A hybrid AHP–SMART–ILP framework for project portfolio selection: Evidence from a developing economy

Guangul, Fiseha Mekonnen; Chala, Girma Tadesse; Chandra, Subhash

doi:10.22068/ijiepr.37.2.2018

IN PRESS Back to the articles list | Back to browse issues page

‎ 10.22068/ijiepr.37.2.2018

A hybrid AHP–SMART–ILP framework for project portfolio selection: Evidence from a developing economy

Fiseha Mekonnen Guangul¹

, Girma Tadesse Chala²

, Subhash Chandra³

1- Mechanical Engineering, Faculty of Technology, Arts and Culture, De Montfort University Dubai , fiseha@dmu.ac.uk
2- International College of Engineering and Management
3- Department of Manufacturing Technology, FTVETI

Abstract: (111 Views)

Strategic investment decisions across multiple projects require a systematic assessment of extensive quantitative and qualitative data, especially under conditions of resource constraints and uncertainty. Traditional single-project appraisal methods often fail to identify optimal portfolios aligned with organizational goals. This study presents a hybrid project portfolio selection framework integrating the Analytic Hierarchy Process (AHP), Simple Multi-Attribute Rating Technique (SMART), and 0–1 Integer Linear Programming (ILP) to enhance decision-making clarity and robustness. The framework employs a hierarchical structure, utilizing a comprehensive set of technical, commercial, socio-economic, financial, investment, and institutional criteria. AHP establishes consistent relative weights from expert judgments, while SMART scores candidate projects, generating aggregated scores that inform an ILP optimization model aimed at maximizing portfolio utility while adhering to budget constraints, mandatory project conditions, and interdependencies. Validation is performed using real data from an Endowment Corporate Office in Ethiopia, accounting for ongoing and prospective projects under varying demand scenarios. Scenario and sensitivity analyses reveal how variations in demand and criterion weights affect project rankings and portfolio composition, alongside an assessment of portfolio risk via variance and standard deviation. The hybrid AHP–SMART–ILP approach effectively considers both tangible and intangible objectives, achieving stable portfolios that address investment complexities and interdependencies.

Keywords: Project portfolio optimization, Analytical hierarchy process, Multi-criteria decision making, Multi-attribute rating technique, 0–1 Integer programming, Developing economies