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

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

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Article ID: iaor20083589
Country: Netherlands
Volume: 172
Issue: 3
Start Page Number: 1018
End Page Number: 1039
Publication Date: Aug 2006
Journal: European Journal of Operational Research
Authors: , ,
Keywords: statistics: data envelopment analysis
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.

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