Modelling resource allocation of R&D project portfolios using a multi‐criteria decision‐making methodology

Purpose – The purpose of this paper is to outline a structured Multi‐Criteria Decision Making (MCDM) methodology to help organisations efficiently allocate limited resources (investments in this case) to different R&D projects within attainable project portfolio strategy packages and select the efficient portfolios that align R&D investments to the corporate long‐term objectives. Design/methodology/approach – In this paper a case study is used to present a proposed multi‐criteria methodology approach for project resource allocation. The method provides the decision maker with an ability to easily assess the impact of trading off R&D project portfolios tangible benefits (short‐term profits) and intangible benefits (reliability and risk) against constrained budget resources (investment costs), without the requirement for sophisticated and time‐consuming mathematical formulations. Findings – Superior findings are achieved when decisions are assisted by computer‐based MCDM methodology. Practical implications – The paper shows that the concept embodied in this multi‐criteria approach is applied in a case study to identify and select the efficient R&D project portfolios of a multi‐national manufacturing company. Originality/value – The novelty of this paper lies in applying a multi‐criteria methodology that offers an integrated framework that allows efficient modelling of resource allocation of project portfolios. The ultimate benefit of this work can be seen in its dual effect of specifying efficient R&D projects within different attainable portfolio packages and in defining appropriate R&D investment strategies based on trading off benefits against organisationally constrained budget resources.