Multilevel Project Planning and Simulation Using a Matrix-Based Model and Nonlinear Tardiness Compensation Profiles

Managing multiple simultaneous projects is a common approach utilized by most companies today and involves complex decision-making in a rapidly changing business environment. To deal with the often conflicting goals and the limited number of competing resources, the demand to align and prioritize projects is higher than ever.Taking the cost of delay into account, trade-offs between time, resource conflicts and cost can be balanced to align the individual projects and thus support the higher-level goals of the organization.The existing literature has considered penalties for the project completion date but still maintains the assumption that all projects have linear penalties associated with late completion. In reality, several other factors (size and type of project, urgency, etc.) might impact the incurred cost of delay over time. Our study contributes to the literature by considering nonlinear and time-dependent tardiness characteristics (i.e., cost of delay), similar to those proposed in the Agile literature. First, we reconstruct the so-called compensation profiles with standard probabilistic distributions and parameters that make further analysis possible.The simulations are carried out with the help of our matrix-based model and using metaheuristic optimization. The study proposes an optimization that can be successfully applied to the problem. The data source used for evaluation is a well-known standard artificial multiproject plan, taken from the existing literature. The proposed approach is evaluated to show how the different cost profiles and problem parameters affect the outcome in a general setup with the help of Monte Carlo sensitivity analysis.The simulation results indicate that planning decisions can be improved with the flexibility provided áby nonlinear compensation profiles. The cost of resource conflicts, delays, or both can be reduced depending on the chosen objective function. We aim to give recommendations and insights for practicing managers and scholars on how to deal with prioritization using our approach in a complex and demanding setting such as multilevel project environments