Abstract
The objective of this chapter is to present the real options theory (ROT) as an alternative methodology applicable to investment analyses in research and development projects (R&D). The authors intend to simulate the evaluation of an R&D project as a real option, compare real options theory outcomes to a conventional R&D project evaluation technique, and review real options theory as a trend in innovation project evaluation. The outcomes were compared to those obtained via the traditional net present value (NPV) method and a brief practical discussion regarding project management decision making is held. Finally, although ROT is still in a developmental and consolidation stage, the authors suggests that it can be used as a promising tool in the decision-making process concerning R&D projects. ROT is presented as a research field that would integrate a set of emerging management technologies, becoming a theoretical base for new tools and methods to support project management (PM) decision making.
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