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Book chapter
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Reference no. BEP8382
Authors: Robert N McGrath
Chapter from: "Capital Project Management, Volume II"
Published by: Business Expert Press
Originally published in: 2020
Revision date: 28-Nov-2019

Abstract

This chapter is excerpted from 'Capital Project Management, Volume II'. This book is a companion to Volumes I and III in the series, which altogether comprise a comprehensive case study of Tesla through 2018. Volume I addresses the comprehensive challenge of managing strategy through capital project portfolios; Volume III is a complete and lengthy traditional case study. This volume presents chapters that describe the corporate strategy challenge from the economic theory called capitalism to adding real economic value based on remuneration of the cost of capital; then, explain how this is accomplished through the capital budgeting process emphasizing project hurdle rates; and then, discusses the respective contribution of free cash flow planned and managed at the capital project level. Finally, capital projects are discussed from the perspective of the financial options theory, largely as a way to manage risk and actually enhance the likelihood that a project will be approved. The author is a retired business professor, scholar, and researcher, not an investigative reporter. His abiding research interest has always been the management of technology and innovation. For this book, he conducted no interviews and double-checked no media data - though multiple media sources typically provided cross-checks. This approach does not portend to be any kind of tell-all inside story. It advocates no one person, no one company, no one technology, and no portion past, present, or future, of the global automobile industry at large. It accepts the veracity of reported events and turns to their practical interpretations.

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Abstract

This chapter is excerpted from 'Capital Project Management, Volume II'. This book is a companion to Volumes I and III in the series, which altogether comprise a comprehensive case study of Tesla through 2018. Volume I addresses the comprehensive challenge of managing strategy through capital project portfolios; Volume III is a complete and lengthy traditional case study. This volume presents chapters that describe the corporate strategy challenge from the economic theory called capitalism to adding real economic value based on remuneration of the cost of capital; then, explain how this is accomplished through the capital budgeting process emphasizing project hurdle rates; and then, discusses the respective contribution of free cash flow planned and managed at the capital project level. Finally, capital projects are discussed from the perspective of the financial options theory, largely as a way to manage risk and actually enhance the likelihood that a project will be approved. The author is a retired business professor, scholar, and researcher, not an investigative reporter. His abiding research interest has always been the management of technology and innovation. For this book, he conducted no interviews and double-checked no media data - though multiple media sources typically provided cross-checks. This approach does not portend to be any kind of tell-all inside story. It advocates no one person, no one company, no one technology, and no portion past, present, or future, of the global automobile industry at large. It accepts the veracity of reported events and turns to their practical interpretations.

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