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Journ al of Scienti fic & Industrial Re search

Vol. 6 1. December 2002 , pp 1033- 1038

R&D Project Prioritisation Model for Public Research Institutes S Rama Mohan'"

Buisness Manage mcnt Area. Indian Ins titute o f Chemi cal Technol ogy. J-I yderabad ')00007

and

A Ramakri shna Rao

Depart ment 0 1' Mec hani cal Engi neerin g. S V Uni ve rsit y Collegc of Enginee ring. Tirupati - 7 ')02.

Rece ived 0.+ Ju ne 2002: acce pted: 09 October 2002

In the prese nt study, an attempt is made to develop a simple and log ical model 1'0 1' a puh lic research in stillite that ass ists it s dl:ci sion makers in prioriti zing the projects and allocating resources e lTecti ve ly. Puhlic research institu tes can use the suggested mudel by changing the assessment cr iteria and we ighing coenlcient s .. according to their ohjectives. goal s. and polic ies.

Introduction

In economies that are fac ing liberali za ti on, privatization and the shortage of public resources for funding , concern about efficiency in va lue for money is forcing public researc h in stitutes to reconsider the balance and type of acti vities they engage in I . Under these circumstances , effic ient allocation of limited resources to the best ava ilable R&D projects, in line wi th the goa ls and objec ti ves of the institute, is one of the initiatives that can be thought of by the dec ision makers to improve the productivity of the in st itute. To maximi ze the productivity of the in stitute. it is imperati ve to select the best R&D projects, in line with its short-term goa ls as we ll as long-term objec ti ves"' A crucial decision it ha s to make is that whi ch ac ti viti es are to be pursued vigorously and whi ch are to be reemphasised3

Usuall y, R&D activities in public research institutes are often long-term, resulting in uncertain outcomes . Researc h projects are not directed to a specific product/process ; they are predominantl y scienti fic rather than economi c. This makes the project selec ti on and resource all ocation in these in stitutes more difficult.

Ma ny project se lection models are ava ilable for decision makers of industri al research institutes in the literature. for assess ing R&D project proposals and to

* Author for correspondence

choose among competing alternat ives4. They refer to

a formal , quantitative model. algorithm or heuri stic dev ice employed to assign the va lues to indi vidual projects and aid the dec ision-makers for efficient resource allocation}. Attention to planning for sc ientifi c research in public research institutes recei ved less attenti on as compared to the other planning activities5

. Less attention is also given in deve loping projec t se lec ti on and resource all ocati on mode ls. that hel p decision-makers in publ ic research in stitutes in choosing the best projects in line with the organ iza ti onal objec ti ves and all ocating resources effectively.

Dec ision makers in public resea rch institutes are under tremendous press ure to implement more objecti ve and prec ise tec hniques for allocating resources to the best R&D projects. Efficient projec t se lect ion and resource allocati on must be placed on a more logica l and sc ientifi c foundation, rather than the subj ec ti ve eva luation by indi vidual s and committees. Tn this context, it is very essent ia l to develop some simple and logical models that would help them in identifica tion and proper assess ment of the objectives involved in the project and to minimi ze fruitl ess effort s in choos ing the best projects. These models will also ass ist in achieving the overall obj ect ives of the in stitute effect ive ly by choosing the best projects. Our stud y attempts to develop a simple and logical model that helps deci sion makers in public research

1034 J SCI IND RES VOL 61 DECEMI3 ER 1002

institutes to pri oriti se the R&D projec ts. in line with its obj ec ti ves and goa ls. and all ocate scarce resources effecti ve ly.

Review of the Relevant Literature

M any models that are available in the literature arc for proj ec t selec ti on and resource all ocation in industri al resea rch institutes . Some o f the important models are categori zed subsequentl y.

