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Research and Development Risk in Projects Selection

Research and Development Risk in Projects Selection

Copyright: © 2018 |Pages: 26
ISBN13: 9781522527039|ISBN10: 1522527036|EISBN13: 9781522527046
DOI: 10.4018/978-1-5225-2703-9.ch004
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MLA

Vojo Bubevski. "Research and Development Risk in Projects Selection." Novel Six Sigma Approaches to Risk Assessment and Management, IGI Global, 2018, pp.66-91. https://doi.org/10.4018/978-1-5225-2703-9.ch004

APA

V. Bubevski (2018). Research and Development Risk in Projects Selection. IGI Global. https://doi.org/10.4018/978-1-5225-2703-9.ch004

Chicago

Vojo Bubevski. "Research and Development Risk in Projects Selection." In Novel Six Sigma Approaches to Risk Assessment and Management. Hershey, PA: IGI Global, 2018. https://doi.org/10.4018/978-1-5225-2703-9.ch004

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Abstract

Elaborated method is applied to R&D for project portfolio selection to achieve investment objectives controlling risk. DMAIC framework applies stochastic techniques to risk management. Optimisation resolves Efficient Frontier of portfolios for desired range of expected return with initially defined increment. Simulation measures Efficient Frontier portfolios calculating mean return, variance, standard deviation, Sharpe Ratio, and Six Sigma metrics versus pre-specified target limits. Analysis considers mean return, Six Sigma metrics and Sharpe Ratio and selects the portfolio with maximal Sharpe Ratio as initially the best portfolio. Optimisation resolves Efficient Frontier in a narrow interval with smaller increments. Simulation measures Efficient Frontier performance including mean return, variance, standard deviation, Sharpe Ratio, and Six Sigma metrics versus pre-specified target. Analysis identifies the maximal Sharpe Ratio portfolio, i.e. the best portfolio for implementation. Selected projects in the portfolio are individual projects. So, Project Management approach is used for control.

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