An integrated decision support approach for project investors in risky and uncertain environments


Armaneri O., Özdağoğlu G., Yalçınkaya Ö.

JOURNAL OF COMPUTATIONAL AND APPLIED MATHEMATICS, vol.234, no.8, pp.2530-2542, 2010 (SCI-Expanded) identifier identifier

  • Publication Type: Article / Article
  • Volume: 234 Issue: 8
  • Publication Date: 2010
  • Doi Number: 10.1016/j.cam.2010.03.018
  • Journal Name: JOURNAL OF COMPUTATIONAL AND APPLIED MATHEMATICS
  • Journal Indexes: Science Citation Index Expanded (SCI-EXPANDED), Scopus
  • Page Numbers: pp.2530-2542
  • Keywords: Project evaluation, Simulation, Fuzzy sets, Project risk assessment, FUZZY-SETS, PROGRAMMING-MODELS, ECONOMIC-ANALYSIS, PARAMETERS, SELECTION
  • Dokuz Eylül University Affiliated: Yes

Abstract

In project investment decisions, it is often assumed that estimated values of project parameters are certain and they would not deviate by the time. However, project parameters normally change during a life cycle of the project. Therefore, an existence of a deviation or gap between forecasted values and actual values is inevitable. Because of the uncertainty of the future, forecasting the true and exact values of project parameters is almost impossible. In this study, an integrated decision support approach based on simulation and fuzzy set theory is proposed for project investors in risky and uncertain environments. This approach determines the risk levels of the projects and helps investors to make investment decisions. In the scope of the study, a flowchart is presented to guide to decision maker in different situations of information uncertainty that belongs to project parameter values. Via this flowchart, the values of project parameters can be chosen depending on how they are determined (deterministic, stochastic or fuzzy) by project analyst. Besides, calculating and analyzing the project risk in all possible situations would be easier. Illustrative examples are given to demonstrate the application of this approach. (C) 2010 Elsevier B.V. All rights reserved.