Abstract
Construction project portfolio management has a large impact on many companies as they are often confronted with having more projects to select from than the resources available to execute them. Selecting the wrong projects will lead to wasted resources and loss of benefits which may have been gained by focussing on other projects. While there have been many discussions surrounding portfolio theory, there is currently a lack of framework which integrates sustainability into construction project portfolio management. This paper departs from existing frameworks (which focus more on monetary gains in projects) by proposing robust methods to account for sustainability across two critical stages: I. Screening; II. Optimal portfolio selection. Under the screening stage, sustainability project criteria are proposed followed by the use of second order moment thinking to account for uncertainty in sustainability measurements. The outputs from the screening stage are then used for developing an efficient frontier which facilitates the selection of an optimal portfolio from a sustainability perspective. The originality of this paper is that it aims to integrate sustainability thinking into construction project portfolio management which has not been attempted.
Article PDF
Similar content being viewed by others
Avoid common mistakes on your manuscript.
References
Archer, N. P. and Ghasemzadeh, F. (1999). “An integrated framework for project portfolio selection.” International Journal of Project Management, Vol. 17, No. 4, pp. 207–216, DOI: 10.1016/S0263-7863(98)00032-5.
Archer, N. P. and Ghasemzadeh, F. (2000). “Project portfolio selection through decision support.” Decision Support Systems, Vol. 29, No. 1, pp. 73–88, DOI: 10.1016/S0167-9236(00)00065-8.
Australian Bureau of Statistics (2003). Construction and the Environment, viewed on 14 February 2015, <http://www.abs.gov.au/ausstats/abs@.nsf/Previousproducts/1301.0Feature%20Article282003?opendocument&tabname=Summary&prodno=1301.0&issue=2003&num=&view=>.
Brundtland Report (1987). Our common future: Report of the world commission on environment and development, United Nations, viewed on 14 February 2015, <http://www.un-documents.net/ocf-02.htm>.
Carazo, A. F., Gomez, T., Molina, J., Hernandez-Diaz, A. G., Guerrero, F. M., and Caballero, R. (2010). “Solving a comprehensive model for multiobjective project portfolio selection.” Computers and Operations Research, Vol. 37, No. 4, pp. 630–639, DOI: 10.1016/j.cor.2009.06.012.
Carlsson, C., Fuller, R., Heikkila, M., and Majlender, P. (2007). “A fuzzy approach to r&d project portfolio selection.” International Journal of Approximate Reasoning, Vol. 44, No. 2, pp. 93–105, DOI: 10.1016/j.ijar.2006.07.003.
Carmichael, D. G. (2006). Project planning, and control, Taylor and Francis, London.
Carmichael, D. G. and Balatbat, M. C. A. (2008). “Probabilistic DCF analysis, and capital budgeting and investment- A survey.” The Engineering Economist, Vol. 53, No. 1, pp. 84–102, DOI: 10.1080/00137910701864809.
Constructing Excellence (2007). Why is sustainable construction important? Joint UK-Sweden Initiative, viewed on 4 April 2013, <http://www.ukswedensustainability.org/background/framework.jsp>.
Doerner, K. F., Gutjahr, W. J., Hartl, R. F., Strauss, C., and Stummer, C. (2006). “Pareto ant colony optimization with ILp preprocessing in multiobjective project portfolio selection.” European Journal of Operational Research, Vol. 171, No. 3, pp. 830–841, DOI: 10.1016/j.ejor.2004.09.009.
Fama, E. F. and French, K. R. (2005). “The capital asset pricing model: theory and evidence (Digest Summary).” Journal of Economic Perspectives, Vol. 35, No. 2, pp. 325–346, DOI: http://dx.doi.org/10.2469/dig.v35.n2.1671.
Fernandez-Sanchez, G. and Rodrguez-Lopez, F. (2010). “A methodology to identify sustainability indicators in construction project managementapplication to infrastructure projects in Spain.” Ecological Indicators, Vol. 10 No. 6, pp. 1193–1201, DOI: 10.1016/j.ecolind.2010.04.009.
Guo, N. and Yu, S. W. (2013). “The necessity of project portfolio management in the construction industry of China Mainland.” Applied Mechanics and Materials, No. 357–360, pp. 2238–2241. DOI: 10.4028/www.scientific.net/AMM.357-360.2238.
Gutjahr, W. J., Katzensteiner, S., Reiter, P., Stummer, C., and Denk, M. (2008). “Competence-driven project portfolio selection, scheduling and staff assignment.” Central European Journal of Operations Research, Vol. 16, No. 3, pp. 281–306, DOI: 10.1007/s10100-008-0057-z.
Gutjahr, W. J., Katzensteiner, S., Reiter, P., Stummer, C., and Denk, M. (2010). “Multi-objective decision analysis for competence-oriented project portfolio selection.” European Journal of Operational Research, Vol. 205, No. 3, pp. 670–679, DOI: 10.1016/j.ejor.2010.01.041.
Hernandez, C., Pajares, J., and Lopez-Paredes (2011). “A portfolio inspired metric for project selection in construction management, organization.” Technology and Management in Construction, Vol. 3, No. 1, pp. 264–268, DOI: 10.5592/otmcj.2011.1.6.
