Uncertain Public R&D Project Portfolio Selection Considering Sectoral Balancing and Project Failure

Hongbo Li, Rui Chen () and Xianchao Zhang ()
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Hongbo Li: School of Management, Shanghai University, Shanghai 200444, China
Rui Chen: School of Management, Shanghai University, Shanghai 200444, China
Xianchao Zhang: Key Laboratory of Medical Electronics and Digital Health of Zhejiang Province, Jiaxing University, Jiaxing 314001, China

Sustainability, 2022, vol. 14, issue 23, 1-13

Abstract: In order to promote scientific and technological innovation and sustainable development, public funding agencies select and fund a large number of R&D projects every year. To guarantee the performance of the resulting project portfolio and the government’s investment benefits, the decision maker needs to select appropriate projects and determine a reasonable funding amount for each selected project. In the process of project selection, it is necessary to consider the balance of funding allocated to different scientific sectors as well as the failure probability of the projects in future execution, so that the expected performance of the project portfolio is maximized as much as possible. In view of this, we propose and study the uncertain public R&D project portfolio selection problem considering sectoral balancing and project failure. We formulate a stochastic programming model for the problem to support the portfolio decisions of the funding agencies. We also transform the model into an equivalent deterministic second-order cone programming model that can be directly solved by exact solvers. We generate datasets reflecting different scenarios through simulation and perform computational experiments to validate our model. The impacts of various factors (i.e., the number of project proposals, project failure probability, the upper limit of the budget allocated to each project, and the decision maker’s tolerance for project failure) on the project portfolio performance are analyzed.

Keywords: public R&D project; project portfolio selection; sectoral balancing; project failure; uncertainty; stochastic programming (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2022
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