies of pharmaceutical firms,” Strategic Management Journal, vol. 25, no. 1, pp. 1–21, 2004.
  11. APM, “APM body of knowledge seventh edition,” 2019.
  12. T. Cooke-Davies, “The “real” success factors on projects,” International Journal of Project Management, vol. 20, no. 3, pp. 185–190, 2002.
  13. R. J. Turner, “Projects for shareholder value the influence of projects at different financial ratios,” in 29th Annual Project Management Institute 1998 Seminars & Symposium. Project Management Instiatue, 1998, Conference Proceedings.
  14. P. Serrador and R. Turner, “The relationship between project success and project efficiency,” Project Management Journal, vol. 46, no. 1, pp. 30–39, 2015.
  15. R. Joslin and R. Müller, “The impact of project methodologies on project success in different project environments,” International Journal of Managing Projects in Business, vol. 9, no. 2, pp. 364–388, 2016.
  16. PMI, A Guide to the Project Management Body of Knowledge (PMBOK® Guide)—Seventh Edition. Newtown Square, PA: Project Management Institute, 2021.
  17. H. Erdogmus and J. Favaro, “Keep your options open: Extreme programming and the economics of flexibility,” in Giancario Succi, James Donovan Wells and Laurie Williams, "Extreme Programming Perspectives", Addison Wesley, 2002, 2002, Conference Paper.
  18. Y. Shastri, R. Hoda, and R. Amor, “Does the ’project manager’ still exist in agile software development projects?” in 2016 23rd Asia-Pacific Software Engineering Conference (APSEC), Hamilton, New Zealand, 2016, Conference Paper, pp. 57–64.
  19. A. Tiwana, M. Keil, and R. G. Fichman, “Information systems project continuation in escalation situations: A real options model,” Decision Sciences, vol. 37, no. 3, pp. 357–391, 2006.
  20. P. Kodukula and C. Papudesu, Project valuation using real options: A practitioner’s guide. J. Ross Publishing, 2006.
  21. R. G. Fichman, M. Keil, and A. Tiwana, “Beyond valuation:“options thinking” in IT project management,” California Management Review, vol. 47, no. 2, pp. 74–96, 2005.
  22. M. Benaroch and J. Goldstein, “An integrative economic optimization approach to systems development risk management,” IEEE Transactions on Software Engineering, vol. 35, no. 5, pp. 638–653, 2009.
  23. F. D. Maddaloni, G. Favato, and R. Vecchiato, “Whether and when to invest in transportation projects: Combining scenarios and real options to manage the uncertainty of costs and benefits,” IEEE Transactions on Engineering Management, pp. 1–15, 2022.
  24. J. L. Wellman, “Project valuation using real options: A practioner’s guide,” Project Management Journal, vol. 37, no. 5, p. 116, 2006.
  25. T. Chen, J. Zhang, and K.-K. Lai, “An integrated real options evaluating model for information technology projects under multiple risks,” International Journal of Project Management, vol. 27, no. 8, pp. 776–786, 2009.
  26. I. Krystallis, G. Locatelli, and N. Murtagh, “Talking about futureproofing: Real options reasoning in complex infrastructure projects,” IEEE Transactions on Engineering Management, pp. 1–14, 2020.
  27. C.-H. Wang and K. J. Min, “Electric power generation planning for interrelated projects: a real options approach,” IEEE Transactions on Engineering Management, vol. 53, no. 2, pp. 312–322, 2006.
  28. A. Jahanshahi Asghar and A. Brem, “Does real options reasoning support or oppose project performance? empirical evidence from electronic commerce projects,” Project Management Journal, vol. 48, no. 4, pp. 39–54, 2017.
  29. Z. Racheva, M. Daneva, and L. Buglione, “Complementing measurements and real options concepts to support inter-iteration decision-making in agile projects,” in 2008 34th Euromicro Conference Software Engineering and Advanced Applications, 2008, Conference Proceedings, pp. 457–464.
  30. T. Wang and R. de Neufville, “Identification of real options ’in’ projects,” in Systems Sciences, vol. 16, 2005, Conference Proceedings, pp. 1124–1133.
  31. H. Erdogmus, “Valuation of learning options in software development under private and market risk,” The Engineering Economist, vol. 47, 2002.
