TY - JOUR
T1 - Fuzzy present value analysis model for evaluating information system projects
AU - Omitaomu, Olufemi A.
AU - Badiru, Adedeji
PY - 2007/4
Y1 - 2007/4
N2 - In this article, the economic evaluation of information system projects using present value is analyzed based on triangular fuzzy numbers. Information system projects usually have numerous uncertainties and several conditions of risk that make their economic evaluation a challenging task. Each year, several information system projects are cancelled before completion as a result of budget overruns at a cost of several billions of dollars to industry. Although engineering economic analysis offers tools and techniques for evaluating risky projects, the tools are not enough to place information system projects on a safe budget/selection track. There is a need for an integrative economic analysis model that will account for the uncertainties in estimating project costs, benefits, and useful lives of uncertain and risky projects. In this study, we propose an approximate method of computing project present value using the concept of fuzzy modeling with special reference to information system projects. This proposed model has the potential of enhancing the project selection process by capturing a better economic picture of the project alternatives. The proposed methodology can also be used for other real-life projects with high degree of uncertainty and risk.
AB - In this article, the economic evaluation of information system projects using present value is analyzed based on triangular fuzzy numbers. Information system projects usually have numerous uncertainties and several conditions of risk that make their economic evaluation a challenging task. Each year, several information system projects are cancelled before completion as a result of budget overruns at a cost of several billions of dollars to industry. Although engineering economic analysis offers tools and techniques for evaluating risky projects, the tools are not enough to place information system projects on a safe budget/selection track. There is a need for an integrative economic analysis model that will account for the uncertainties in estimating project costs, benefits, and useful lives of uncertain and risky projects. In this study, we propose an approximate method of computing project present value using the concept of fuzzy modeling with special reference to information system projects. This proposed model has the potential of enhancing the project selection process by capturing a better economic picture of the project alternatives. The proposed methodology can also be used for other real-life projects with high degree of uncertainty and risk.
UR - http://www.scopus.com/inward/record.url?scp=34250205977&partnerID=8YFLogxK
U2 - 10.1080/00137910701328912
DO - 10.1080/00137910701328912
M3 - Article
AN - SCOPUS:34250205977
SN - 0013-791X
VL - 52
SP - 157
EP - 178
JO - Engineering Economist
JF - Engineering Economist
IS - 2
ER -