Project Portfolio Research Articles

Method for solving the multi-criteria non-Markov problem of project portfolio optimization

The subject of the study in this paper is models and methods of optimization of the organization's project portfolio for the planning period, considering the effects of the previously made decisions. Project portfolio optimization is one of the responsible and complex tasks by company's top management solves. Based on the analysis of the known works in the field, the research purpose is described: to create a method that would allow solve the problem of multi-criteria project portfolio optimization for the planned period, considering the aftereffects of the previously made decisions. The research tasks are to enhance the method for solving the project portfolio optimization problem in terms of maximizing the difference between income and costs for all projects started during the planned period; to propose a method for solving the project portfolio optimization problem in terms of the social effects of projects that started during the planned period; create a method for solving the problem of project portfolio optimization for the planned period in a multi-criteria setting. There are the following results obtained in the paper. There is presents the mathematical model of the problem being solved, the problem objective functions include the difference between the receipt and expenditure of funds in time, the portfolio risks, and its implementation social effects. The mathematical model considers the provision of funds sufficiency for the implementation of projects in all periods, the required sequence of project implementation, and the mandatory inclusion of some projects in the portfolio for a given period. The problem under consideration belongs to the multi-criteria non-Markov dynamic discrete optimization problems. There is a proposed method for solving it in a multi-criteria formulation. The method is based on solving one criterion problem, and then a multi-criteria problem. The method is based on the minimax approach and implicit search. There has been developed solving method for the problem of enterprise project portfolio optimization for the planned period following the profit criterion. In contrast to the existing methods, this method considers the constraints on debt absence and the aftereffects of the previously made decisions. The method served as the basis for creating risk and social effect optimization methods. A method for enterprise project portfolio optimization of the planned period is provided, which, unlike previous, considers the criteria of profit, risks, and social effect, the constraints on debt absence, and the aftereffect of the previously made decisions. That makes it possible to improve the quality of the generated portfolio.

Hydrocarbon Field (Re-)Development as Markov Decision Process

Summary Hydrocarbon field (re-)development requires that a multitude of decisions are made under uncertainty. These decisions include the type and size of surface facilities, location, configuration, and number of wells but also which data to acquire. Both types of decisions, which development to choose and which data to acquire, are strongly coupled. The aim of appraisal is to maximize value while minimizing data acquisition costs. These decisions have to be done under uncertainty owing to the inherent uncertainty of the subsurface but also of other costs and economic parameters. Conventional value of information (VOI) evaluations can be used to determine how much can be spent to acquire data. However, VOI is very challenging to calculate for complex sequences of decisions with various costs and including the risk attitude of the decision-maker. We are using a partially observable Markov decision process (MDP) to determine the policy for the sequence and type of measurements and decisions to do. A partially observable MDP (POMDP) is characterized by the states (here: description of the system at a certain point in time), actions (here: measurements and development scenario), transition function (probabilities of transitioning from one state to the next), observations (measurements, appraisal activity), and rewards [costs for measurements, expected monetary value (EMV) of development options]. Solving the MDP gives the optimum policy, sequence of the decisions, the probability of maturation (POM) of a project, the EMV, the expected loss, the expected appraisal costs, and the probability of economic success (PES). These key performance indicators can then be used to select in a portfolio of projects the ones generating the highest expected reward for the company. Combining the production forecasts from numerical model ensembles with probabilistic capital and operating expenditures and economic parameters allows for quantitative decision-making under uncertainty.

Managing project interdependencies in IT/IS project portfolios: a review of managerial issues

Adequately managing project interdependencies among diverse and simultaneous projects is deemed critical for successful implementation of project portfolios. The challenge is significant because it may entail managing a complex network of project interdependencies that keeps changing over time. The present study investigates the managerial challenges that may undermine effective management of project interdependencies in IT/IS project portfolios. The investigation is based on evidence from reviewing relevant literature and documented studies associated with managing project interdependencies. The main contribution of this study is to discuss three managerial challenges of project interdependencies in project portfolios. We discuss the challenges from three perspectives: types of interdependencies; patterns of interaction in interdependencies; and cost/benefit impact of project interdependencies.