  32. ISO, “ISO 21502: 2020-12 project, programme and portfolio management — guidance on project management,” 2020.
  33. G. J. Miller, Framework for Project Management in Agile Projects: A Quantitative Study, ser. Information Technology for Management: Current Research and Future Directions. Springer International Publishing, 2020.
  34. The Stationery Office, “Managing successful projects with PRINCE2,” 2017.
  35. P. Eskerod and M. Huemann, “Sustainable development and project stakeholder management: What standards say,” International Journal of Managing Projects in Business, vol. 6, no. 1, p. 36–50, 2013.
  36. M. Neumann, “The integrated list of agile practices — a tertiary study,” in Lean and Agile Software Development, A. Przybyłek, A. Jarzębowicz, I. Luković, and Y. Y. Ng, Eds. Springer International Publishing, 2022, Conference Proceedings, pp. 19–37.
  37. A. Appari and M. Benaroch, “Monetary pricing of software development risks: A method and empirical illustration,” Journal of Systems and Software, vol. 83, no. 11, pp. 2098–2107, 2010.
  38. H. Alahyari, R. Berntsson Svensson, and T. Gorschek, “A study of value in agile software development organizations,” Journal of Systems and Software, vol. 125, pp. 271–288, 2017.
  39. M. Montajabiha, K. Alireza Arshadi, and B. AfsharNadjafi, “A robust algorithm for project portfolio selection problem using real options valuation,” International Journal of Managing Projects in Business, vol. 10, no. 2, pp. 386–403, 2017.
  40. B. Wachnik, Moral Hazard in IT Project Completion. An Analysis of Supplier and Client Behavior in Polish and German Enterprises, ser. Information Technology for Management. Cham: Springer, 2016, vol. 243, pp. 77–90.
  41. H. Delerue and H. Sicotte, “Resource interdependence and project termination: An analysis in the biopharmaceutical industry,” International Journal of Project Management, vol. 38, no. 5, pp. 256–266, 2020.
  42. M. Vaculík, A. Lorenz, N. Roijakkers, and W. Vanhaverbeke, “Pulling the plug? investigating firm-level drivers of innovation project termination,” IEEE Transactions on Engineering Management, vol. 66, no. 2, pp. 180–192, 2019.
  43. J. Schmidt, “IT project failure, termination and the marginal cost trap,” Journal of Modern Project Management, vol. 10, pp. 255–275, 2022.
  44. W. Xiong and Y. Han, “Incentives of early termination compensation in public–private partnership projects,” IEEE Transactions on Engineering Management, pp. 1–13, 2021.
  45. C. Y. Baldwin and K. B. Clark, “Managing in an age of modularity,” Harvard Business Review, vol. 75, no. 5, pp. 84–93, Sep/Oct 1997, copyright - Copyright Harvard Business Review Sep/Oct 1997 Last updated - 2015-11-06.
  46. E. J. de Waard and E.-H. Kramer, “Tailored task forces: Temporary organizations and modularity,” International Journal of Project Management, vol. 26, no. 5, pp. 537–546, 2008.
  47. R. N. Langlois, “Modularity in technology and organization,” Journal of Economic Behavior & Organization, vol. 49, no. 1, pp. 19–37, 2002.
  48. G. Lizarralde, M. d. Blois, and I. Latunova, “Structuring of temporary multi-organizations: Contingency theory in the building sector,” Project Management Journal, vol. 42, no. 4, pp. 19–36, 2011.
  49. H. A. Simon, “The architecture of complexity,” Proceedings of the American philosophical society, vol. 106, no. 6, pp. 467–482, 1962.
  50. J. K. Liker, D. K. Sobek, A. C. Ward, and J. J. Cristiano, “Involving suppliers in product development in the United States and Japan: evidence for set-based concurrent engineering,” IEEE Transactions on Engineering Management, vol. 43, no. 2, pp. 165–178, 1996.
  51. E. Ziemba and I. Kolasa, “Risk factors relationships for information systems projects – insight from polish public organizations,” in Information Technology for Management. Lecture Notes in Business Information Processing, E. Ziemba, Ed., vol. 243. Cham: Springer, 2016, Book Section, pp. 55–76.