![]() ![]() That is the reason why a unique criterion or translation is not viable enough to determine which project(s) should or should not be executed. When analyzing the above table, one can observe that the different dimensions demonstrate how complex it is to come up with an exact translation for the meaning of low cost and high benefits. It's important to observe that a benefit-cost relationship does not necessarily mean the use of exclusive financial criteria like the widely known benefit-cost ratio, but instead a broader concept of the reaped benefits from executing the project and their related efforts.īecause organizations belong to a complex and varying context, oftentimes even chaotic, the challenge of the aforementioned definition resides exactly in determining what the costs and benefits are for any given organization.Įxhibit 1 shows the different interpretations for the concepts of cost and benefits.Įxhibit 1 – Different Perceptions and Synonyms for Defining Low Cost and High Benefit. Projects with higher benefits, when compared with their costs, will have a higher priority. When we consider the ever-changing dynamics of the current environment like we have never seen before, making the right choices based on adequate and aligned objectives constitutes a critical factor, even for organizational survival.īasically, the prioritization of projects in a portfolio is nothing more than an ordering scheme based on a benefit-cost relationship of each project. Given any specific situation, making the right decisions is probably one of the most difficult challenges for science and technology (Triantaphyllou, 2002). One of the main challenges that organizations face today resides in their ability to choose the most correct and consistent alternatives in such a way that strategic alignment is maintained. The Importance of Project Selection and Prioritization This paper also discusses the importance and some possible criteria for prioritizing projects, and by using a fictitious project prioritization example, it demonstrates AHP in a step-by-step manner, where the resulting priorities are shown and the possible inconsistencies are determined. However, decision making is, in its totality, a cognitive and mental process derived from the most possible adequate selection based on tangible and intangible criteria (Saaty, 2009), which are arbitrarily chosen by those who make the decisions. When looking into how organizations decide over which projects to execute, we notice a constant desire to have clear, objective, and mathematical criteria (Haas & Meixner, 2005). AHP is one of the main mathematical models currently available to support the decision theory. ![]() The objective of this paper is to present, discuss, and apply the principles and techniques of the analytic hierarchy process (AHP) in the prioritization and selection of projects in a portfolio. ![]()
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