Combination of Data Envelopment Analysis and Non-Linear Programming: A Novel Hybrid for Optimizing the Allocation of the Fixed-Cost in the Project Portfolio

Subject Areas : International Journal of Data Envelopment Analysis

Farhad Khazaeli ¹ , Hosein Arman ² , Mohammadreza Zare ³

1 - Department of Civil Engineering, Najafabad Branch, Islamic Azad University, Najafabad, Iran.
2 - Department of Management, Najafabad Branch, Islamic Azad University, Najafabad, Iran
3 - Department of Civil Engineering, Najafabad Branch, Islamic Azad University, Najafabad, Iran

Received: 2020-06-09 Accepted : 2020-11-25 Published : 2020-12-01

Keywords: Project scope management, Resource optimization, Fixed-cost allocation, DEA, InvDEA, Project performance, EVM,

Abstract :

Resource allocation is one of the most complicated managers' concerns, which forces them to seek novel methods and approaches. The fixed-cost (FC) allocation among different decision-making units is one such problem. That has led to considerable research in this regard. Numerous methods have been proposed, that the most important of them is Data Envelopment Analysis (DEA). Fixed-Cost allocation problem is more reflected in project portfolio management. The management has to allocate a common cost between several different projects. However, due to the nature of the project, the previously proposed methods are insufficiently adapted to the project execution realities. In this research, a novel method is proposed to allocate FC aligned with project management methods. For this purpose, the current situation of projects is first evaluated using the Earned Values Management method. Then projects which are out of scope are identified. Inverse Data Envelopment Analysis estimates the required costs to keep them back into their scope on the assumption that the project's efficiency remains constant. Finally, by using non-linear programming, the fixed-cost allocates optimally. In order to illustrate the proposed method, a real case example is presented.