Is there a net economic loss from employing reference class forecasting in the appraisal of hydropower projects?

This paper investigates the potential effects of the use of reference class forecasting on the World Bank's financing decisions, and quantifies the net economic impact of such decisions in the long run. A set of 57 World Bank-financed hydropower projects constructed between 1975 and 2015 was selected based on data availability. The findings show that reference class forecasting can help reduce net losses by preventing some hydropower projects with negative economic net present values from being executed. However, it also leads to the forfeiture of even larger amounts of net economic benefits by causing the rejection of some projects that are found, from ex-post analysis, to be economically worthwhile. Furthermore, because of the increased ex-ante rejection of projects, the loss of potentially economically positive projects from the portfolio of hydro dam projects is greatly increased. The errors in the estimation of economic net present values of these hydropower projects are highly positively correlated to the errors in the estimation of the benefits and only weakly negatively correlated to the errors in the estimation of costs.

Project Management System of Exploration Program in the Light of Prioritizing of Reservoir Engineering Stages According to the Criterion of Prospects

A model of the project portfolio management system of a geological exploration enterprise has been developed, taking into account the stages of work. The model includes a control object, a decision-making subsystem, which includes a control device represented by the decision support software system “Balance of Groundwater Availability” (BGA) and an executive device represented by a decision-maker, making decisions at a geological exploration enterprise. The stimulus to the target asset arises on the one hand in connection with the implementation of sectorial and federal programs within the area for the development of the geological industry and the reproduction of mineral resources, on the other hand, it is the need to maintain a certain balance of the availability of raw materials in the region, in particular, underground water. Hence, it is necessary for the underground water exploration company to take into account the specifics of the programs in view of the interconnection of the sites within one large field of regional scale. In this case, the project portfolio needs to be managed, taking into account the network nature of their interaction, i.e. mutual influence on the remaining sections of the field. On the other hand, when forming a portfolio of projects of a geological exploration enterprise, it is necessary to take into account staging and phasing of geological exploration, their seasonal nature allows viewing the model of the management system in the context of discrete time. The work was carried out with the financial support of the grant of the President of the Russian Federation No. MD-2409.2020.5.

NLM's Sponsorship of Research in Biomedical Informatics (1985-2016).

The U.S. National Library of Medicine's (NLM) funding for biomedical informatics research in the 1980s and 1990s focused on clinical decision support systems, which were also the focus of research for Donald A.B. Lindberg M.D. prior to becoming NLM's director. The portfolio of projects expanded over the years. At NLM, Dr. Lindberg supported various large infrastructure programs that enabled biomedical informatics research, as well as investigator-initiated research projects that increasingly included biotechnology/bioinformatics and health services research. The authors review NLM's sponsorship of research during Dr. Lindberg's tenure as its Director. NLM's funding significantly increased in the 2000's and beyond. Authors report an analysis of R01 topics from 1985-2016 using data from NIH RePORTER. Dr. Lindberg's legacy for biomedical informatics research is reflected by the research NLM supported under his leadership. The number of R01s remained steady over the years, but the funds provided within awards increased over time. A significant amount of NLM funds listed in RePORTER went into various types of infrastructure projects that laid a solid foundation for biomedical informatics research over multiple decades.

Project portfolio risk categorisation – factor analysis results

The subject of this article is project portfolio risk categorisation. Research conducted indicated categories containing the most probable and significant risks. The research described in this paper was carried out in two stages. In the first stage, the relevant literature was reviewed and the Delphi method was used to identify 36 risks specific to a project portfolio. In the second stage, the respondents (project portfolio managers) assessed the probability of each risk occurring and the impact of that risk on the objectives of the project portfolio. The empirical data obtained in this way made it possible to conduct an exploratory factor analysis and to identify the risk categories of the project portfolio. The presented results may also contribute to a broader discussion concerning the validity of identifying project portfolio risks and how to categorise them. The results may be useful for further discussion on the empirical confirmation of three categories of portfolio risks proposed by the Project Management Institute.

