Multi-Criteria Decision Making in Engineering

Running head: STRATEGIC PROJECT, PROGRAM AND PORTFOLIO MANAGEMENT
Literature Review
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Author Note

1STRATEGIC PROJECT, PROGRAM AND PORTFOLIO MANAGEMENT
Table of Contents
Introduction......................................................................................................................................2
Strategic Framework Model............................................................................................................2
Project portfolio process of selection..............................................................................................5
Strategies in selecting the project portfolio.....................................................................................5
Systemic approach to selection of project portfolio........................................................................6
Process of decision making that supports project selection.............................................................7
Fundamentals of analytic hierarchic process...................................................................................8
Improvement of the business process in decision of project portfolio..........................................10
Facilitating AHP............................................................................................................................10
Modern day challenge of project portfolio management...............................................................11
Enhancing project portfolio management using AHP...................................................................12
Reasons for using the Analytic Hierarchy Process in decision making........................................15
Summary........................................................................................................................................16
Reference List................................................................................................................................18

2STRATEGIC PROJECT, PROGRAM AND PORTFOLIO MANAGEMENT
Literature Review: Use of analytic hierarchy process in project selection for portfolio
design
Introduction
According to Aragones-Beltran et al. (2014), the organizations in being successful in
nature have to implement effective strategies so that it can help them in gaining a competitive
advantage. The strategies that are taken up by the organizations have to be examined thoroughly
so that it can be formulated and implemented within the organization. The making of the right
decisions, opting for the best alternatives along with the optimization of the choices so that the
environmental changes can be visible within the organization are part of the choices that needs to
be considered by the organization. The use of the Analytic Hierarchy Process (AHP) helps in
identifying the six sigmas, lean six sigmas and the other decisions regarding the improvement of
the business processes.
Strategic Framework Model
The balanced scorecard is a framework that helps the organizations in viewing their rate
of success from various perspectives such as from the viewpoint of customers, human resources,
operational and financial. The financial point of view is an external part that helps in viewing the
results of the organization that are related to the finances (Bolat et al, 2014). The perspective of
the customers is also another external factor that helps in articulating the value proposition of the
customers along with the benefits that the customer may receive from the organization.
The operational point of view for the organization deals with the different operations that
are present within the organization internally that will help the organization in achieving the

3STRATEGIC PROJECT, PROGRAM AND PORTFOLIO MANAGEMENT
customer and the financial outcomes (Velasques & Hester, 2013). The perspective of the human
resources will help the organization in managing its labor so that the operations can be carried
out in a proper manner.
The strategic framework model with the help of the balanced scorecard will help the
organizations in making the choices so that the deployment of the Six Sigma can be done
successfully. It will also help the organization in formulating a clear vision and mission along
with aligning the goals in the strategic pyramid by dividing the functional areas of business
among the employees. This will help in improving the process of business so that the
expectations of the company can be set in a realistic manner (Govindan et a., 2015).
Contextually, the improvement of the business process is based on the selection of the
projects and aligning it with the goals of the organizations. The portfolio of the project can be
optimized according to the needs of the changes in the business gradually. Thus, there is a need
to make consistent and effective decisions so that the resources that are available in the
organization can be used in a better manner (Morton, Keisler & Sallo, 2016).
According to Ahmad and Tahar (2014), the developer of the analytic hierarchy process
Tom Saaty, had spent many years in examining the decisions that are used in the process of
business including the factor of optimal selection so that it can be aligned to the strategy of the
organization. The research principles that he discovered helped in improving the projects along
with the selection of the process of business so that the portfolio of the project can be optimized.
According to Brook and Pagnanelli (2014), the use of AHP as an alternative approach in
selecting the projects have six advantages that are firstly, it is of a hierarchical structure that
helps the decision makers to define the strategic objectives present at a higher level along with

4STRATEGIC PROJECT, PROGRAM AND PORTFOLIO MANAGEMENT
the available metrics so that it can help inn proper assessment of the strategies. Secondly, the use
of the process helps in analyzing the finances by taking in to consideration the qualitative and the
quantitative considerations along with the viewpoints of the stakeholders so that it can help in
evaluating it efficiently. Chiang, Chen and Ho (2016) stated that thirdly, the process allows the
makers of the decisions in measuring the importance of the projects by taking in to account the
costs, risks and the benefits that the project may provide by allocating the suitable resources in it.
Fourthly, the use of the analytic hierarchy process needs to be applied within the organizations so
that the maturity level of the inputs can be measured using the subjective judgments or the
numerical data. According to Raut and Mahajan (2015), the next advantage of the process is that
it will provide the sensitivity analysis by allowing the practioners in examining the situations
with better capabilities of analytics. Lastly, the explicit and the auditable structure of the decision
will help in creating a firm framework so that it can help in selection of the processes and
allocation of the decisions in a systematic manner.
AHP follows a format that is well-structured so that the execution of it can be done
easily. The technique can be applied in a simplistic manner and is based on the following four
steps where the first step includes the development of the business criteria and the drivers so that
the top projects can be analyzed with the help of drivers that are of high level. This will help in
measuring the values that are present in the project (Yuen, 2014). The second step involves the
use of decisions so that the priorities can be determined and lead the organization to success. The
third step involves the use of accurate numerical data so that the projects can be rated by
comparing it with the other projects. The last step includes the allocation of the resources so that
the allocation of the funds and the resources can be done accordingly. This will be possible by

5STRATEGIC PROJECT, PROGRAM AND PORTFOLIO MANAGEMENT
linking the integer and the linear techniques of optimization procedure (Lee, Tang & Sugumaran,
2014).
Project portfolio process of selection
The selection of the project portfolio has become popular from the last decade, as the
priorities of the organization help them in selecting the projects. The project portfolio selection
can be defined as a record of projects that are active within the organization and is updated on a
constant manner. This helps the new projects in being evaluated, selected and prioritized so that
the allocation of the resources can be done to the active and the immediate projects (Solimanpur,
Mansourfar & Ghayour, 2015).
Strategies in selecting the project portfolio
According to Kannan, Govindan and Rajendran (2015), the selection and the
prioritization of the projects depends on the importance of the projects so that the external and
the internal capabilities of making the right mix of elements can help in the successful
completion of the projects by allocating the proper resources. The alignment of the projects
along with the corporate strategy of the organization is an important criterion, as it helps in
allocating the effective resources within the project. Wang, Hsu and Tzeng (2014) stated that the
resources of the organization are limited and it is important for them in targeting and utilizing the
resources in the right manner so that it can help the organization in maximizing its value.
Indicators such as Net Profit Value and Return on Investments are used in measuring the
financial outcomes of the organization. The organization also needs to balance the financial
investments so that the long and the short-term risks can be mitigated and the project can be
completed within the stipulated time.