Prediction markets for forecasting project metrics - thoughts?
Mat FogartyCEO| CrowdcastSan Francisco, Ca, United States
I'm doing a start-up and am researching potential uses of prediction markets to help with IT project management. I'd love to hear the thoughts of the Gantthead community.
(imagine a play-money betting market, where "players" place anonymous bets on future outcomes - example: "I bet $1,000 that the project will finish in January", if the bet is right, the player wins more money (and prizes etc). In this way, the project manager can gain unbiased feedback on likely ship dates, budgets, resources required etc.)
Pros: very accurate forecasts, so project manager can better manage expectations and re
Cons: if a team knows that a project is going to ship late, will this affect their motivation? Saving Changes...
Hi Mat,
Not sure how this would work. Who is doing the betting and what information are they using to decide their bets?
If it is the project team and they know it will ship late then as a project manager I should be the first person they tell, so I don't see bets as helpful to solving the project problems.
Regards Julie Saving Changes...
Don KimPROJECT-TO-PORTFOLIO MANAGEMENT EXPERT| Seeking opportunitiesSacramento, CA, United States
Actually, this kind of options trading for projects was already done in the sub-prime mortgage markets and look at the results! ;) I'm sure project were rolled out by large investment firms to securitize mortgages. In fact these were called "Mortgage Backed Securities" (MBS) and used sophisticated derivatives trading systems to come up with schemes such as CDOs and SIVs.
The only book I know of that outlines using derivative, options based valuation for predicting project investment scenarios is the following book:
I think much like the MBS of the sub-prime fiasco, you need to be careful of the speculative nature of using things like call/put options, strike price, etc. to predict and/or valuate the potential valuations derived from a project investment.
It is though, an interesting way to vette a project request through a rigorous quantitative process, though in my opinion, just getting organizations to properly utilize the basics such as payback, NPV, ROI and IRR through a project evaluation process, especially in IT is hard enough.
