Portfolio Planning: a Comprehensive Approach to Limited Resources and Project Prioritization

Abstract

The main issue for portfolio managers is to set a realistic schedule that ensures that the resources needed for operations are readily available on deadline dates, which is the classic goal of the Resource-Constrained Multi-Project scheduling problem (RCMPSP). This article presents an algorithm that provides solution to RCMPSP, where each project has a different priority for the organization. The key feature of this algorithm is that it includes project prioritization during the planning process. Before planning, the portfolio manager determines which projects are relevant for the company. With this in mind, the algorithm uses market mechanisms to determine which activities should be prioritized in the planning process. Based on this, the algorithm creates an artificial market and enables to plan those projects that are of higher priority. Thus, out of a number of possible schedules corresponding to resource constraints (i.e., the solution provided by classic approaches to RCMPSP), the approach considered in the article allows obtaining an optimal portfolio schedule. This schedule, in addition to having the shortest possible duration of the portfolio, allows planning activities in accordance with priorities of the portfolio manager and, consequently, priorities of the company.