An integrated framework for project portfolio selection NP Archer* and F Ghasemzadeh Michael G. DeGroote School of Business, McMaster University, Hamilton, Ontario, Canada L8S 4M4 The task of selecting project portfolios is an important and recurring activity in many organiz- ations. There are many techniques available to assist in this process, but no integrated frame- work for carrying it out. This paper simpli®es the project portfolio selection process by developing a framework which separates the work into distinct stages. Each stage accomplishes a particular objective and creates inputs to the next stage. At the same time, users are free to choose the techniques they ®nd the most suitable for each stage, or in some cases to omit or modify a stage if this will simplify and expedite the process. The framework may be im- plemented in the form of a decision support system, and a prototype system is described which supports many of the related decision making activities. # 1999 Published by Elsevier Science Ltd and IPMA. All rights reserved Keywords: Project portfolio selection, project management, integrated framework, decision support Introduction Project portfolio selection and the associated activity of managing selected projects throughout their life cycles are important activities in many organizations, 1± 3 since project management approaches are so com- monly used in many industries for activities such as research and development of new products, implement- ing new systems and processes in manufacturing and information systems, and contracting engineering and construction projects. But there are usually more pro- jects available for selection than can be undertaken within the physical and ®nancial constraints of a ®rm, so choices must be made in making up a suitable pro- ject portfolio. There are many relatively divergent techniques that can be used to estimate, evaluate, and choose project portfolios. 4 Many of these techniques are not widely used because they are too complex and require too much input data, they provide an inadequate treat- ment of risk and uncertainty, they fail to recognize interrelationships and interrelated criteria, they may just be too dicult to understand and use, or they may not be used in the form of an organized process. 1 But because of growing competitive pressures in the global economy, it has been suggested 5 that project portfolio analysis and planning will grow in the 1990s to become as important as business portfolio planning became in the 1970s and 1980s. Firms that wish to be competitive by selecting the most appropriate projects must therefore use techniques and procedures for port- folio selection that are based on the most critical pro- ject measures, but these techniques will not be used if they cannot be understood readily by managerial de- cision makers. Although there is no lack of techniques for project evaluation and portfolio selection, there is a total lack of a framework for organizing these tech- niques logically in a ¯exible process which supports the project portfolio selection process. The objectives of this paper are to: (a) evaluate brie¯y the current state of the art in project portfolio selection methods and to develop a number of related propositions for eective portfolio selection, based on the literature, (b) suggest an integrated framework to provide decision support for portfolio selection, allow- ing decision makers to utilize a desired subset of avail- able methodologies in a ¯exible and logical manner, and (c) describe a decision support system which can embody this framework in the support of portfolio selection activities. Tools for decision support, not decision making tools, are emphasized in this discussion, since the thought processes in decision making should be supported and not supplanted by the tools used. This support is pro- vided through techniques or models, data, and man- agement of large amounts of information, so decision makers can make informed decisions based on the most important facts. To bring these points forward, we examine the literature and develop a series of prop- ositions that must be met if a framework is to be developed that will succeed in practice. Then an inte- grated framework is proposed which allows decision makers to choose from a variety of techniques or International Journal of Project Management Vol. 17, No. 4, pp. 207±216, 1999 # 1999 Published by Elsevier Science Ltd and IPMA. All rights reserved Printed in Great Britain 0263-7863/99 $ - see front matter PII: S0263-7863(98)00032-5 *Corresponding author. Tel.: +001-905-525-9140; Fax: +001-905- 521-8995. 207