Thiele, Brett James (2024) A financial decision support tool for improved project and portfolio profit performance in project-based organisations. PhD thesis, University of New South Wales, Australia.
Abstract
Small and Medium-sized Enterprises who are also project-based organisations (SME-PBOs) from the construction industry are overrepresented in insolvency statistics, primarily due to high levels of financial risk within the sector and poor financial management. This research introduces a Financial Decision Support Tool (FDST) which approximates the accrued position of a project portfolio in near real-time. The FDST reduces financial management risk to construction-based SME-PBOs by providing a conservative view of available funds for use outside of the current portfolio, in other portfolios, programs or at the enterprise level.The FDST represents a whole-of-business approach to improving financial returns from projects. It borrows and simplifies key principles of Project Portfolio Management (PPM), Earned Value Management (EVM) and International Financial Reporting Standards (IFRS) to approximate the monthly accrued position and time-phase forecast portfolio profit margins across the forward months. In developing the FDST a practical and holistic method is presented for standardising project budgets, collecting and attributing field data, measuring progress, forecasting costs, recognising entitled revenue and time-phasing forecast profit margins. This thesis makes the following contributions to the project management literature, and they form the technical chapters of this thesis.1. A real project portfolio dataset is introduced providing 40,927 individual records across 18 projects delivered as a true portfolio, utilising a homogeneous set of resources, both consumable and nonconsumable, which are inter-related in a highly complex and multi-dimensional manner across the study period. The dataset also includes revenue information, a first for the literature.2. A method is developed for standardising Project Portfolio Process through the introduction of a standardised Portfolio Work Breakdown Structure (PWBS). Using the PWBS, actual improvements in portfolio performance are quantified using empirical methods for the first time in the literature.3. The Normalised Project Management Baseline (NPMB) is introduced as a method of real-time error identification in project performance metrics and therefore their associated index-based cost, duration, and profit margin forecasts.4. The FDST is introduced which combines and simplifies the industry-recognised methods of EVM and IFRS 15, usually reserved for larger enterprises, to approximate the accrued portfolio position.The approximate accrued position of the FDST is shown to provide sound, conservative financial information when compared to final actual portfolio profit margins and the cash-based methods traditionally used by SME-PBOs. The use of the FDST by SME-PBOs to inform financial management decisions at the portfolio or business level is a simple way to reduce the risk of over committing the business financially or entering negative cash management scenarios.
| Item Type: | Thesis (Doctoral) |
|---|---|
| Thesis advisor: | Abbasi, Alireza and Ryan, Michael |
| Uncontrolled Keywords: | decision support; duration; earned value management; financial management; financial reporting; forecasting; insolvency; project performance; small and medium-sized enterprises; standards; value management |
| Index terms: | financial reporting, program, dataset, decision support, insolvency, profit, project-based organization, revenue, earned value management, project performance, value management, project management, statistics, construction industry, duration, forecasting, portfolio management, financial management |
| Subjects: | economic analysis, organization, liability law, financial and cost management, prediction and forecasting, mathematical modelling, control systems, project controls, data management, decision analysis, industry analysis, management, software systems, project management theory and practice |
| Topics: | Legal Issues, Value Management, Project Management, Risk Management, Digital Applications, Organizational Design, Time Control, Business Strategy, Cost Management, Research Practice |
| Descriptive scope: | 4 PCTA |
N.B. Descriptive scope is a count of how many of the five facets of empirical research are indicated by the words used in title, abstract and keywords. It is not intended as a judgement on the research; merely a count of the kind of word we would expect to indicate Phenomenon, Concepts, Theoretical framing, Empirical techniques, Analytical techniques. If all five are present, then a code of “5 PCTEA” will indicate this. If you feel the coding for this record is questionable, we welcome discussion around the terms we matched or the way we categorized them. The facet you would expect may not be coded, or a facet may be coded inappropriately. This can also bear on a larger question, of which facets should be treated as defining in construction management research. Please get in touch, and we will look at it. More details here