Constructing and evaluating balanced portfolios of R&D projects with interactions: A DEA based methodology

Harel Eilat, Boaz Golany, Avraham Shtub

Research output: Contribution to journalArticlepeer-review

Abstract

We propose and demonstrate a methodology for the construction and analysis of efficient, effective and balanced portfolios of R&D projects with interactions. The methodology is based on an extended data envelopment analysis (DEA) model that quantifies some the qualitative concepts embedded in the balanced scorecard (BSC) approach. The methodology includes a resource allocation scheme, an evaluation of individual projects, screening of projects based on their relative values and on portfolio requirements, and finally a construction and evaluation of portfolios. The DEA-BSC model is employed in two versions, first to evaluate individual R&D projects, and then to evaluate alternative R&D portfolios. To generate portfolio alternatives, we apply a branch-and-bound algorithm, and use an accumulation function that accounts for possible interactions among projects. The entire methodology is illustrated via an example in the context of a governmental agency charged with selecting technological projects.

Original languageEnglish
Pages (from-to)1018-1039
Number of pages22
JournalEuropean Journal of Operational Research
Volume172
Issue number3
DOIs
StatePublished - 1 Aug 2006

Keywords

  • Balanced scorecard
  • Data envelopment analysis
  • Portfolio analysis
  • R&D projects

ASJC Scopus subject areas

  • General Computer Science
  • Modeling and Simulation
  • Management Science and Operations Research
  • Information Systems and Management

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