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Duong, T B A, Pham, T, Truong, Q H, Nguyen, K, Pham, C H, Hoang, T and Pham, T H (2023) Risk in sustainable construction supply chains: construct development and measurement validation. Construction Management and Economics, 41(08), 634–50.

Huang, Y and Lin, T (2023) Compound deferrable options for the valuation of multi-stage infrastructure investment projects. Construction Management and Economics, 41(08), 670–86.

  • Type: Journal Article
  • Keywords: Real option; option to defer; compound option; project valuation; multi-stage investment;
  • ISBN/ISSN: 0144-6193
  • URL: https://doi.org/10.1080/01446193.2023.2190993
  • Abstract:
    Multi-stage planning is common for expanding infrastructure complexes or networks. Previous real-option studies developed a sequential compound call option (SCCO) for evaluating multi-stage infrastructure investment projects, including evaluating abandonment options during individual pre-scheduled investment stages. In practice, however, investment schedules involve risk and uncertainties forcing investors to change plans, raising an important issue regarding investors having more options at each commencement date. This study introduces a new model, the sequential compound deferrable call option (SCDCO), incorporating deferment options for each fold in an n-fold setting and generalizing the exercise of each deferment option into mn periods. A closed-form solution to the valuation of SCDCO is derived accordingly. A real-world case demonstrates that introducing deferment options increases project value, but the marginal benefit of increasing deferment time diminishes. The presence of dedicated assets for the usage of future expansions can also increase project value, but this increase is restricted by deferment options. Furthermore, the investment cost growth with an increase of deferment time rapidly decreases project value and vice versa. Inflation or deflation is therefore important to consider in deferment decisions. Finally, although deferment options only produce limited project value, they have the flexibility to manage risks, changes, and budgetary constraints.

Moradi, S and Sormunen, P (2023) Revisiting the concept of waste and its causes in construction from analytical and conceptual perspectives. Construction Management and Economics, 41(08), 621–33.

Rajala, P, Ylä-Kujala, A, Sinkkonen, T and Kärri, T (2023) Building renovation business: the effects of specialization on profitability. Construction Management and Economics, 41(08), 687–702.

Rosander, L and Kadefors, A (2023) Implementing relational contracting in a public client organization: the influence of policy clashes, resources and project autonomy. Construction Management and Economics, 41(08), 651–69.