Project Portfolio Selection Model Development Using Project Portfolio Management (Ppm) Approach With Special Reference to Djenna Endowment

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Date

2007-07

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Addis Ababa University

Abstract

The general objective of the thesis is to develop a model that assists companies’ for the selection and management of an optimal project portfolio that maximizes the benefits using project portfolio management (PPM) approach. In this thesis two models are developed. The first model is a general Project Portfolio Management (PPM) model that describes the whole process and steps of PPM. In this model the PPM process is divided in to six steps. The relationships between the steps, the processes and activities of each step are discussed in detail. The second model developed in this thesis is the portfolio selection step of the PPM process. In the portfolio selection model project evaluation criteria and sub-criteria are identified, and projects that are screened in the individual project evaluation step are arranged in Analytical Hierarchy Process (AHP) structure to prioritize and give relative weights of each component against to the next higher level components. At the most lower level the candidate projects for portfolio selection are arranged. These projects are going to be prioritized and scored in accordance with their contribution to the total sub-criteria, which are placed on the next higher level in the structure. The score or weights of the projects are used as a coefficient of the optimization problem. A zero-one integer linear programming is proposed to find the solution of the optimization problem. The developed model is tested and validated by considering one local multi-project owner corporate office. The corporate office vision, mission, objectives, criteria, sub-criteria, ongoing and candidate projects are considered and the objective function of the corporate office is formulated with an inclusion of the Endowment constraints and interdependence of projects. Then considering three probable demand scenarios and using a zero-one integer linear programming two portfolios of projects are generated. The portfolios’ risk and objective function values are calculated thereafter. The selection of one out of the two portfolios by taking into account the trade-offs of the risk and objective function value is left unto management for their decision.

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Industrial Engineering

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