REAL OPTIONS AND REAL ENGINEERING PROJECTS

摘要

Real options are the valuation of flexibility in future choices. However, much of the literature focuses on the mathematical details of how to use real options without taking the time to ask whether key characteristics of engineering projects have been recognized in developing the data that is used. In addition, many papers contrast real options analysis with a simple NPV analysis with deterministic data and no options. Since engineering economic analysis has long included decision trees, sensitivity analysis, simulation, and other tools; the key question is what does real options analysis add to this toolbox. This foundation is used to outline what constraints real engineering projects place on the flexibility represented by real options. This suggests when real options provide real value to decision-making and how they can best be used.