Stochastic dominance in projects
by Amaka Ogwueleka
International Journal of Project Organisation and Management (IJPOM), Vol. 2, No. 2, 2010

Abstract: In 21st century, the success criteria have shifted from conformance to performance which necessitates a new approach to project management practice. The demand for a new approach requires a technique which is driven towards maximum investors' delight. The application of stochastic dominance enables projects to be ranked based on investors' preferences which will incorporate investors' voices in decision making. The paper discusses types of stochastic dominance such as first, second, third or higher degree stochastic dominance and also rules governing their applications. FDSD is based on the assumptions that individuals prefer more to less returns and realisations. SDSD prefers less risky distributions while third or higher degree stochastic dominance deals with decreasing risk-averse by accepting little or more risk in decision making. The paper studies the application of stochastic dominance in a construction project using two different project networks A and B designed for the project. The two networks are analysed using SDSD, the results show schedule A is less risky to B while A dominates B under time-cost constraint and also A is more spread out than B. Based on the investors' policy and priorities less risk is preferred to cost and time minimisation.

Online publication date: Tue, 15-Jun-2010

The full text of this article is only available to individual subscribers or to users at subscribing institutions.

 
Existing subscribers:
Go to Inderscience Online Journals to access the Full Text of this article.

Pay per view:
If you are not a subscriber and you just want to read the full contents of this article, buy online access here.

Complimentary Subscribers, Editors or Members of the Editorial Board of the International Journal of Project Organisation and Management (IJPOM):
Login with your Inderscience username and password:

Username:        Password:          Forgotten your password?

Want to subscribe?
A subscription gives you complete access to all articles in the current issue, as well as to all articles in the previous three years (where applicable). See our Orders page to subscribe.

If you still need assistance, please email subs@inderscience.com