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A bonus-malus approach to project management

Author

Listed:
  • Rodica Branzei
  • Giulio Ferrari
  • Vito Fragnelli
  • Stef Tijs

Abstract

This paper concentrates on the management of delayed projects charged with penalty costs and of expedited projects rewarded with bonuses, based on an activity graph description of the projects. We propose a two-stage heuristic procedure to assist project managers to determine “fair” shares of penalties or compensations for agents involved when information regarding the project’s schedule and its actual execution is available. Incentives for better performance play a key role in this procedure, which combines a “bonus-malus” approach with a rationing approach. In the first stage, activities’ deviations from the schedule are computed using heuristic algorithms which implement incentives for better performance according to two alternative scenarios. In the second stage, the deviations of activities computed according to the chosen scenario are adjusted using well-known rules from the literature on rationing problems. A new family of compensations-penalties solutions, called Mutual Help Solutions, is introduced and illustrated. Copyright Springer-Verlag 2011

Suggested Citation

  • Rodica Branzei & Giulio Ferrari & Vito Fragnelli & Stef Tijs, 2011. "A bonus-malus approach to project management," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 19(4), pages 495-512, December.
    • Handle: RePEc:spr:cejnor:v:19:y:2011:i:4:p:495-512
    DOI: 10.1007/s10100-010-0139-6
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    References listed on IDEAS

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    1. Rodica Brânzei & Giulio Ferrari & Vito Fragnelli & Stef Tijs, 2002. "Two Approaches to the Problem of Sharing Delay Costs in Joint Projects," Annals of Operations Research, Springer, vol. 109(1), pages 359-374, January.
    2. Rodica Branzei & Giulio Ferrari & Vito Fragnelli & Stef Tijs, 2008. "A Flow Approach to Bankruptcy Problems," Czech Economic Review, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, vol. 2(2), pages 146-153, September.
    3. Herrero, Carmen & Maschler, Michael & Villar, Antonio, 1999. "Individual rights and collective responsibility: the rights-egalitarian solution," Mathematical Social Sciences, Elsevier, vol. 37(1), pages 59-77, January.
    4. Arantza Estévez-Fernández & Peter Borm & Herbert Hamers, 2007. "Project games," International Journal of Game Theory, Springer;Game Theory Society, vol. 36(2), pages 149-176, October.
      • Estevez Fernandez, M.A. & Borm, P.E.M. & Hamers, H.J.M., 2005. "Project Games," Other publications TiSEM 21fd9b62-93b6-4a8b-9bf4-4, Tilburg University, School of Economics and Management.
      • Estevez Fernandez, M.A. & Borm, P.E.M. & Hamers, H.J.M., 2007. "Project games," Other publications TiSEM 809ba203-2bd2-48ce-ae6d-b, Tilburg University, School of Economics and Management.
      • Estevez Fernandez, M.A. & Borm, P.E.M. & Hamers, H.J.M., 2005. "Project Games," Discussion Paper 2005-91, Tilburg University, Center for Economic Research.
    5. Moulin, Herve & Shenker, Scott, 1992. "Serial Cost Sharing," Econometrica, Econometric Society, vol. 60(5), pages 1009-1037, September.
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    7. HervÊ Moulin, 1999. "Incremental cost sharing: Characterization by coalition strategy-proofness," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 16(2), pages 279-320.
    8. Tijs, S.H. & Koster, M.A.L., 1998. "General aggregation of demand and cost sharing methods," Other publications TiSEM 43bb1596-ff5b-4567-a25f-9, Tilburg University, School of Economics and Management.
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    Cited by:

    1. Jan Bartoska & Tomas Subrt, 2012. "The effect of human agent in project management," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 20(3), pages 369-382, September.
    2. Javier Castro & Daniel Gómez & Juan Tejada, 2014. "Allocating slacks in stochastic PERT network," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 22(1), pages 37-52, March.
    3. Vito Fragnelli & Stefano Gagliardo & Fabio Gastaldi, 2014. "Integer solutions to bankruptcy problems with non-integer claims," TOP: An Official Journal of the Spanish Society of Statistics and Operations Research, Springer;Sociedad de Estadística e Investigación Operativa, vol. 22(3), pages 892-933, October.

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