Effective Decision-Making in Project Based Environments: A Reflection of Best Practices

Effective Decision-Making in Project Based Environments: A Reflection of Best Practices

Copyright: © 2018 |Pages: 13
DOI: 10.4018/IJAIE.2018010103
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Effective decision-making requires economic analysis to be beneficial in a project environment. Producing effective economic decisions is based on various factors and methods, including payback period (PBP), internal rate of return (IRR), and net present value (NPV). Once projects are identified, a managerial team can begin the financial process of determining whether the project should be accepted. The team should use one of the mentioned tools. By analyzing past research, it is concluded that NPV is a vital tool that leads to the most effective project evaluation. NPV, in comparison to PBP and IRR, provides more realistic and effective value with little marginal error. This article illustrates the superiority of NPV by presenting evidence from existing research, scenarios, limitations, and future direction to use this tool in economic decision-making.
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2. Research Methodology

This literature review process was comprised of two major steps (Svejvig and Andersen, 2015). The first was less structured and required uncovering useful knowledge including inputs from economic decision-making in project management and other areas. The second part was the structured review process that required the use of databases and specific search strings. Furthermore, as part of the second part, we had to scan the table of contents for two journals pertaining directly to the field being studied.

2.1. Part 1: Explorative and Unstructured Literature Review

Since the study yearns to rethink economic decision-making in project management, the first part required searching for publications about economic decision-making (Winter et al., 2006b). We uncovered many pertinent research fields, including project management (Bradley, 2010; Breese, 2012; Ward and Daniel, 2012), business value of economic decision-making (Kohli and Grover, 2008; Schryen, 2012), business and organization value (Smyrk and Zwikael, 2011; Zwikael and Smyrk, 2012), and project success and economic decision-making (Andersen, 2014; Andersen et al., 2006; Atkinson, 1999; Shenhar et al., 2001). We identified 41 relevant journal articles and 6 books in this part. We then used the keywords found in each of the 47 total publications to be incorporated into search terms for the second part, the structured review process.

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