S'corillg Models

Scori ng model i nvol ves a mathematical f ormu la or algebrai c ex press ion that produces a score for each proj ec t under considerati on. The formula incorporates those fac tors believed to be important in proj ec t se lec ti on. Each factor is we ighted to reflect it s import ance relati ve to other factors. Eac h proj ec t is scored on each fac tor. The scores arc substituted in the formula , and an overall score computed for each proj ec t. Proj ec ts are then ranked in order or their scores. T he princ ipal shortcoming o f the scoring model is that the structuring o f the method is usuall y not we ll defined. making it d iff icult to justify it s use2. v-x .

Ecoll olilic Models

Economic models arc ba sed on the capital budgeting techniques. The most commonl y used economic criteria are net present value, pay bad peri od. and rate o f return on in ves tment. The usc of economic analysis is theoreticall y we ll justifi ed if the stri ct conditions for which the models are val id can be sa ti sfi ed. However, in practi ce the contributions of R& D proj ects are difficult to measure. Al so, it is often necessary to estimate direc t financial benefits or cash fl ows of proj ec ts over planning hori zon, the data that is very diffi cult to obtain in publi c research institutes . An other problem is that R& D dec isions are usuall y Illultiple criteria . but economic models consider onl y a single criteri on, namely economic

<) return.

COli s/m illed Op/illlis{(/ioll Models

T hese methods. based on Linear and Dynamic Progra mming techniques . can be appli ed to max imi Ze? the net pro fit s of the organi zati on se lec ting an optimum port folio proj ec ts. Here, set of pro jects related to some cri teri on functi on (usuall y economic) is subjec ted to spec i fi ed resource constraints. These methods arc difficult to app ly because o f inherent uncertaint y o f research in publi c research institutes . These techniques cannot be applied to a situat ion

where the research is more fundamental in nature, proj ects are not much defined, and the benefit s may not be quantifiable. A lso like economic models. these models al so consider single cri te ri on. namely economic return 10. I I.

Decisioll AI/{/I vsis Models

Deci sion Anal ys is M odels are used in the situati ons where deci sion makers face a sequence of deci sions. and between each two success i ve dec isions, an outcome of the prev ious dec ision intervenes. It in vol ves the structuring of the problems by enumerating all poss ible intervening and fin al consequential outcomes and applies princip le of maximulll ex pected utilit y to determine bes t proj ec t. The maj or problelll in these methods is that the deci sion maker is required to ass ign probabiliti es to uncertain variabl es and preferences to consequential outcomes. Generall y. these models C:.tn be use full y appli ed to the evaluati on o f appli ed R& D proj ec ts, i .e., proj ec ts which have we ll defined technical and cO llllllercial objec ti ves w ith full commercial informati on')-I I.

Apart frolll these, there are so many other Illodels also in the literature for projec t se lecti on in industrial research institutes, which cannot be categori zed in the above class ifi ca ti on.

Scope for Development of the New :\10dcl

All the above said proj ec t selecti on Illodels dea l, mainly w ith the proj ect se lecti on in industrial research institutes. They cannot be used for pu bli c research institutes as it is, as the obj ec ti ves and poli cies of these inst itutes are entirely different from that of the industrial research institutes . Not many models are available in the literature that are use ful for deci sion makers in publ ic research in stitutes to pri oriti se proj ec ts and all ocate sca rce resources. M oreover, some of the Illodels sugges ted in the literature liJ..e Dec ision Theory Illodels. Constrai ned models. and Economic Illodels requ ire commercial informati on about the proj ec ts. But. it is very difficult to ge t such type of informati on for the kind of the proj ects that pub l ic research i nsti tute usua Ily undertake. An easy to use, simple and logical model is needed for the dec ision makers in these inst itutes to prioriti se the best proj ec ts.

ln thi s study. an attempt is made to deve lop a model with the follow ing features:

• Ali gn proj ects with instituti ona l objec ti ves .

• Rank the proj ects.

MOHAN & RAO R& D PROJ ECT PRI ORIT ISATION MODEL 1035

• Simple and logica l.

