TY - GEN
T1 - Optimizing project prioritization under budget uncertainty
AU - Koç, Ali
AU - Morton, David
AU - Popova, Elmira
AU - Hess, Stephen
AU - Kee, Ernie
AU - Richards, Drew
PY - 2008
Y1 - 2008
N2 - 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).
AB - 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).
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U2 - 10.1115/ICONE16-48108
DO - 10.1115/ICONE16-48108
M3 - Conference contribution
AN - SCOPUS:70249117165
SN - 0791848140
SN - 9780791848142
T3 - International Conference on Nuclear Engineering, Proceedings, ICONE
SP - 19
EP - 26
BT - 2008 Proceedings of the 16th International Conference on Nuclear Engineering, ICONE16
T2 - 16th International Conference on Nuclear Engineering, ICONE16 2008
Y2 - 11 May 2008 through 15 May 2008
ER -