Share:


A two-step approach for selection of railway modernization projects based on analytic hierarchy process

Abstract

This paper presents a simulation of the Project Portfolio Management (PPM) model usage in evaluation and selection of modernization projects of Serbian Railways. Performance review of the selected projects is conducted in regards to the strategic goals of the company, which have been established during the process of strategic planning. The project selection model is methodologically set up as a two-step selection model. The number of portfolio projects is narrowed down by ranking their importance in regards to the success of the modernization program (benefits, risks, and resources), which is followed by the ranking of the projects on the basis of their contribution to the realization of previously chosen liquidity and rentability goals, which are always a challenge when it comes to railway companies. This selection procedure is simulated by applying the Analytic Hierarchy Process (AHP), a mathematical model of linear programming, embedded in the software package “Expert Choice”. The simulation results show that, in this way, it is possible to achieve a considerable drop in the amount of necessary financial resources for the realization of modernization projects, which is also the main contribution of this paper. This proves the efficiency of the PPM concept application as a modern model of strategic management. The showcased model of project portfolio selection can find a significant usage among the current processes of railways restructuring, especially in financing of the projects of public–private partnerships.

Keyword : project portfolio management, two-step selection model, AHP, railway

How to Cite
Ković, R., & Milenković, M. (2022). A two-step approach for selection of railway modernization projects based on analytic hierarchy process. Transport, 37(4), 264–278. https://doi.org/10.3846/transport.2022.17808
Published in Issue
Nov 21, 2022
Abstract Views
291
PDF Downloads
268
Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.

References

Anisseh, M.; Hemmati, F.; Shahraki, M. R. 2018. Best selection of project portfolio using fuzzy AHP and fuzzy TOPSIS, Journal of Engineering Management and Competitiveness 8(1): 3–10. https://doi.org/10.5937/jemc1801003A

Arnold, U.; Schmidt, B. 2010. Integrating sustainability into strategic purchasing: an advanced purchasing portfolio approach, in 2010 Eighth Annual International Symposium on Supply Chain Management “Exploring the Leading Edge in SCM: Innovation, Sustainability, Performance Measurement”, 26–28 September 2010, Toronto, Canada.

Aubry, M.; Hobbs, B.; Thuillier, D. 2007. A new framework for understanding organisational project management through the PMO, International Journal of Project Management 25(4): 328–336. https://doi.org/10.1016/j.ijproman.2007.01.004

Benaija, K.; Kjiri, L. 2014. Project portfolio selection: multi-criteria analysis and interactions between projects, International Journal of Computer Science Issues 11(6): 134–143. Available from Internet: https://www.ijcsi.org/papers/IJCSI-11-6-1-134-143.pdf

Benítez, J.; Delgado-Galván, X.; Izquierdo, J.; Pérez-García, R. 2012. An approach to AHP decision in a dynamic context, Decision Support Systems 53(3): 499–506. https://doi.org/10.1016/j.dss.2012.04.015

Blichfeldt, B. S.; Eskerod, P. 2008. Project portfolio management – there’s more to it than what management enacts, International Journal of Project Management 26(4): 357–365. https://doi.org/10.1016/j.ijproman.2007.06.004

Boj, J. J.; Rodriguez-Rodriguez, R.; Alfaro-Saiz, J.-J. 2014. An ANP-multi-criteria-based methodology to link intangible assets and organizational performance in a balanced scorecard context, Decision Support Systems 68: 98–110. https://doi.org/10.1016/j.dss.2014.10.002

Chatterjee, K.; Hossain, S. A., Kar, S. 2018. Prioritization of project proposals in portfolio management using fuzzy AHP, OPSEARCH 55(2): 478–501. https://doi.org/10.1007/s12597-018-0331-3

Closs, D. J.; Jacobs, M. A.; Swink, M.; Webb, G. S. 2008. Toward a theory of competencies for the management of product complexity: six case studies, Journal of Operations Management 26(5): 590–610. https://doi.org/10.1016/j.jom.2007.10.003

Collan, M.; Luukka, P. 2014. Evaluating R&D projects as investments by using an overall ranking from four new fuzzy similarity measure-based TOPSIS variants, IEEE Transactions on Fuzzy Systems 22(3): 505–515. https://doi.org/10.1109/TFUZZ.2013.2260758

Cooper, R. G.; Edgett, S. J.; Kleinschmidt, E. J. 2002. Portfolio Management for New Products. 2nd Edition. Basic Books. 400 p.

