Decision-making for the selection of investment projects

This thesis considers work regarding the selection of investment projects in construction engineering. The research work previously undertaken illustrates that, in many cases, the selection process is ill structured. In addition to this, the scope generally used to evaluate projects is narrowly defined in economic and financial terms.

The construction industry is undergoing radical changes all over the world, especially in developing countries where governments face the increasing demands of society for more and better services. Simultaneously, society's awareness of their rights and the delicate environmental equilibrium is becoming a key element in the success implementation of development projects. These changes demand the current evaluation and selection process to be revisited and probably re-formulated to account for these new elements.

A theory that enables the incorporation of these new elements into the process of selecting projects is described. This theory includes the production of a methodology to assist the decision-maker in the process of choosing between different investment projects. The methodology uses an additive decision model as a framework within which projects can be appraised. An extension to this model allows the incorporation of uncertainty about the future by means of a computerised scenario generator. Given the difficulty of testing decision-making models in practice, the computer system developed constitutes an alternative procedure to assess the correctness of the outcomes of the model. This is achieved by means of simulating the possible scenarios that will surround the projects.

The methodology has been tested and validated together with the computer system developed during this research work. The results of the testing are presented and the findings arisen from them are discussed.

Conclusions drawn from the work and recommendations for areas of future work are also presented.