Generating software-project investment policies in an uncertain environment

This paper presents a method for the identification of an investment policy that allows managers to make better decisions during the execution of projects with managerial flexibility. Moreover, it shows that introducing managerial flexibility brings an increase in the project value while maintaining the risk of financial loss under an acceptable level. The case study presented in the paper demonstrates that the result obtained using a flexible investment policy can be substantially different from the one obtained with an inflexible plan, which are so common in todaypsilas software projects, even when allowing for uncertain cash flows.