An extended model of dynamic project portfolio selection problem considering synergies between projects

Abstract

The project portfolio selection considering the adjustment of existing projects is a new research problem rising in recent years which is called Dynamic Project Portfolio Selection Problem (DPPSP). However, two deficiencies are discovered in current DPPSP research. The one is that researchers ignore the synergies between existing projects and newly selected projects, which makes some potential benefits cannot be realized, the other is that how these synergies influence dynamic project portfolio selection has not been studied. Under this circumstance, this paper firstly studies the synergies in DPPSP, and divides them into the synergy generated by sharing productive factors and the synergy generated by the inheritance of productive factors. Combining with the learn-forget curve model, the net present value of existing projects is further explored after considering dynamic adjustment and synergy benefits. On this base, an extended model of DPPSP considering synergies between projects is established. The analysis of a case study demonstrates that 1) considering synergies can further enlarge the benefits brought by the dynamic adjustment of existing projects, 2) earlier implementation of higher benefit projects and giving up some existing projects are profit to release funds and avoid potential losses caused by capital constraints.