Project Reversibility Measurement to Manage 'Adoption-Waiting' Decisions

Rapid technological change is ever more characterizing today's markets and business decisions. Such a situation is to afford with complex tools not always available to all firms. This holds true, especially as far as Small and Medium Enterprises (SMEs) are concerned. Traditional and consolidated techniques are based on financial methods and tend to consider projects and investments as “objects” distinct from the organizations undertaking them. Furthermore, on the practical side, such formal and elegant tools encounter many difficulties in the various implementation steps due to natural environments where their methodological origin is rooted. Considering these constraints, we propose a simple algorithm to analyze, model and quantify “adoption-waiting” decisions to integrate and support traditional methods. The model - very recently published in project management literature as a general tool by the author also with an application real case - is substantially based on widespread and well-known accounting measures. This aspect allows an easy adoption and implementation by any kind of organization in order to tailor investment decisions to its own situation. The aim is pursued by the calculation of a firm's specific reversibility rate able to improve effectiveness of planning processes within project cost management knowledge area