Cooper, R.; Edgett, S.; Kleinschmidt, E. 2001. Portfolio management for new product development: results of an industry practices study, R&D Management 31(4): 361–380. https://doi.org/10.1111/1467-9310.00225

Danesh, D.; Ryan, M. J.; Abbasi, A. 2017. A systematic comparison of multi-criteria decision making methods for the improvement of project portfolio management in complex organisations, International Journal of Management and Decision Making 16(3): 280–320. https://doi.org/10.1504/IJMDM.2017.085638

Danesh, D.; Ryan, M. J.; Abbasi, A. 2018. Multi-criteria decision-making methods for project portfolio management: a literature review, International Journal of Management and Decision Making 17(1): 75–94. https://doi.org/10.1504/IJMDM.2018.088813

Danesh, D.; Ryan, M. J.; Abbasi, A. 2015. Using analytic hierarchy process as a decision-making tool in project portfolio management, International Journal of Economics and Management Engineering 9(12): 4194–4204.

Dawidson, O. 2006. Project Portfolio Management – an Organising Perspective. Thesis for the Degree of Doctor of Philosophy. Chalmers University of Technology, Gothenburg, Sweden. 170 p. Available from Internet: https://research.chalmers.se/en/publication/18136

Dietrich, P.; Lehtonen, P. 2005. Successful management of strategic intentions through multiple projects – reflections from empirical study, International Journal of Project Management 23(5): 386–391. https://doi.org/10.1016/j.ijproman.2005.03.002

Dobrovolskienė, N.; Tamošiūnienė, R. 2016. Sustainability-oriented financial resource allocation in a project portfolio through multi-criteria decision-making, Sustainability 8(5): 485. https://doi.org/10.3390/su8050485

Elonen, S.; Artto, K. A. 2003. Problems in managing internal development projects in multi-project environments, International Journal of Project Management 21(6): 395–402. https://doi.org/10.1016/S0263-7863(02)00097-2

Ghapanchi, A. H.; Tavana, M.; Khakbaz, M. H.; Low, G. 2012. A methodology for selecting portfolios of projects with interactions and under uncertainty, International Journal of Project Management 30(7): 791–803. https://doi.org/10.1016/j.ijproman.2012.01.012

Giannoulis, C.; Ishizaka, A. 2010. A web-based decision support system with ELECTRE III for a personalised ranking of British universities, Decision Support Systems 48(3): 488–497. https://doi.org/10.1016/j.dss.2009.06.008

Greer, M. 2006. What’s Project Portfolio Management (PPM) & Why Should Project Managers Care about It? 4 p. Available from Internet: http://hosteddocs.ittoolbox.com/MG041906.pdf

Gürbüz, T.; Alptekin, S. E.; Alptekin, G. I. 2012. A hybrid MCDM methodology for ERP selection problem with interacting criteria, Decision Support Systems 54(1): 206–214. https://doi.org/10.1016/j.dss.2012.05.006

Hadad, Y.; Keren, B.; Laslo, Z. 2013. A decision-making support system module for project manager selection according to past performance, International Journal of Project Management 31(4): 532–541. https://doi.org/10.1016/j.ijproman.2012.10.004

He, Q.; Luo, L.; Hu, Y.; Chan, A. P. C. 2015. Measuring the complexity of mega construction projects in China – a fuzzy analytic network process analysis, International Journal of Project Management 33(3): 549–563. https://doi.org/10.1016/j.ijproman.2014.07.009

Ishizaka, A.; Labib, A. 2009. Analytic hierarchy process and expert choice: benefits and limitations, OR Insight 22(4): 201–220. https://doi.org/10.1057/ori.2009.10

Janssen, R.; Nijkamp, P.; Rietveld, P. 1990. Qualitative multicriteria methods in the Netherlands, in C. A. Bana e Costa (Ed.). Readings in Multiple Criteria Decision Aid, 383–409. https://doi.org/10.1007/978-3-642-75935-2_17

Kester, L.; Hultink, E. J.; Lauche, K. 2009. Portfolio decision-making genres: a case study, Journal of Engineering and Technology Management 26(4): 327–341. https://doi.org/10.1016/j.jengtecman.2009.10.006

Ković, R.; Djuranović, D. 2011. Železnice Srbije: dvostepeni model selekcije projekata za portfolio nabavke (praktičan prikaz), u III Međunarodni simpozijum “Novi horizonti saobraćaja i komunikacija 2011”, 24–25 novembar 2011, Doboj, Republika Srpska, Bosna i Hercegovina, 88–88. (in Serbian).

Levine, H. A. 2005. Project Portfolio Management: a Practical Guide to Selecting Projects, Managing Portfolios, and Maximizing Benefits. Jossey-Bass. 560 p.

Markowitz, H. M. 2009. Harry Markowitz: Selected Works (World Scientific-Nobel Laureate). World Scientific Publishing Company. 716 p.

Martinsuo, M.; Lehtonen, P. 2007. Role of single-project management in achieving portfolio management efficiency, International Journal of Project Management 25(1): 56–65. https://doi.org/10.1016/j.ijproman.2006.04.002

Perez, F.; Gomez, T. 2016. Multiobjective project portfolio selection with fuzzy constraints, Annals of Operations Research 245(1–2): 7–29. https://doi.org/10.1007/s10479-014-1556-z

PMI. 2017. The Standard for Portfolio Management. 4th Edition. Project Management Institute (PMI). 189 p.

