Project Selection Regarding Life-Cycle Oriented and Equity-Intensive Projects: A Critical Assessment of the PPP Project Selection Process in the Construction Industry

Abstract

At first glance, project selection decision-making in construction companies dealing with life-cycle oriented and equity-intensive projects is dominated by intuition rather than structured quantitative processes. In contrast, companies from other business fields (e. g. institutional investors) that are also dealing with these projects are successfully using quantitative instruments to support their project selection processes. The objectives of this paper are to analyze if the assumption that intuition guides project selection processes in construction companies can be justified, and to investigate how this process can be enhanced. To meet these objectives, three main aspects are discussed. First, the state of practice in the construction industry is outlined by showing a practical example of a project selection process that is currently being applied by an international construction company. Second, the practically applied project selection process is assessed critically and improvement potentials are outlined. Finally, the concept of a quantitative project selection model for life-cycle oriented projects in the construction industry is presented. This paper represents one of the first steps of a research project that aims to develop a quantitative project selection model, which will enable construction companies to select projects suitable to their specific profile.