Selecting projects in a portfolio using risk and ranking
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Abstract
There are three dimensions in project management: time, cost and performance. Risk is a characteristic related to the previous dimensions and their relationships. A risk equation is proposed based on the nature of the uncertainty associated to each dimension as well as the relationship between the uncertainties. A ranking equation that is able to prioritise projects is proposed and discussed. The problem solved here is which projects to select in a given portfolio of projects. The model is implemented in a group decision support system (GDSS) which can guide decisionmakers in their decision process. However, the system is not intended as a substitution of the decisionmaker task, but merely as an aid. The methodology used is analysis of the equations proposed and trial and error based on examples. This paper’s main contribution is the risk equation and the ranking equation.
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