The robustness risk and selection optimization of R&D project portfolio under uncertainty

Facing the complexity of project portfolios selection, such as the uncertainty, interaction effects between projects and its influence on the project risk and selection, this paper proposed the conception of project portfolio robustness risk. Which is described from three aspects of; project risk, interaction effects and control costs, and is measured by the theory of the node load and node processing capacity. Then considering the uncertainty, a fuzzy project portfolio optimization model for profit maximum based on the constraint of project portfolio robustness risk and resource is established. According to the model, the improved quantum genetic algorithm is designed and an example is given. The result shows that the traditional model exclude the kind of project which can increase profit and take the risk after the project is selected into the portfolio. In addition, the model proposed in this paper can not only provide effective decision support for decision maker but also decrease the possibility of failure due to the unreasonable selection.

I. Introduction

In recent years, with the needs of diversity, the technology complexity and the limited resources, companies could no longer rely on the implementation of a single R&D project to respond to the rapidly changing environment. The parallel implementation of R&D projects has become an inevitable trend to obtain the competitive edge. Project portfolio is a group of candidate projects which are selected by the decision makers, considering the strategies, profits, risks. There are multi-independences among projects, such as resource effect, outcome effect and technology effect. However, due to the restriction of the human resources, capital, equipment and other resource, it is difficult to achieve complete parallel development of the R&D projects. The decision-maker has to face the portfolio selection problem. Nevertheless, as the complexity and innovative of R&D project portfolio, there are many uncertainties in projects. Managers have to consider the uncertainty in portfolio selection, otherwise it will lead to mistakes in project portfolio management decision. Moreover, because of the independences among R&D projects, the risk can diffuse to other projects through this relationship, so that the failure of one project may trigger the changes of the possibility failure of other projects, or even a direct failure to a certain project. Consequently, project selection has to consider the uncertainty of R&D projects and the influence of interaction effect to the project risk.