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Jun 2010

Managerial judgement and strategic investment decisions

This report presents the findings from a cross-sectional survey funded by CIMA. The project aimed to survey senior management accountants working across a range of organisations and industries with a unique focus on the behavioural side of decision making in the context of strategic investment decisions (SIDs). The focus is on how decision judgements are reached.

The aim of the study was to enrich our understanding of how managerial judgement influences the SID process. The study set out to identify the various stages in the SID process at which managers are consulted and how agreement is facilitated. The objectives were to identify the extent, or otherwise, by which heuristics, framing and/or consensus are admitted to the process. Analysis of the survey data provides evidence of different practices by which managerial judgement influences the SID-making process.

Most companies (90%) now use spreadsheet models to support SID making, and half use critical path analysis (project management software). Only 6% use no decision support software at all to aid project appraisal.

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Managerial judgement and strategic investment decisions