• Easy to appl y.

Development of' the Model

Th is mode l introduces a simple tec hnique for choosing the best R&D projec ts in line with instituti onal objec ti ves and all ocate scarce resources ell cti ve ly. By identi fying approp ri ate assess ment criteria and determining relati ve imporlan ce, thi s model will help dec ision makers to choose best projects. in terms of the degree to 'vv hi ch avail able resources meet needs of projec ts. The concept sugges ted by Wa koh and Call i ns-l fa r pra ject assess ment in indust ri al research in st itutes was made use af in the study.

A SS IIII /PI iOll s

It is ass umed that resaurce all acati a n would be done correspanding to. the relati ve impartance a f the prajec t assess ment criteria. The actual all oca ti a n a f resa urces wil l be necessa ril y constra ined by limited resources . We assume that the success af a parti cul ar projec t would be in verse ly pra pa rti a nal to. the difference between idea l and actual di stributi on a f resa urces. That mea ns, when the difFe rence between idea l and actual di stributi on a f resaurces is more for a parti cul ar projec t, then it is less success ful and when the di ffe rence between ideal and ac tual di stributi on a f resa urces is less, the prajec t is ma re success ful. To. sum up. success a r fa ilure af a project will be determined by the difference betwee n all acati an a f resaurces needed to complete the prajec t successfull y and the actual all aca ti a n that wauid be pass ibl e under given resaurce canstraints. Quantitati ve indicator af thi s diflerence would prov ide a useful taal to. ass ists eval uators in pri a riti zing the prajec ts.

The fa ll aw ing two ass umpti a ns are cansidered in devela ping the madel:

• All oca ti a n a f management resources correspond s to the relat i ve importance of the pro jec t eva luati a n criteri a being used in the evaluati on process.

• Success of a parti cul ar praject wauld be in verse ly pra pa rti anal to di ffe rence between actual and ideal di stributi a n a f resa urces.

Va riaules all r! SYlIl buls

p = Number af criteri a.

C" (p = U ..... 11 ) = Criteri a.

W" (p = 1.2, .. n) = Weighing coeff icient assoc iated with eac h criteria C" (W,) li es between 0 and 100).

q = Number af projects considered. X"" = Preliminary scare that eva luator ass igns to

the C" th criteria for prajec t q.

W"X"" = Weighed score given by prajec t q to. cr ite ri a C" ( W" X(II' lies betwee n 0 and HI,, ).

Y" = Prajec t prioriti zati an scare. A" = Pass ible resources that in stitute ca n a ll aca te

to. the prajec t. ; \ , = Idea l amount of resaurces that projec t leade r

fee l wauld gener:.lle projec t success.

Model

Step I

Diffe rent criteri a that ass ist the decisia n maker. ty pi call y in eva luating merit s and demerits of R&D prajects has to. be identifi ed. We ighing coefficients that ca n be ass igned to each criteria , corres ponding to. the re lati ve emphasis given to. them during prajec t pl annin g and resaurce all ocati on pracess has to. be determined. De lphi method can be used fo r thi s

I ~ purpase .

A completely un structured and a pen ended questi onnaire is prepared. A pane l cansisting of ex perts has to. be canstituted. Ques ti a nnaire is circulated amang the panel members requesting them to. identify the criteri a that ca n be cansidered in the project se lec ti on. After rece iving respa nse from them the res ults are cansa lidated into a sin gle set by cansa lidating simil ar criteria and e liminating unimpa rtant criteria . Thi s li st becames the second ques ti a nnaire. Aga in , paneli sts are presented with thi s ques ti annaire and requested to. give the we ightage to. the criteri a. based on their relati ve impa rtance. A consa lidated stati sti cal summary of the pa nelis ts opinia ns is prepared after rece iving their respanse. The li st af the criteria al ong with their stati sti ca l summary is again prese nted to. the pane li sts, ask ing them to. reexa mine the ir judgment. Results are fin ali zed after receiving the response. Let Cp (p = I, 2, ... 11 ) be their criteria and W,) their correspandi ng we ighing cae ffi cient.

