Multi-criteria decision making (MCDM) for Project selection

Abstract

Multi-criteria decision making (MCDM) also called Multi-criteria decision analysis (MCDA) can be used as a decision support tool when making decisions with multiple criteria to evaluate simultaneously. In Portfolio management ensuring that the resources are allocated optimally is a complex task. No company have one single objective to maximize, but several and conflicting objectives to manage simultaneously. MCDM can be used as a decision support tool and provide assistants in the process of making such decisions. MCDM is a good method for selecting which projects a company should initiate. This decision is based on a list of potential projects. All potential projects have assigned values or scores to all criteria’s. The objective function in the model could be to maximize the sum of scores in the selected projects subject to a number of constraints such as available capacity (man hours, budget) and project diversity (at least one project in every category). The decision variables will be which projects to initiate and which not to. This list provides the decision makers with a starting point and augmentation for the decisions made. MCDM relies on assigning all potential projects with values for all criteria. This process can be time consuming so a pre-screening process will in many cases come before the MCDM process.

Framework for Project selection

Archer, N.P. and Ghasemzadeh, F. (1999): an Integrated Framework for Project portfolio selection. International Journal of Project Management, 17 (4), 207-2016