Hu, G., Wang, L. Fetch, S., and Bidanda, B. (2008). “A multi-objective model for project portfolio selection to implement lean and six sigma concepts.” International Journal of Production Research, Vol. 46, No. 23, pp. 6611–6625, DOI: 10.1080/00207540802230363.
Kangari, R. and Riggs, L. S. (1988). “Portfolio Management in Construction.” Construction Management and Economics, Vol. 6, No. 2, pp. 161–169, DOI: 10.1080/01446198800000014.
Karapetrovic, S. and Willborn, W. (1999). “Holonic model for a quality system in academia.” International Journal of Reliability and Quality Management, Vol. 16, No. 5, pp. 457–485, DOI: 10.1108/02656719910249847.
Kibert, C. J. (2005). Sustainable construction green building design delivery, Hoboken, John Wiley & Sons.
Le, M. C. and Nguyen, V. T. (2007). Strategy for project portfolio selection in private corporations in Vietnam, MSc Thesis, Autumn 2007, UMEA, School of Business, Sweden.
Markowitz, H. (1952). “Portfolio selection.” Journal of Finance, Vol. 7, No. 1, pp. 77–91, DOI: 10.1111/j.1540-6261.1952.tb01525.x.
Merton, R. C. (1972). “An analytic derivation of the efficient portfolio frontier.” Journal of Financial and Quantitative Analysis, Vol. 7, No. 4, pp. 1851–1872, DOI: 10.1.1.318.7756.
Meskendahl, S. (2010). “The influence of business strategy on project portfolio management and its success — A conceptual Framework.” International Journal of Project Management, Vol. 28, No. 8, pp. 807–817, DOI: 10.1016/j.ijproman.2010.06.007.
Muller, H. H. (1988). “Modern portfolio theory: Some main results.” ASTIN Bulletin, Vol. 18, No. 2, pp. 127–145, DOI: 10.2143/AST.18.2.2014947.
Rao, R. V. and Gandhi, O. P. (2002). “Digraph and matrix methods for the machinability evaluation of work materials.” International Journal of Machine Tools and Manufacture, Vol. 42, No. 3, pp. 321–330, DOI: 10.1016/S0890-6955(01)00133-X.
Reyck, B. D., Grushka-Cockayne, Y., Lockett, M., Calderini, S. R., Moura, M., and Sloper, A. (2005). “The impact of project portfolio management on information technology projects.” International Journal of Project Management, Vol. 23, No. 7, pp. 524–537, DOI: 10.1016/j.ijproman.2005.02.003.
Roychoudhury, S. (2007). The optimal portfolio and the efficient frontier, Capital University, viewed on 15 February 2015, <http://www.capital.edu/uploadedFiles/Capital/Academics/Schools_and_Departments/Natural_Sciences,_Nursing_and_Health/Computational_Studies/Educational_Materials/Finance_and_Economics/portfolio30107.pdf>.
Saaty, T. L. (1980). The analytic hierarchy process: Planning, priority setting, Resource Allocation, McGraw Hill International Book Co., New York and London.
Siew, R. Y. J. (2014a). Evaluating and enhancing the impact of sustainability reporting Tools (SRTs), PhD Thesis School of Civil and Environmental Engineering, University of New South Wales, Sydney, July 2014.
Siew, R. Y. J. (2014b). Alternative framework for assessing sustainable building funds: Green building fund (in print), Building Research & Information, viewed on 21 November 2014, <http://www.tandfonline.com/doi/abs/10.1080/09613218.2014.936170#.VJeRRsBA>.
Siew, R. Y. J. (2014c). “A review of sustainability reporting tools (SRTs) for Communities.” International Journal of Sustainable Construction Engineering and Technology, Vol. 5, No. 2, pp. 39–52, ISSN: 2180-3242.
Siew, R. Y. J., Balatbat, M. C. A., and Carmichael, D. G. (2013). “A review of building/infrastructure Sustainability Reporting Tools (SRTs).” Smart and Sustainable Built Environment, Vol. 2, No. 2, pp. 106–139, DOI: 10.1108/SASBE-03-2013-0010.
Stummer, C., Kiesling, E., and Gutjahr, W. J. (2009). “A multicriteria decision support system for competence-driven project portfolio selection.” International Journal of Information Technology & Decision Making, Vol. 8, No. 2, pp. 379–401, DOI: 10.1142/S0219622009003429.
Tong, T. K. L., Tam, C. M., and Chan, A. P. C. (2001). “Genetic algorithm optimization in building portfolio management.” Construction Management and Economics, Vol. 19, No. 6, pp. 601–609, DOI: 10.1080/01446190110062096.
Voros, J. (1985). “Portfolio analysis-an analytic derivation of the efficient portfolio frontier.” European Journal of Operational Journal, Vol. 23, No. 3, pp. 294–300, DOI: 10.1016/0377-2217(86)90295-X.
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
About this article
Cite this article
Siew, R.Y.J. Integrating sustainability into construction project portfolio management. KSCE J Civ Eng 20, 101–108 (2016). https://doi.org/10.1007/s12205-015-0520-z
Received:
Revised:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s12205-015-0520-z