Step 2

The ideal amount of in ves tment that the projec t leader be li eves wauld generate the project success, aga inst eac h criteria . is fo und a Lit fa r all projects. Simi larl y the ama unt af in ves tment that the deci sian ma ker be l ieves the in st i tute ca n all aca te to. the pruject, agai nst eac h cr ite ri a IS determined.

1036 J SCIIND RES VOL 6 1 DECEMBER 2002

Prel i min ary assess ment score I' or eac h assess ment criteria is ca lcul ated for a ll the projects with the he lp of Eq . ( I).

Xf/p = rApl AI] (X'IP li es betwee n 0 and I). . .. ( I )

Step 3

Preliminary score aga inst eac h criteria is multiplied with the corresponding weightage factor. Project prioriti za ti on score for each projec t is ca lcu lated by summing up that product for a ll criteria , i.e., project prioriti zation score for eac h project is ca lcula ted using Eq. ( 2) .

1/

Yf/ = L Wp X,w = (WI Xql ) + ... ... ... + (WI) X,w) p= 1 ... (2)

Step 4

Ranks are all otted to the projects in the descending order of their final score. Resources are all ocated to the projec ts according to their ranks, till the available resources ex haust.

Application of the Model to a Public Research InstitUite

Most of the times, public research in stitutes in India will not use any sc ientifi c and mathematical model for projec t selec ti on and resource all ocation. They depend on the subj ec ti ve eva luation and recommendations made by the co mmittees. Any institute can eas il y use the model deve loped in the study, to choose best projects and all ocate limited resources at any level of budget planning.

A top performing resea rch in stitute in India was considered in the study, for identifying the criteria that will ass ist the dec ision maker typicall y in eva luati ng merits and demerits of the R&D projects. Other research institutes in India can al so use almost the same cri teria , as the objec ti ves and goal s are almost si mi lar.

Delphi method was appl ied to identify the criteri a and their weighing coefficients based on the ir relati ve importance. A panel, with i5 members, compri sing se ni or scienti sts and dec ision makers was chosen. A complete ly un structured and open ended questionnaire was presented to the panel requesting the members to identify the criteria that could be used to assess R&D projects for budget allocation. The res ults were consolidated into a si ngle set after rece iving response from the pane l, by combining

si mi lar events and el i mi nHting uni rnportant events. The consolidated li st that resu lted is as fol lows:

• Scientific Impact - Impac t that ca n be created by the project in sc ientifi c fi e ld In terms of new innovati ons.

• Economic Effect - The ex ten t of cost sav ing due to new tec hnologies deve loped from the project.

• Soc ial Objectives - lmpact of projec t res ults on the soc iety.

• Poss ibility of Patenting and Publishing­Poss ibility of getting patents and publications from the projec t.

• Commerciali sati on of Res ults - Poss ibility for commerci a li za ti on of the result s obtained from the projec t.

Paneli sts were presented with thi s consolidated criteria li st again , and asked to give the weightage based on their relati ve importa nce, so that the total weight of al l criteria equaled to 100. Weighing had to be given in such a way that it re fl ec ted the specific needs and goa ls of the in stitute. Consolidated stati stical summary (Average va lues) of the paneli sts opinion was prepared. Li st of the crite ri a obtained and their weighing coeffic ients were aga in prese nted to the panel and requested the pane li st:; to reexa mine thei r judgment , if the re was any. Fi nal ised stati sti ca l summary of the res ults was taken for subsequent app licat ion of the model. 'Commercia li sation of Res ults' got hi ghest mean va lue 29, followed by 'Scientific Impact' with 25 and 'Possibility of Publi shing and Patenting' with 19. 'Social Objectives ' got mean va lue 16, whereas 'Economic Effect' obtained the lowest mean va lue, i. e., II .