Performance measurement of complex project: framework and means supporting management of project-based organizations

Performance management and measurement enable to improve strategy implementation and increase organizational competitiveness. The literature review and desk research confirm that the design of a performance system is an issue because of the redefinition of project environment conditions and complexity of 4P. The system should be continuously developed during exploitation. Main objectives of the paper are to propose a framework of project performance measurement and a set of measures that could be applied in project-based organizations. The assessment proposal is the result of a literature review and qualitative empirical studies, interviews, and participatory observations. The framework considers performance assessment of the project and its context, including benefits occurring outside the project – on the program, project portfolio, and project-based organization levels – but being the result of project execution. The framework incorporates in project performance assessment the simultaneous and supplementary utilization of quantitative and qualitative measures, financial and non-financial measures that describe various fields of evaluation: finance, production, procurement, product quality, social, marketing of a product, legal, natural environment, client, and other stakeholders’ satisfaction.

Evaluating the criticality of the product development project portfolio network from the perspective of risk propagation

There are numerous projects with many interdependencies in the new product development (PD) portfolio, which can be viewed as a complex network. Due to the dependency among projects, the risks in one project may transmit to others, which will ultimately affect the success of the entire project portfolio. Thus, evaluating the priority and criticality of projects under the influence of risk propagation is a fundamental challenge for the PD project portfolio. This paper presents a risk propagation model using the Bayesian network and brittle risks. The criticality analysis presented is based on both the local and the global effects of risk in the portfolio. Firstly, we build a Bayesian network model of the portfolio based on the analysis of relationships between projects. Further, we measure the criticality of the project based on the local impact of risk propagation using Bayesian and complex networks. Then, we measure the criticality of the project based on the global impact of risk propagation using brittleness. Finally, we synthesize the calculation results of criticality to measure the integrated criticality of the portfolio, and examine an exemplar industrial portfolio to verify the effectiveness of the proposed model and method.

Social Investing Modeling for Sustainable Development of the Russian Arctic

The method of the social investing of the Arctic subsoil users is considered in this article. As the portfolio of social investments is formed based on the interests of indigenous peoples, the authors used expert assessment and sociological research for social investing modeling. A two-stage procedure for forming a portfolio of such projects is proposed. An approach has also been developed for assessing and selecting investment projects for the Arctic sustainable development according to different criteria of optimality. The authors substantiate the need for a new approach to sustainable development of the Arctic, based not on compensation for the negative consequences of industrial development used in many countries, but on social investment. In this article the proposed approach is tested on the case of the Arctic indigenous community in Taimyr and the optimal social investing portfolio is justified.

Project portfolio planning under CO2 fleet emission restrictions in the automotive industry

AbstractThis paper aims to identify financially and environmentally promising project portfolio decisions under CO2 fleet emission restrictions in the automotive industry. These decisions are particularly difficult due to uncertain demand, ever‐stricter CO2 fleet emission thresholds, and an increasing number of alternative powertrain technologies that can be integrated into different vehicle projects with high project‐specific investments and long product life cycles. We develop a mixed‐integer linear programming model that maximizes the net present value of car manufacturers’ project portfolios, so‐called cycle plans, by selecting specific vehicle projects and by determining the respective production quantities to comply with the given thresholds for the CO2 fleet emissions. By applying the model to an illustrative European car manufacturer, promising cycle plan decisions are determined and analyzed across six market demand scenarios. The results reveal that compliance with the European emission thresholds until 2035 is generally possible if electric vehicle demand gains momentum, but threshold exceedance and corresponding penalty payments can be financially advantageous in some situations. Long‐term compliance with CO2 regulation and financial success is supported by the fast market introduction of battery electric vehicles and the preparation of fuel cell electric vehicles for a later market introduction in large‐sized vehicles.

