MDH researchers study the accuracy of investment calculations

1.2 million SEK for Economics research at MDH

Jan 29, 2013 | Research/Cooperation

Mälardalen University has received 1.2 million SEK in research funding from Ragnar Söderberg’s Foundation. The grant will go towards investigating why certain investment projects differ greatly between budget and outcome and what consequences it can entail.

Esbjörn Segelod, Professor of Business Administration at Mälardalen University, is Project Manager of the research project “Systematic deviations between forecast and outcome and their consequences for the assessment of investments”. The project is one of the winning projects that have been granted research funding from Ragnar Söderberg’s Foundation.

Investment calculations can be more or less accurate, but it is not just coincidence that decides whether there will be large or small differences between budget and outcome. Previous research has shown, for example, that differences are generally bigger for small investments and during a longer setting-up period.

- In other words there is a systematic approach for how budget and outcome differ. This is important to understand to be able to make good calculations. But underestimating the real costs and problems does not just have negative effects. A lot of investments would never be carried out and a lot of new companies would never start if all future problems were foreseeable. It’s going to be a matter of analysing the consequences of systematic deviations to make it possible to gain support for visions, move into action, exercise control, and make calculations and assessments of investments, says Esbjörn Segelod.