lt can be noticed that the top we ightage was givcn to the 'Commcrcial izati on of Res ults'. Thi s may be due to the fact that the management of the institute Illay like to g ive more weightage to the sc ientifi c research of applied nature. At the sa me tillle, 'Sc ientifi c Impact ' was al so given good we ightage. That Illeans, in stitute al so wants to give priority to basic research that ca n lead to breakthrough innovat ions. In short, it can be sUlllmari zed that institute wants to give priority to both applied and basic resea rch , i.e., it wa nts to balance both type of act iviti es in its projec t portfoli o. Other public research in stitutes in Ind ia ca n al so use the sa ille criteria, as almost the poli cies of all the in stitutes are sa me.

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MOH AN & RAO R& D PROJECT PR IORITISi\T ION MODEL 1037

Hypothet ica l data was considered in the stud y to exp lain the remaining part of the model. Research in stitutes can use thi s mode l wi th it s ori ginal data and proceed as ex plained subsequentl y. Ass ume that a research in stitute ha s a budget of Rs 1. 1 S crore to all ocate to one of it s di visions for a parti cular peri od. Also. ass ume that it ha s seve n projec ts at the moment in the di vision for whi ch the amount ha s to be a ll ocated. Let the pro jec ts ava ilab le at the moment be Project A. Projec t 13 . Projec t C. Project D. Pro jec t E. Projec t F, and Project G with required in ves tment Rs 12 lak h, Rs 10 Iakh. Rs 18 lak h. Rs 2S lak h. Rs 24 lakh . Rs 17 lak h. and Rs 20 lakh. respec ti ve ly. Since. it is not poss ible to fund all the projec ts, dec ision makers ca n choose the bes t proj ects out of the available projects for resollrce all ocat ion. The proposed model can be used here . so that the bes t projec ts among the ava ilable projec ts ea n be determined and the ava ilable resources can be allocated to them.

Projec t leaders are asked to determine the ideal amount of inves tment that they would think generate the success for each project against each criteria . Similarl y. dec ision makers arc asked to determ ine the

amount of in ves tment that they believe the in stitute can allocate to eac h project against each cr iteri a. Prel i mi nary scores for each assess ment cri teria fo r all the project s we re ca lcu lated. using thi s data and Eq .( I) and arc prese nt ed in Table I.

Average we ight s obtained in De lphi method fo r dillerent criteria were rounded oIl and taken as we ighing coelTicien ts for the c rit e ri ~1. By suhsti lLlt ing the values of we ighing coefficient s in Eq. (2). the model become.

Project prioriti zation score for each pro ject was calc ul atecl using Eq.(4) and the obtained result s are prese nt ed in Table 2. Rank s we re ass igned. based on the descending order of the scores, i.e .. projec t ha ving hi ghest score is ass igned rank I, etc.. It can be observed frol11 Tab le 2 that Project A got hi ghest score. i.e .. 82.36, so it was awarded rank I. Simi larly, rank 2 was given to Project G, r~lIlk 3 to Project C. rank 4 to Pro ject E, rank 5 to Project B, rank 6 to Project D. and rank 7 to Projec t F. Now, the resou rces availab le can be a ll ocated to the projects based on

T ahle 1- Prel iminary ,cores 01' ui lTen: nt projects

Cnlc'ri:J A Il (' I) E F (j

,\" ;\ , X iiI' A,. A, X,", A,. A, X,", 1\ " ;\ , X,", A" A, X,", A" r\ , X qp ;\" 1\ , X"I'

SCil'IIlilic 7 C) 0 .77 7 n.71 10 15 ON, 15 22 o.xx I~ 15 (I .X 7 I ~ O.5X 16 18 O . \ )ll

i mpKI

ECllllomic 7 0.7 1 (, X 0.7 ) () 1-1 0.6-1 10 17 0.5X X 12 O(,6 5 X OJ,2 10 15 O.r,(,

dkcl

soci:J1 -1 -1 1.00 ., 5 U.(,(J X 10 0.8(J X 1-1 0.57 X 12 O.G(, 7 10 0.70 ') 13 n.m l1hjccli\·l'~

