SBM1203: Project Selection Method Based on Balanced Scorecard

This report summarizes an article that presents a project evaluation method developed using the Balanced Scorecard (BSC) framework and a mathematical model based on the knapsack problem. The study aims to enhance project selection by integrating the BSC's dimensions into a mathematical model, where output points (Eij) are computed for each dimension of various projects, weighted, and summed. This model, implemented using GAMS software, selects projects that maximize overall output, considering constraints like budget, time, and personnel. The article details the model's performance, sensitivity analysis, and its ability to incorporate additional constraints. The model's application extends to investment evaluation, decision-making, and resource management, offering consistent results and adaptability for future studies. The article emphasizes the importance of strategic alignment and efficient resource allocation in project selection, providing a structured approach for organizations to make informed decisions.

ASSESSMENT 1: ARTICLE
SUMMARY

Project Selection Method Based on Balanced Scorecard Framework
Various changes have been noticed in methods of production and processes & machines due
to advancement and development in technology. Now-a-days just meeting the quantity
demanded and maintaining quality standards are not sufficient for the organisations to
continue its existence. Rather, they need to formulate and implement proper strategies. It is
very necessary for the management of the company to properly determine the performance
criteria in accordance with their vision and ultimate objective.
The objective of the study is to formulate a method of project evaluation using the
dimensions of balanced scorecard (BSC). A project evaluation method has been developed
with the combination of both BSC technique and mathematical model of knapsack problem.
Here, Balance Scorecard’s dimension has been injected in the mathematical model. For every
single dimension of each project, the output points (Eij) were computed. These output points
relies on the success criteria which are pre-assigned. For every single dimension, these output
points are weighted as well as summed up. This mathematical model was written using
GAMS software which selects only those projects that maximises the output in total. To
represent thirteen projects, a sample data was prepared and generated. Later, developed
model’s performance and sensitivity to every single parameter was tested. Using a computer
with certain specifications like Windows 10 Pro operating system, 8 GB RAM and 2.90 GHz
processor these test runs were performed. On an average, 0.97 seconds was recorded as the
running time of model.
Notations used for constructing mathematical model:
Eij: j th dimension point of project I
Wj: weight assigned to j th dimension by the decision maker
T: Total time allocated for all projects
ti: time required to realise project i
B: total budget reserved for all projects
Ci: capital required for project i
Ri: success probability assigned to project i
H: total number of employees assigned for all projects
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Project Selection Method Based on Balanced Scorecard Framework
Pi: number of qualified personnel for running phase for project i
Decision variables that are considered are listed below.
Xi = { 1,
𝑠𝑒𝑙𝑒𝑐𝑡𝑖𝑜𝑛 𝑜𝑓 𝑝𝑟𝑜𝑗𝑒𝑐𝑡 𝑖
{0,
𝑜𝑡ℎ
𝑒𝑟
Employing given notation, the mathematical model which is made as below:
Maximise z = ∑i ∑j EijWjXi
∑i t𝑖 Xi ≤ T (1)
∑i C𝑖 Xi ≤ B (2)
∑i P𝑖 Xi ≤ H (3)
𝑋i E {1, 0} (4)
Projects whose total productivity stands at highest is selected by the objective function.
Constraints which are numbered as 1,2 and 3 are used to make sure that budget, duration of
project and personnel do not go above the limit given for the project by the company.
This model can be implemented by the companies for project evaluation, investment
evaluation, decision-making process, management of resources, direct review of outputs and
indirect review of outputs. This model has always given consistent result which includes the
constraints like budget, time constraints and personnel constraints. Also, the model is capable
of adding new constraints as well as parameters. It is helpful in preventing when available
resources actually exceed. More constraints can be included in model for carrying out the
future studies to denote the complete structure of organisation, definite needs and
requirements and strategic targets.
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Project Selection Method Based on Balanced Scorecard Framework
Link to the Article Used: https://www.berjournal.com/wp-
content/plugins/downloads-manager/upload/
BERJ10519Article12p.1179-1187.pdf
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