Saaty, T. L. 1980. The Analytic Hierarchy Process: Planning, Priority Setting, Resource Allocation. McGraw-Hill. 287 p.

Saaty, T. L.; Sagir, M. 2009. Extending the measurement of tangibles to intangibles, International Journal of Information Technology & Decision Making 8(1): 7–27. https://doi.org/10.1142/S0219622009003247

Sala, S.; Farioli, F.; Zamagni, A. 2013. Life cycle sustainability assessment in the context of sustainability science progress (part 2), The International Journal of Life Cycle Assessment 18(9): 1686–1697. https://doi.org/10.1007/s11367-012-0509-5

Sandstrom, C.; Bjork, J. 2010. Idea management systems for a changing innovation landscape, International Journal of Product Development 11(3–4), 310–324. https://doi.org/10.1504/IJPD.2010.033964

Shi, Q.; Zhou, Y.; Xiao, C.; Chen, R.; Zuo, J. 2014. Delivery risk analysis within the context of program management using fuzzy logic and DEA: a China case study, International Journal of Project Management 32(2): 341–349. https://doi.org/10.1016/j.ijproman.2013.05.002

Singh, R. K.; Murty, H. R.; Gupta, S. K.; Dikshit, A. K. 2007. Development of composite sustainability performance index for steel industry, Ecological Indicators 7(3): 565–588. https://doi.org/10.1016/j.ecolind.2006.06.004

Song, S.; Yang, F.; Xia, Q. 2019. Multi-criteria project portfolio selection and scheduling problem based on acceptability analysis, Computers & Industrial Engineering 135: 793–799. https://doi.org/10.1016/j.cie.2019.06.056

Steffens, W.; Martinsuo, M.; Artto, K. 2007. Change decisions in product development projects, International Journal of Project Management 25(7): 702–713. https://doi.org/10.1016/j.ijproman.2007.01.008

Sudhaman, P.; Thangavel, C. 2015. Efficiency analysis of ERP projects – software quality perspective, International Journal of Project Management 33(4): 961–970. https://doi.org/10.1016/j.ijproman.2014.10.011

Tavana, M.; Keramatpour, M.; Santos-Arteaga, F.; Ghorbaniane, E. 2015. A fuzzy hybrid project portfolio selection method using data envelopment analysis, TOPSIS and integer programming, Expert Systems with Applications 42(22): 8432–8444. https://doi.org/10.1016/j.eswa.2015.06.057

Thanassoulis, E.; Kortelainen, M.; Allen, R. 2012. Improving envelopment in data envelopment analysis under variable returns to scale, European Journal of Operational Research 218(1): 175–185. https://doi.org/10.1016/j.ejor.2011.10.009

Triantaphyllou, E. 2000. Multi-criteria decision making methods, Applied Optimization 44: 5–21. https://doi.org/10.1007/978-1-4757-3157-6_2

Vargas, R. V. 2010. Using the analytic hierarchy process (AHP) to select and prioritize projects in a portfolio, PMI® Global Congress North America 2010, 9–12 October 2010, Washington, DC, US. Available from Internet: https://www.pmi.org/learning/library/analytic-hierarchy-process-prioritize-projects-6608

Verdecho, M.-J.; Alfaro-Saiz, J.-J.; Rodriguez-Rodriguez, R. 2012. Prioritization and management of inter-enterprise collaborative performance, Decision Support Systems 53(1): 142–153. https://doi.org/10.1016/j.dss.2011.12.011

Wang, T.-C. 2012. The interactive trade decision-making research: an application case of novel hybrid MCDM model, Economic Modelling 29(3): 926–935. https://doi.org/10.1016/j.econmod.2012.02.001

Whyte, L. L.; Wilson, A. G.; Wilson, D. 1969. Hierarchical Structures. Elsevier. 322 p.

Yang, F.; Song, S.; Huang, W.; Xia, Q. 2015. SMAA-PO: project portfolio optimization problems based on stochastic multicriteria acceptability analysis, Annals of Operations Research 233: 535–547. https://doi.org/10.1007/s10479-014-1583-9

Yeh, C.-H. 2002. A problem-based selection of multi-attribute decision-making methods, International Transactions in Operational Research 9(2): 169–181. https://doi.org/10.1111/1475-3995.00348

Zhong, J.; Hou, K.; Yang, L.; Hou, R.; Zhu, X. 2012. Research on evaluation index system of mixed-model assembly line based on ANP method, in 2012 9th International Conference on Service Systems and Service Management: Proceedings of ICSSSM’12, 2–4 July 2012, Shanghai, China, 171–174. https://doi.org/10.1109/ICSSSM.2012.6252215