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Multicriteria Portfolio Decision Analysis for Project Selection

In: Multiple Criteria Decision Analysis

Author

Listed:
  • Alec Morton

    (University of Strathclyde)

  • Jeffrey M. Keisler

    (University of Massachusetts)

  • Ahti Salo

    (Aalto University)

Abstract

Multicriteria Portfolio Analysis spans several methods which typically build on MCDA to guide the selection of a subset (i.e., portfolio) of available objects, with the aim of maximising the performance of the resulting portfolio with regard to multiple criteria, subject to the requirement that the resources consumed by the portfolio does not exceed the availability of resources and, moreover, satisfies other relevant constraints as well. In this chapter, we present a formal model of this selection problem and describe how this model can present both challenges (e.g. portfolio value may, due to the interactions of elements, depend on project-level decisions in complex and non-additive ways) and opportunities (e.g. triage rules can be used to focus elicitation on projects which are critical for value assessment). We also survey the application of Portfolio Decision Analysis in several domains, such as allocation of R&D expenditure, military procurement, prioritisation of healthcare projects, and environment and energy planning, and conclude by outlining possible future research directions.

Suggested Citation

  • Alec Morton & Jeffrey M. Keisler & Ahti Salo, 2016. "Multicriteria Portfolio Decision Analysis for Project Selection," International Series in Operations Research & Management Science, in: Salvatore Greco & Matthias Ehrgott & José Rui Figueira (ed.), Multiple Criteria Decision Analysis, edition 2, chapter 0, pages 1269-1298, Springer.
    • Handle: RePEc:spr:isochp:978-1-4939-3094-4_28
    DOI: 10.1007/978-1-4939-3094-4_28
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    Citations

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    Cited by:

    1. Gasparini, Gaia & Brunelli, Matteo & Chiriac, Marius Dan, 2022. "Multi-period portfolio decision analysis: A case study in the infrastructure management sector," Operations Research Perspectives, Elsevier, vol. 9(C).
    2. Barbati, M. & Figueira, J.R. & Greco, S. & Ishizaka, A. & Panaro, S., 2023. "A multiple criteria methodology for priority based portfolio selection," Socio-Economic Planning Sciences, Elsevier, vol. 88(C).
    3. Kapil Mittal & Puran Chandra Tewari & Dinesh Khanduja, 2017. "On the right approach to selecting a quality improvement project in manufacturing industries," Operations Research and Decisions, Wroclaw University of Science and Technology, Faculty of Management, vol. 27(1), pages 105-124.
    4. Jeffrey M. Keisler & Christy M. Foran & Maija M. Kuklja & Igor Linkov, 2017. "Undue concentration of research and education: multi-criteria decision approach to assess jurisdiction eligibility for NSF funding," Environment Systems and Decisions, Springer, vol. 37(3), pages 367-378, September.
    5. Brunelli, Matteo & Corrente, Salvatore, 2024. "Modeling criteria and project interactions in portfolio decision analysis with the Choquet integral," Omega, Elsevier, vol. 126(C).
    6. Mavrotas, George & Makryvelios, Evangelos, 2021. "Combining multiple criteria analysis, mathematical programming and Monte Carlo simulation to tackle uncertainty in Research and Development project portfolio selection: A case study from Greece," European Journal of Operational Research, Elsevier, vol. 291(2), pages 794-806.
    7. Liesiö, Juuso & Kee, Taeyoung & Malo, Pekka, 2024. "Modeling project interactions in multiattribute portfolio decision analysis: Axiomatic foundations and practical implications," European Journal of Operational Research, Elsevier, vol. 316(3), pages 988-1000.
    8. Barbati, Maria & Greco, Salvatore & Kadziński, Miłosz & Słowiński, Roman, 2018. "Optimization of multiple satisfaction levels in portfolio decision analysis," Omega, Elsevier, vol. 78(C), pages 192-204.
    9. Barbati, Maria & Corrente, Salvatore & Greco, Salvatore, 2020. "A general space-time model for combinatorial optimization problems (and not only)," Omega, Elsevier, vol. 96(C).
    10. Liesiö, Juuso & Salo, Ahti & Keisler, Jeffrey M. & Morton, Alec, 2021. "Portfolio decision analysis: Recent developments and future prospects," European Journal of Operational Research, Elsevier, vol. 293(3), pages 811-825.

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