Optimizing project prioritization under budget uncertainty

Ali Koç, David Morton*, Elmira Popova, Stephen Hess, Ernie Kee, Drew Richards

*Corresponding author for this work

Research output: Chapter in Book/Report/Conference proceedingConference contribution

2 Scopus citations

Abstract

We consider a problem commonly faced in the nuclear power industry, nn'olving annual selection of plant capital investments under the constraints ot a limited and uncertain budget. Wiun the budget is assumed known, a typical approach to such ,rohlemns is built on a multi-dimensional knapsack model. This model takes as input the available budget in each year, the stream of liabilities induced by selecting each project, and the profit. i.e., net present value (NPV, of each project. The goal to select the portfolio of projects with the highest total NP while observing the budget constraint Jr each year as well as any additional constraints. We show that a portfolio selected in this manner can fail to hedge against uncertainties in the budget. While the budget may be known at the beginning of the planning period, external events can cause this to change as time unfolds, and hence the funds that will actual/v be allocated over time are typically uncertain. So. we propose a model that forms an optimal priority list of projects. incorporating multiple budget scenarios. ihe model is a,plied to example pmjects from the South Texas Project Nuclear Operating Company (STPNOC).

Original languageEnglish (US)
Title of host publication2008 Proceedings of the 16th International Conference on Nuclear Engineering, ICONE16
Pages19-26
Number of pages8
Volume1
DOIs
StatePublished - Dec 1 2008
Event16th International Conference on Nuclear Engineering, ICONE16 2008 - Orlando, FL, United States
Duration: May 11 2008May 15 2008

Other

Other16th International Conference on Nuclear Engineering, ICONE16 2008
CountryUnited States
CityOrlando, FL
Period5/11/085/15/08

ASJC Scopus subject areas

  • Nuclear Energy and Engineering

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