Project Investment Decisions: Comparison of Nonmonetary Benefits.

When deciding which project to fund, the comparison of project-required resources and monetary or financial benefits is relatively straightforward (as these can be presented in dollar values). In contrast, comparing the nonmonetary benefits of projects can be challenging. The literature often overlooks this problem and only provides high-level approaches (e.g., comparing a project's contributions to the organization's strategic goals). Such approaches are inefficient as they are highly subjective and may be impacted by decision-makers' bias. To this point in time, the literature has not effectively addressed this problem. This literature gap and the practical importance of the problem motivate the development of detailed step-by-step methodological processes to reduce subjectivity and enable a quantitative comparison of the nonmonetary benefits of projects. This paper develops such a novel straightforward methodology and illustrates its application through a case study where nonmonetary benefits of a railway construction project are compared against a hospital expansion project. In addition to this methodological contribution, this paper also contributes to the current literature on construction engineering and management by showing how to perform an effective comparison of the nonmonetary benefits in the project investment decision. The paper also sheds light on how the reasoning structures of different project decision makers may be impacted by their degree of optimism. Practical Applications: Construction projects may deliver a range of dissimilar benefits. Unlike monetary values (such as required resources and financial or monetary benefits), the comparison of nonmonetary benefits (e.g., social values) of different proposals can be challenging. This paper provides a two-phased methodology to facilitate this comparison. In the first phase, two straightforward questions are asked to draw benefit satisfaction graphs, and in the second phase, different future scenarios are integrated to make the comparison process more reliable. Ultimately, a methodology is developed to show how the nonmonetary benefits of different projects can be compared. It is then illustrated on a case from the Australian government where the nonmonetary benefits of a railway construction project are compared against those of a hospital expansion project to assist with the decision as to which project should be given a higher priority to be funded. [ABSTRACT FROM AUTHOR]