Abstract
The paper deals with an application of the network (dichotomous) programming method for solving multi-extremal problems and discrete optimization problems. The concept of a generalized dual problem is introduced and a theorem on its convexity is proved. Network programming method is used to build a business-forming project portfolio as well as an algorithm for solving completely dependent related projects is developed. Also, this method is used to solve the problem of building a business-supporting project portfolio for which the lower cost estimate is obtained. A computational experiment is carried out to evaluate the suggested algorithm, which showed that for large dimensions of the problem it is more effective than for solving the problem by linear programming methods.
Highlights
The recent scientific literature suggests many definitions of project portfolio
Taking into account that the theory of network programming has a wide range of applicability in various spheres including project management it seems reasonable to apply the theory to the problem of project portfolio formation that the paper deals with
The paper examines the application of the network programming theory for the project portfolio formation
Summary
The recent scientific literature suggests many definitions of project portfolio. According to Meredith and Mandel (2010) a portfolio is ‘a group or set of projects with varying characteristics’. Turner and Müller (2003) propose the following definition of a portfolio: ‘An organization where projects are managed together to coordinate interfaces, prioritize resources between projects, and thereby reduce uncertainty’. Artto et al (2001) consider a project portfolio as ‘a collection of projects that are carried out in the same business unit sharing the same strategic objectives and the same resource pool’. Based on the above definitions we consider in this paper a project portfolio as a set of projects that are grouped in order to increase management efficiency and to achieve the strategic goals of the organization. The main goal of this paper is the application of the network (dichotomous) programming method for solving multiextremal problems and discrete optimization problems that allows to build a businessforming project portfolio and a businesssupporting project portfolio.
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