312 European Journal of Operational Research 64 (1993)312-325 North-Holland Hierarchical models for multi-project planning and scheduling M. Grazia Speranza Dipartimento di Metodi Quantitativi, Universit~ di Brescia, 25122 Brescia, Italy Carlo Vercellis * Dipartimento di Economia e Produzione, Politecnico di Milano, 20133 Milano, Italy Abstract: We propose a model-based approach to nonpreemptive multi-project management problems, based on a hierarchical two-stage decomposition of the planning and scheduling process. Two perfor- mance criteria are considered: the net present value, which includes investment costs, operating costs, revenues, penalties for late completion; and the service level, expressed as the agreement between the completion times of the different projects and the customer needs. The resulting hierarchy of integer programming models is aimed at assisting the planners in understanding the interrelations among the allocation of resources, the timing of the activities, the cash flows. A class of branch-and-bound procedures is then proposed for the solution of these integer programming models. Keywords: Multi-project planning; Hierarchical decomposition; Project scheduling 1. Introduction The area of project management includes planning activities which range from the tactical level - in which milestones and due dates have to be determined, along with the allocation of limited resources, for a number of projects within the same organization - to the operational level - in which the scheduling of specific activities must be established in light of an appropriate trade-off between time, cost and resource usage. This paper deals with the planning and scheduling process in a multi-project environment, and gives particular emphasis to the methodologies for achieving a high degree of integration between tactical and operational stages of the decision process. In the project management practice, planners are generally concerned with a number of different decision criteria, often contrasting among each other. The intrinsic multi-objective nature of the decision process involved in project management emerges with particular evidence in conjunction with the tactical planning phase, over medium to long term time horizon. Hence, this conflict of objectives appears particularly relevant in the early stages of analysis of the project plan, when establishing milestones for bidding proposals and allocating scarce resources among different projects. Indeed, even if the productiv- ity performance is of major concern to most project managers, other factors, such as the service time to the customer and the reliability in meeting the promised delivery dates, should be explicitly taken into account. * Partially supported by Research Project 'Construction Building' of the National Research Council. Correspondence to: Prof. C. VerceUis, Dipartimento di Economia e Produzione, Politecnico di Milano, Piazza Leonardo da Vinci 32, 20133 Milano, Italy. 0377-2217/93/$06.00 © 1993 - Elsevier Science Publishers B.V. All rights reserved