A financial market entry decision model for international construction business using real option analysis and Monte Carlo simulation

Du Yon Kim, Seung Heon Han, Baabak Ashuri

Research output: Chapter in Book/Report/Conference proceedingConference contribution

1 Citation (Scopus)

Abstract

Recent trends in the international construction markets indicate a growing number of projects that require a long-term investment strategy on the part of a construction firm. Therefore, this changing market environment calls for businesses to shift their paradigm from individual projects with limited decision-making tasks to projects with long-term investments and complex decision-making issues. The majority of the latest studies on international market entry address decision-making models based on risk analysis. When a contractor ventures into foreign markets, the consideration of various financial circumstances that he faces poses certain inevitable limitations. Therefore, this study developed a model that is based on real option analysis and Monte Carlo simulation, and is capable of incorporating uncertainties in the market during the evaluation of the market development proposal and the financial evaluation. The model allows for integrative consideration of both market risk and private risk. Applying the proposed model is believed to offer reasonable support to construction firms with maximum accommodation of each market's circumstances.

Original languageEnglish
Title of host publicationConstruction Research Congress 2010
Subtitle of host publicationInnovation for Reshaping Construction Practice - Proceedings of the 2010 Construction Research Congress
Pages1307-1315
Number of pages9
DOIs
Publication statusPublished - 2010 Sep 10
EventConstruction Research Congress 2010: Innovation for Reshaping Construction Practice - Banff, AB, Canada
Duration: 2010 May 82010 May 10

Publication series

NameConstruction Research Congress 2010: Innovation for Reshaping Construction Practice - Proceedings of the 2010 Construction Research Congress

Other

OtherConstruction Research Congress 2010: Innovation for Reshaping Construction Practice
CountryCanada
CityBanff, AB
Period10/5/810/5/10

Fingerprint

Decision making
Industry
Risk analysis
Contractors
Monte Carlo simulation
Financial markets
Uncertainty

All Science Journal Classification (ASJC) codes

  • Civil and Structural Engineering
  • Safety, Risk, Reliability and Quality
  • Building and Construction

Cite this

Kim, D. Y., Han, S. H., & Ashuri, B. (2010). A financial market entry decision model for international construction business using real option analysis and Monte Carlo simulation. In Construction Research Congress 2010: Innovation for Reshaping Construction Practice - Proceedings of the 2010 Construction Research Congress (pp. 1307-1315). (Construction Research Congress 2010: Innovation for Reshaping Construction Practice - Proceedings of the 2010 Construction Research Congress). https://doi.org/10.1061/41109(373)131
Kim, Du Yon ; Han, Seung Heon ; Ashuri, Baabak. / A financial market entry decision model for international construction business using real option analysis and Monte Carlo simulation. Construction Research Congress 2010: Innovation for Reshaping Construction Practice - Proceedings of the 2010 Construction Research Congress. 2010. pp. 1307-1315 (Construction Research Congress 2010: Innovation for Reshaping Construction Practice - Proceedings of the 2010 Construction Research Congress).
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Kim, DY, Han, SH & Ashuri, B 2010, A financial market entry decision model for international construction business using real option analysis and Monte Carlo simulation. in Construction Research Congress 2010: Innovation for Reshaping Construction Practice - Proceedings of the 2010 Construction Research Congress. Construction Research Congress 2010: Innovation for Reshaping Construction Practice - Proceedings of the 2010 Construction Research Congress, pp. 1307-1315, Construction Research Congress 2010: Innovation for Reshaping Construction Practice, Banff, AB, Canada, 10/5/8. https://doi.org/10.1061/41109(373)131

A financial market entry decision model for international construction business using real option analysis and Monte Carlo simulation. / Kim, Du Yon; Han, Seung Heon; Ashuri, Baabak.

Construction Research Congress 2010: Innovation for Reshaping Construction Practice - Proceedings of the 2010 Construction Research Congress. 2010. p. 1307-1315 (Construction Research Congress 2010: Innovation for Reshaping Construction Practice - Proceedings of the 2010 Construction Research Congress).

Research output: Chapter in Book/Report/Conference proceedingConference contribution

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Kim DY, Han SH, Ashuri B. A financial market entry decision model for international construction business using real option analysis and Monte Carlo simulation. In Construction Research Congress 2010: Innovation for Reshaping Construction Practice - Proceedings of the 2010 Construction Research Congress. 2010. p. 1307-1315. (Construction Research Congress 2010: Innovation for Reshaping Construction Practice - Proceedings of the 2010 Construction Research Congress). https://doi.org/10.1061/41109(373)131