Corporate memory dynamics in project-based organizations (PBOs): multiple case study in Brazilian engineering design firms and a framework proposal

PurposeThis study aims to investigate how the processes of memory acquisition, retention, retrieval and application occur in project-based organizations (PBOs). In this kind of organization, the nature of corporate memory is influenced by the transience, uniqueness and independence of the project portfolio. Such understanding may help practitioners to mitigate the effects of project transience and promote knowledge sharing among project teams.Design/methodology/approachAn empirical and qualitative study was carried out through a multiple case study approach conducted in three Brazilian Engineering Design Firms, which are organized by projects. Document analysis, direct observation and semi-structured interviews with engineers, project managers and executives were conducted.FindingsThe memory acquisition process takes place in five forms which have different sources and destinations when comparing PBOs with traditional organizational settings. Memory retention in PBOs crosses organizational boundaries and establishes a knowledge network of former employees and third parties. The PBOs project memory can be divided into volatile and perennial memory, where the former can be lost throughout project execution and the latter is internalized, becoming an inseparable part of the corporate memory. Memory retrieval in PBOs is also distinct since it has particular mechanisms depending on whether the knowledge is technical or administrative.Originality/valueThe research investigates the corporate memory processes within the volatile context of PBOs in a Latin-American developing country whose culture favors tacit knowledge exchange. The paper proposes a framework that unveils different patterns of knowledge acquisition, temporary and perennial retention structures, intensive usage of external knowledge in memory retrieval and particular memory applications in PBOs. The framework may guide scholars, project managers, engineers and practitioners in navigating through the uniqueness of organizational learning flows and structures in PBOs.

SPECIFICS OF FORMATION PORTFOLIO OF HYBRID PROJECTS OF MOTOR TRANSPORT ENTERPRISES

An analysis of methodologies and research papers on project portfolio management in various sectors of the econ-omy. The peculiarities of the subject branch (motor transport enterprises) are analyzed. The expediency of implementation of hybrid projects and development of tools for their management is substantiated. It is established that one of the unsolved management tasks is the task of forming effective portfolios of hybrid projects of motor transport enterprises. The purpose of the study is to substantiate the peculiarities of the formation portfolios of hybrid projects of trucking companies. And on their basis to describe the system relationships between operational, project and portfolio management, which provides quality tools for solving basic management problems of forming effective portfolios of hybrid projects of trucking com-panies. The scientific novelty of the performed researches is the substantiated features of the formation portfolios of hybrid projects of motor transport enterprises and the system interrelations between operational, project and portfolio management are described. As a result of the performed researches, the approach to the formation portfolios of hybrid projects of motor transport enterprises which are based on the account of the specificity of subject branch and system interrelations between operational, project and portfolio management is proved. This approach underlies the development of quality tools for the portfolio management of hybrid projects of trucking companies. It is established that based on the management of separate hybrid projects knowledge on their value and risk which together with the information on a condition of the design environment and features of portfolios of hybrid projects of the motor transport enterprises, is a basis of their qualitative formation is received. The unique characteristics of products (transport services) of individual projects, as well as actions for their creation and knowledge about them, are identified.

Visibility of carbon market approaches in greenhouse gas inventories

Under the Paris Agreement, Parties must track the implementation and achievement of their nationally determined contributions (NDCs). In many cases, NDC targets are expressed as a greenhouse gas (GHG) emissions level and their implementation and achievement is tracked through national GHG inventories. To achieve their targets, it is thus essential for countries that the effects of mitigation measures are visible in their inventories. Inventory visibility is understood as the degree to which a change in GHG emissions or removals resulting from mitigation actions is reflected in GHG inventories. Inventory visibility can be assessed by identifying which emission sources and gases are affected by a mitigation action, determining the minimum inventory methods required for reflecting the related emission reduction, and identifying the completeness of and methods used by the current GHG inventory. In addition, it is useful to identify potential differences with the quantification approaches used under carbon market mechanisms. Inventory visibility is found to be generally high for measures that reduce CO2 emissions from fossil fuel combustion, while in parts of the industrial processes sector and in the forestry sector there is a higher risk that emission reductions are not visible. An analysis of the portfolio of Clean Development Mechanism projects shows that for most projects this risk is low; only 8% of the carbon credit supply potential is assessed to have a medium risk and 5% is assessed to have a high risk. However, as future carbon market mechanisms under Article 6 of the Paris Agreement may need to tap more into project types with medium to higher risk of non-visibility, national GHG inventory systems may need to be strengthened to assure visibility of mitigation projects.

