Making Real Options Valuation a Real Option

Thomas Aspinall, Benjamin Meyer, Colette Southam*

*Corresponding author for this work

Research output: Contribution to journalArticleProfessionalpeer-review


When it comes to valuing projects in highly uncertain business environments, real options valuation (ROV) isn’t popular as a management tool despite having long been touted as a best practice in academic circles. For example, in a 2004 Harvard Business Review article entitled “Making Real Options Really Work,” Alexander van Putten and Ian MacMillan explored the pros and cons associated with deploying real options as a valuation model. “If this fundamental option discipline is not baked into every option project, you are not investing, you are gambling,” they concluded after noting that real options are an essential complement to discounted cash flow (DCF) analysis because they allow managers to “capture the considerable value of being able to ruthlessly abandon floundering projects before making major investments.”
Original languageEnglish
JournalIvey Business Journal
Publication statusPublished - 14 Jan 2023


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