An assessment of various approaches for evaluating project strategic benefits Recommending the strategic index

An assessment of various approaches for evaluating project strategic benefits Recommending the... Capital projects can be complex and offer strategical benefits that are difficult to quantify in financial terms and, as a result, are often left out of the appraisal process altogether. This paper highlights the inadequacy of the financial appraisal models to capture many of these strategic benefits, and reviews various approaches and strategic models currently used in practice. It argues the case for the adoption of a management team approach, focusing on judgmental values, to the identification and evaluation of a project's strategic benefits. The paper concludes by looking at the strategic index (SI) which was developed to identify and evaluate project strategic benefits. The procedure to arrive at the SI has been designed to extract “accurate” judgmental values and to formalise, in a structured way, what would otherwise be an unstructured and complex problem, linking project selection to business strategy. This procedure, to some extent, adopts a “systems thinking” type of process of inquiry, making use of experience‐based knowledge. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Management Decision Emerald Publishing

An assessment of various approaches for evaluating project strategic benefits Recommending the strategic index

Management Decision, Volume 42 (7): 13 – Aug 1, 2004

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Publisher
Emerald Publishing
Copyright
Copyright © 2004 Emerald Group Publishing Limited. All rights reserved.
ISSN
0025-1747
DOI
10.1108/00251740410550925
Publisher site
See Article on Publisher Site

Abstract

Capital projects can be complex and offer strategical benefits that are difficult to quantify in financial terms and, as a result, are often left out of the appraisal process altogether. This paper highlights the inadequacy of the financial appraisal models to capture many of these strategic benefits, and reviews various approaches and strategic models currently used in practice. It argues the case for the adoption of a management team approach, focusing on judgmental values, to the identification and evaluation of a project's strategic benefits. The paper concludes by looking at the strategic index (SI) which was developed to identify and evaluate project strategic benefits. The procedure to arrive at the SI has been designed to extract “accurate” judgmental values and to formalise, in a structured way, what would otherwise be an unstructured and complex problem, linking project selection to business strategy. This procedure, to some extent, adopts a “systems thinking” type of process of inquiry, making use of experience‐based knowledge.

Journal

Management DecisionEmerald Publishing

Published: Aug 1, 2004

Keywords: Investment appraisal; Corporate strategy; Capital projects

References

  • Issues arising from surveys of management accounting practice
    Drury, C.; Tayles, M.
  • Strategic awareness within top management teams
    Hambrick, D.C.
  • The financial appraisal profile (FAP) model of investment appraisal
    Lefley, F.

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