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Auction-based coordination of decentral project portfolios

Summary

Many companies are organizing a growing proportion of their value creation in projects. The individual projects from the company portfolio are often managed at different locations by (partially) autonomous project managers with private information and target systems and compete for shared resources such as experts or capital goods. Two main approaches exist in the literature for the overarching coordination of such project portfolios: Auctions for the rights to use resource units at given time intervals and negotiation-based coordination schemes. The approaches differ in particular in the target systems considered and in the scope and type of information to be exchanged between the actors.

In this PhD project, a new negotiation-based method for the coordination of project portfolios under asymmetric information distribution is considered. Based on an extension of Dudek and Stadtler's (2005, 2007) iterative negotiation scheme for the coordination of supply chains, residual resource availabilities resulting from the solution of collaborative planning models of the other project managers are communicated between the decision makers in each negotiation iteration. As part of the execution of their collaborative planning, each decision maker maximizes the ratio between the improvement of their private goal achievement with full availability of existing resources and the extent of the violation of residual capacities. At the beginning, using the example of the case in which the private objectives correspond to project duration minimization, it is shown how the mixed-integer quotient program of the collaborative planning model can be linearized and integrated into a negotiation scheme that guarantees a negotiation result for arbitrary portfolio configurations in a finite number of iterations.