A method for project portfolio risk assessment considering risk interdependencies – a network perspective

Project portfolios represent the bridge between projects and strategy. However, the final results may not be as expected because materialization of risk factors. Hence, literature has acknowledged project portfolio risk assessment as an element of the project portfolio risk management, being the element that provides information on the importance of risk factors. For that, some specific characteristics should be considered, such as risk interdependency influence and the risk factors impact over portfolio higher levels. Thus, this study is focused on the development of a method for project portfolio risk assessment that considers both risk factor interdependencies and their impact on the strategic objectives as a network. In addition, the method also allows incorporating both risk factors derived from projects and derived at project portfolio level. A representative example is provided to illustrate the proposed method.

Portfolio Management and Industry 4.0: How Companies Manage Their Industry 4.0 Project Portfolio

Portfolio Management and Industry 4.0: How Companies Manage Their Industry 4.0 Project Portfolio

Features of digital transformation projects of industrial enterprises and some aspects of preparation for their implementation

Digital transformation is a process that requires constant development and radical changes in the management system and significantly affects on the way of doing business and its information support. In addition, digital transformation involves serious investments and careful organization of the project itself (project portfolio). The purpose of the work is based on the experience gained over many decades of implementing local digitalization projects, implementing corporate systems, building enterprise architecture, etc., to identify the features of organizing the processes of digital transformation of enterprises, to propose the procedure for preparing for the launch of such a project, to determine the composition and content of priority work to be performed at this stage. The object of the study is the enterprise architecture (EA), as a possible, and in some cases, a necessary platform for digital transformation. The conclusion is made about the possibility of using methods and tools for building EA in digital transformation projects, as well as the need to create a well-organized information management system at the enterprise implementing the project. The paper substantiates the need to analyze those areas of the company's activities that are primarily subject to serious changes in the process of digital transformation, although, in principle, it affects all aspects of business management. The digital transformation project of the enterprise is implemented in conditions when the enterprise fully carries out its activities, which is why the best platform for its implementation is the EA, which allows making the necessary changes during the project with the least financial and information risks. The sequence of works to be performed before the start of the digital transformation project is determined, their content and objectives are characterized. Special attention is paid to the initial stage of this sequence of work – the assessment of the maturity of the corporate culture and information infrastructure of the enterprise. It is proved that at this stage, the success of the project is largely laid down, since its implementation makes it possible to more accurately formulate the possible goals of each stage of digital transformation and prepare the enterprise for its implementation. The role of the information service (IT service) integrated into the enterprise management system is analyzed, which determines and performs the majority of the work related to the regulation of its information activities, and also plays a key role in the formation of the strategy for the development of IT infrastructure and the support of the digital transformation project.

Assessing the likelihood for transformational change at the Green Climate Fund: An analysis using self-reported project data

Climate finance institutions have been tasked with effectively and efficiently allocating funds to spur the transition to low-carbon, climate-resilient economies. The Green Climate Fund (GCF) is expected to assist the most vulnerable adapt to and mitigate climate change because of its mandate to contribute to a paradigm shift. To understand if the GCF’s portfolio is on track to achieve this aim, we review the project documents of GCF investments through March 2020 (N = 125 projects). We examine attributes of these investments by applying a framework for potential transformational change, comprised of eight components. We use bivariate statistics and multivariate cluster analysis to examine the GCF’s project portfolio of mitigation, cross-cutting and adaptation projects. Bivariate tests find that adaptation projects show the greater intention to integrate policy change into national planning processes and that both adaptation and cross-cutting projects require a greater need for and expectation of behaviour change. Results from cluster analysis shows how adaptation projects dominate clusters with high and medium potential for transformational change (with 47% and 78% of projects, respectively). However, even the high potential cluster only displays the highest average scores for four of the eight components in our framework of transformational change. These findings present learning opportunities for the GCF’s future project selection. The GCF should leverage its current resources carefully to attain transformational impacts especially within adaptation where the Fund has a greater market share compared to mitigation projects.

