Budget allocation based on the project utility function

This study presents new approach for allocating the project budget in portfolio. In this approach, initially, multivariate regression is used to extract the project utility function based on key performance indices. Then, Logit model is applied to calculate the initial percentage of budget allocation by considering the project utility value. Finally, visual basic code is developed and the final project budget is obtained. Considering the fact that the value of utility of project may change during the time, the presented approach has the ability to absorb these changes and can be used throughout the lifecycle of the project portfolio. numerical example of Khuzestan steel company developing project portfolio was used to show the performance of this approach.

Keywords:

Project portfolio management , budget allocation , utility function , Logit , key performance index