Project selection using the combined approach of AHP and LP

Abstract

Purpose

This paper aims to propose a new model for project selection using the combined approach of analytic hierarchy process (AHP) and linear programming (LP). The key selection criteria for construction projects are also identified and assessed based on the perception of construction professionals.

Design/methodology/approach

Fifteen project selection criteria are identified based on review of related literature. A questionnaire is developed and distributed among construction professionals in the United Arab Emirates to assess the importance of these criteria. The questionnaire was designed to enable pair-wise comparisons using the AHP methodology. Based on the responses of 42 professionals, the weight of each criterion was calculated using Expert Choice software. Selected criteria are then used to compare available projects. AHP is applied first to prioritize the competing projects, in line with owner strategic goals and objectives. Next, the priority ratios (weights) obtained from the AHP model are used as the coefficients of the decision variables in a LP model to allocate the available budget in an optimal way to maximize the owner’s benefit.

Findings

Results indicate that project-specific criteria are the most important with an overall weight of 0.48. The top three criteria are profit, financial standing and risk with corresponding weights of 0.161, 0.114 and 0.1, respectively. The proposed model provided more benefit to the owner than using the traditional project selection method.

Originality/value

There are several methods for project selection. However, the optimization techniques do not consider qualitative factors. Other techniques consider both qualitative and quantitative factors but do not consider budget limitations to optimize the selection decision. The model proposed here combines both approaches and takes into consideration unique criteria that are specific to the construction industry.

Citation

Parvaneh, F. and El-Sayegh, S.M. (2016), "Project selection using the combined approach of AHP and LP", Journal of Financial Management of Property and Construction, Vol. 21 No. 1, pp. 39-53. https://doi.org/10.1108/JFMPC-09-2015-0034