ЗАЛУЧЕННЯ ІНОЗЕМНИХ ІНВЕСТИЦІЙ В ЕКОНОМІКУ УКРАЇНИ В УМОВАХ КРИЗИ

The article is devoted to the study of the issue of encouraging investment in the economy of a country that is conducting active hostilities, finding a balance between stimulating infrastructure and industry, the implementation of plans for economic recovery. The purpose of the article is to analyze foreign direct investment in the economy of Ukraine and the city of Kyiv, to determine the prerequisites for their involvement. It is proved that the process of inflow of foreign direct investment Ukraine's economy is uneven: from the fall in 2020, due to the COVID-19 pandemic, to the growth of FDI balance and foreign direct investment in the pre-crisis period. The economic downturn in the state is accompanied by a decline in investment in industry and other sectors of the economy. It should be noted that the rate of decline in investment processes is higher than the rate of decline in industrial production. One of the most attractive for foreign investment was and remains Kyiv, which accounts for up to 50% of foreign direct investment in the economy of Ukraine. Over the last ten years, the volume of capital investments in the city's economy has more than doubled. Active hostilities have changed the priorities for sectoral investment in favor of industries that address basic human needs: agriculture, construction, infrastructure and processing. In order to be able to invest in the military economy, additional levers are needed in the form of state guarantees of protection against non-military troubles. For post-war recovery, the rate of investment should be about $ 70 billion annually. In this regard, it is necessary to work on centralized planning of economic development and identification of enterprises that need to be restored, create a viable portfolio of attractive investment projects and develop ready-made design solutions for potential foreign investors. The paper proposes directions for improving the investment climate and the level of investment attractiveness of Ukraine due to the redistribution of investment directions, for which balancing investments between infrastructure and industry will prevail; creation of mechanisms to protect the interests of investors; motivation of investment entities to long-term use of investments; stimulating the processes of reinvestment of enterprises at the expense of own and borrowed funds and improving investment legislation and ensuring its stability

ТЕОРЕТИЧНІ ЗАСАДИ ФОРМУВАННЯ ІННОВАЦІЙНОЇ СТРАТЕГІЇ РОЗВИТКУ ПІДПРИЄМСТВ В ЕПОХУ ЦИФРОВИХ ТЕХНОЛОГІЙ

The article is devoted to the theoretical aspects and provisions of the process of forming an in-novative strategy for the development of enterprises in the era of digital technologies. The following main approaches to understanding the concept of "innovation strategy" have been studied and high-lighted. The classification features of the innovation strategy are systematized, within which their types are singled out and their characteristics are provided. It was found that the innovative strategy of the enterprise's development is shaped by such leading factors as the enterprise's competitive posi-tion, the degree of product uniqueness, the level of innovation potential, etc. The main properties of the innovation strategy are formulated, which include: the formation of a portfolio of innovations that meets the strategic goals of the innovative development of enterprises, taking into account the strate-gic space, the correspondence of the portfolio of innovative projects to market needs, the unification of functional development strategies, as well as permanent cooperation between the employees of the enterprise. The process of forming an innovative strategy for the development of the enterprise has been developed and the consequences of its implementation in the conditions of the spread of digital technologies have been outlined. The authors are convinced that in order to form an innovative strategy for the development of the enterprise, it is necessary to form a unique action plan in terms of managing the innovative activities of the enterprise, take into account the state and regional innovation strategy and coordinate these steps both with the strategies for the development of types of activities and with other business entities.The article examines that the rapid transformation of the economic system and the intensity of changes leads, on the one hand, to the appearance of new threats and challenges, and on the other hand, to the newest opportunities in the business environment, which requires the study of new theoretical foundations and conceptual approaches to the formation of an innovative strategy development of the enterprise.