Abstract
This paper summarizes thirty-five years of experience managing research--the practical aspects, as well as advanced decision-making methods for managing large research projects. Practical aspects are common sense. Hire and provide incentives and the right working environment for the best minds. However, the decision-making method introduced here is new. Called real options, it is a method superior to discounted cash flows because it accounts for the ability of a manager to make decisions that are contingent on the arrival of information at a future point in time. The value of abandonment and expansion are discussed with a numerical example.
