Proceedings of the 12th European Conference on Knowledge ...

Camilo Augusto Sequeira and Eloi Fernández y Fernández
Ano<strong>the</strong>r aspect <strong>of</strong> this valuation method is that it can be applied to any business or organization, even
those that have no explicit market value, i.e., companies not listed on <strong>the</strong> stock market. In summary,
<strong>the</strong>
valuation developed here depends more on structural uncertainties internal to <strong>the</strong> organization
than systemic uncertainties external to <strong>the</strong> organization.
As mentioned, during <strong>the</strong> application <strong>of</strong> <strong>the</strong> method <strong>the</strong> most relevant assets become evident, and <strong>of</strong>
<strong>the</strong>se, "Model for HSE processes and methodologies' stood out as one <strong>of</strong> <strong>the</strong> organization's core
competencies. The assessments pointed to <strong>the</strong> indicator CAPEX, shown in Figure 5, as being most
influenced by this intangible asset: as defined by <strong>the</strong> participants during <strong>the</strong> pilot application, <strong>the</strong>
main
function
<strong>of</strong> <strong>the</strong> organization being surveyed is to define, observe and enforce standards and
procedures, HSE being categorized as an organization within <strong>the</strong> ambit <strong>of</strong> compliance.
Thus, its creation <strong>of</strong> value is a function <strong>of</strong> <strong>the</strong> ability to avoid losses due to failures, accidents and
absenteeism
in health, safety and environment. Therefore, by reducing exposure to risk by <strong>the</strong>
compliance activities, provisions for contingencies to be reduced, thus freeing up investment capacity.
In fact, <strong>the</strong> impact
on CAPEX <strong>of</strong> this intangible asset can be observed by looking at <strong>the</strong> organization's
activities in <strong>the</strong> period 2000 to 2008. In particular,
we observe that four variables showed high
correlation:
Days-Away-from-Work Injury rate
(TFCA)
Oil Spill Volume per m
<strong>the</strong>
nterprise, TFCA and VVO decreased, with a concomitant decrease in PPC. Previously, HSE had not
3 (VVO)
Provision for Contingencies (PPC)
Start <strong>of</strong> HSE policies under <strong>the</strong> responsibility <strong>of</strong> corporate organization, i.e., centralized (HSE
CORP)
Thus, <strong>the</strong> intangible asset "Model for HSE processes and methodologies" was valued, presenting
creation <strong>of</strong> value as reflected in <strong>the</strong> variables TFCA, VVO and PPC. When adopting a centralized
policy <strong>of</strong> Corporate HSE, implementing <strong>the</strong> HSE model <strong>of</strong> processes and methodologies across
e
been a corporate-wide undertaking, and each business unit had implemented its own HSE policy.
Finally, in order to close <strong>the</strong> numbers, several comparative
analyses were conducted. Econometric
calculations
and correlation <strong>of</strong> <strong>the</strong> above variables were also performed to test <strong>the</strong> hypo<strong>the</strong>ses as to
<strong>the</strong>ir impact and measure <strong>the</strong>ir relative weighting.
From <strong>the</strong> standpoint <strong>of</strong> supporting decision-making, <strong>the</strong> organization's managers must define goals for
<strong>the</strong> coming period and, <strong>the</strong>reafter, take appropriate actions, within <strong>the</strong> ambit <strong>of</strong> <strong>the</strong> organization's
strategic requirements, which can be simulated by adjusting parameters in <strong>the</strong> spreadsheet, as done
previously during <strong>the</strong> application <strong>of</strong> <strong>the</strong> method. Real Options Analysis (ROA) method, (Copeland, T.,
Antikarov, V. (2001)) allows for an appraisal <strong>of</strong> strategic flexibility or ability to respond to future
uncertainties by measuring <strong>the</strong> benefit <strong>of</strong> investment in such assets in financial terms. Similarly, <strong>the</strong>
method allows us to measure <strong>the</strong> investment in intangibles, with an indication
<strong>of</strong> <strong>the</strong> level <strong>of</strong> risk or
cost
savings that can be expected. Using ROA requires <strong>the</strong> prior assessment <strong>of</strong> internal and external
uncertainties, as well as uncertainties associated with <strong>the</strong> asset itself.
Capabilities created by Human Resources practices and combinations <strong>the</strong>re<strong>of</strong> are options that can
address such uncertainties. In essence, <strong>the</strong>se capabilities are options because <strong>the</strong>y can lower <strong>the</strong>
cost <strong>of</strong> adjustments when changes occur, preserve value, and provide decision-making and
operational flexibility. Real Options <strong>the</strong>ory recommends that to manage uncertainties proactively
(Bhattacharya, M., Wright, P., 2004) a venture must develop capabilities, i.e. combinations <strong>of</strong>
resources and processes. While SAVs are related resources, capable <strong>of</strong> synergistically creating
future value (future benefits) and presenting uncertainties and associated risks, Real Options provide
a way to manage <strong>the</strong> uncertainties related to investments in assets. while valuation derived from
discounted cash flow (DCF), (Koller, T., Goedhart, M. Wessels, D., (2005)), does not engender
decision-making and operational flexibility, it is complemented by Real Options Analysis.
In o<strong>the</strong>r
words, <strong>the</strong> one does not preclude <strong>the</strong> o<strong>the</strong>r. In fact, valuation starts out with <strong>the</strong> application <strong>of</strong> DCF.
The method already includes
<strong>the</strong> basic tools to carry out a preliminary assessment.
915