A multiobjective model for the selection and timing of public enterprise projects

Abstract

In theory, a public utility company improves the quality of community life through its projects and actions. However, project selection and prioritization by these companies are highly complex processes. To assist company planning managers in such processes, we propose a mixed integer programming model that selects, from a bank of projects, which are worthy of investment. The question of timing is also addressed. The model maximizes a weighted sum of normalized economic and financial net present values and a social impact index. It simultaneously satisfies a set of precedence relations among projects, the earliest and latest project start dates, exogenous budget limits, and endogenous project cash flow generation. We illustrate the model's effectiveness using an example constructed from a case study of a major Latin American water and sewage company.