Portfolio Robustness Evaluation: an Application in the Electricity Sector
نویسندگان
چکیده
Managers continually face the task of allocating resources to projects when there is not enough money to fund them all. Portfolio Robustness Evaluation (PROBE) is a multicriteria decision support system developed to help managers to perform that difficult task. This paper presents a case study developed at EDP Distribuição (EDPD), the main electricity distribution company in Portugal, in which the selected portfolio of projects must comply with budget constraints concerning different types of projects and organizational units in multiple time periods. The paper discusses the shortcomings of the selection procedure used by EDPD and the advantages of adopting PROBE. The robustness of selecting a portfolio when the net present value (NPV) of the projects varies within given uncertainty ranges is analyzed. It is also shown the extent to which the introduction of an environmental impact criterion would affect the stability of a portfolio previously selected taken only the NPV criterion into consideration.
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