Successful Project Portfolio Management Delivery: A Novel Strategic Portfolio Decision-Making Model

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Copyright: Danesh, Darius
Project Portfolio Management (PPM) is an essential component of an organisation’s strategic procedures which requires considering several factors to envisage a range of long-term outcomes that support strategic project portfolio decisions. The success of PPM is closely associated with the degree of understanding of its issues and the quality of decisions made at the portfolio level as poor judgement reduces efficiency and increases portfolio costs. Although several Multi-criteria Decision-making (MCDM) methods have been introduced in support of PPM decision-making functions, there has been little assessment of their performances, particularly regarding which one works best for PPM. This study identifies the key PPM challenges, proposes a new framework for classifying PPM MCDM-related methods and undertakes a literature review of the application of MCDM approaches to PPM. Of over 100 methods identified in over 1400 publications, eight (AHP, ANP, DEA, DSRA, ELECTRE, PROMETHEE, TOPSIS and VIKOR) that best suit PPM are selected and compared. Although two standard methods (AHP and DEA) are shown to be the most appropriate for application to PPM, each has its own shortcomings. To overcome the challenges, this study proposes a novel method for portfolio selection/decision making that combines the Portfolio Theory (PT), AHP and a DEA cross-efficiency technique and considers the profit, risks and proficiency of the portfolio. It is demonstrated that this method can be useful for selecting a portfolio with positive and negative data and, subsequently, measuring efficiency using the AHP. To test the applicability of the proposed model, it is used to determine the efficiency levels of ten of the largest companies in Australia in 2014 and 2015, with two criteria, namely, the expected return and variance, used to identify the preference status of each company. A consistency test conducted to assess the objectivity of the results indicates that this application of the proposed model, which simultaneously analyses profits, risks and proficiency, is feasible and adoptable for a contemporary industrial scenario. Furthermore, an executive management system is proposed as an alternative decision support tool for decision makers.
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Danesh, Darius
Ryan, Michael
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PhD Doctorate
UNSW Faculty
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