I'alcnl in ~ allLl (, () I .Ot) -1 (, 0'(,(, 10 12 tl .X) 15 20 0.75 15 I () on C) 1-1 0(,-1 15 17 O.XX l'uh li , lling

( '(Jllllllcrci: li i, 7 10 tl .70 5 7 lUI ') I ~ ON) t 2 I X (l .('(' 1-1 17 O.X2 () 15 0'(,(, 12 IG 0 75 alion or rcsulis

T ahle 2-:- Proj cc t priorili za l ion scores o r di ITcrcnt proj ecl s

Cri teri a Weigiling i\ J3 C D E F G cocriicicnt

Sciell til'i c illlp~ll·t 2.'1 1<)2) 17.7.'1 16 ) 17 20 I ·Ll 20

Econoillic erfect I I 7.8 1 8.2.'1 7 04 6.38 7.26 687:; 7.:'6

Socia l ohjecti ve, 16 16 <)() 12.8 <) 12 10 .'16 I 1.2 110.+

Patenti ng and Puhli shing 1<) 19 12 . .'1 4 1)77 1'+ .2.'1 1.+ 82 12. 16 16.72

COlll lllcrc ial isation or result s 2<) 20.3 20.59 20.0 1 19. 14 16.4 17.4 2 1.75

Yq 82.:16 68.7.l 72. 12 6.'1 .8<) 69.0'+ 62. 13:; 76.77

1038 J SCI Ii'lD RES VO I, 61 DECE:v1I3 ER 2002

Tahle :l - Re,ourn: allocation l<l r the hest pruJl'Cts

Project 1111'(:, tme III Rcso ulu', Cumu lat il'e hudget n:-quired allucated (in Rq (in Rs) (in Rs)

,\ 12.00.000 12.00.000 12.00.000

G 20.00 .000 20.00.000 32.00.000

C 18.00.000 18.00.000 50.00.000

E noo.ooo 24.00.000 14.00.000

B 10.00.000 10.00.000 4.00.000

D 25.00.000 25.00.000 1.09.00.000

F 17.00.000 6.00.000 1. 1 'i. OO.OOO

their ranks, till the total budget e x h~u s t s . Resources m~y be all ocated. as show n in Table 3. Projects A, G, C, E, B. and 0 are rull y runded. Pro jec t F requires Rs 17 lakh. whereas rhe budge t avail ab le is onl y 6 lakh . Thus. project F is partiall y runded with the remaining amount.

Conclusions

In most or the publi c research in stitutes in India , project se lection and resou rce all ocati on is done based on the subj ecti ve evaluation and recommendati ons made by the committees. A simple and log ical model is suggested in the study to aid the dec ision makers of these in stitutes in picking up the best projects. The advantages of using thi s model arc:

• It is very easy and simple to use.

• It helps decsion makers in eva luating projects sys tematicall y.

• It helps to choose bes t projects.

• It helps to avoid those projects, whi ch arc not in line with the objecti ves of the orga ni zation.

• It a lso helps the dec ision makers in conv incing project leaders whose projects are not se lected.

The sugges ted model ca n be used by public research in stitutes for projec t se lec ti on and resou rce ~ lI oc ati on . It can be used fo r any num be r of pro jec ts and the assess ment cr it e ri~ and the ir wei ghing coeffici ent s c~n be altered as s itu~ti on J emand s.

Acknowledgcmcnts

One of the ~utho r S Ram<l Mohan is grate ful to Dr K V Ragha van . Direc tor. (( C T , Hyderahad and Dr L Kota , Deput y Director. I1 CT, Hyderabad for their encourage ment.

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