An Index to Measure Sustainability of a Business Project in the Construction Industry: Lithuanian Case

Abstract

Abstract:The continuous growth of the world population, resource scarcity and the threat of climate change pose numerous environmental and social problems to the world. Therefore, much hope is put in the concept of sustainability. Companies are increasingly coming under strong global pressure to incorporate sustainability considerations into their project decision-making process. Business projects in the construction industry are among the most important, as this sector is one of the largest sectors and of major importance for the national economy and therefore has a huge impact on the environment and society. Thus, we have to explore ways to integrate sustainability into the management of those projects. This paper presents a composite sustainability index of a project (CSIP) which has been created following a review of existing literature and a pilot research study. A pilot research study was conducted in the Lithuanian construction industry between January 2015 and June 2015. Sustainability criteria were chosen and grouped on the basis of the analysis of the literature and different standards relating to sustainability applicable in the construction industry. A survey was used to select and rank the most important sustainability criteria. The index was constructed using multi-criteria decision-making methods. The results of the pilot study revealed that practitioners in the Lithuanian construction sector attach most importance to 15 sustainability criteria. A composite sustainability index of a project combining all these criteria may be useful in assessing the sustainability of a business project and making decisions regarding project portfolio selection and financial resource allocation. When addressing the issue of financial resource allocation in a project portfolio, the decision-maker could take into account not only the project's return and risk, but also its sustainability. The understanding of this study should enable companies to execute sustainable projects, which could make a contribution to the sustainable development of organizations and thereby increase their competitive advantage.

Green Product Development and Product Portfolio Management: Empirical Evidence from an Emerging Economy

“…A likely explanation for this is that these GPD practices require more systematic work, greater rigor in the conduct of the NPD process, and argumentation in decisions on portfolio management, which affects their performance. This is an important result of this study and therefore contributes to the literature on environmental management, innovation and NPD, at the same time complementing recent research, such as that by Brones et al (), Brones and Carvalho (), Dobrovolskiienė and Tamošiūnienė () and Marcelino‐Sádaba et al (), whose results have suggested the importance of deepening the research pertaining to the fields of environmental sustainability and PPM.…”

“…Among the studies that address portfolio management issues and environmental sustainability in an integrated way, Brook and Pagnanelli () indicate a need to assess certain aspects in the PPM decision ‐ making process, including the following: (i) projects should be aligned with the sustainability agenda, as formulated in the strategy; (ii) projects should reinforce the brand position of the firm in relation to sustainability; (iii) in terms of CO 2 emission/biomaterials, projects should contribute to achieving the zero emission target and increasing fuel efficiency; (iv) projects should have the potential to strengthen the technology capabilities of the company with regard to sustainability. Dobrovolskiienė and Tamošiūnienė () suggest the adoption of specific sustainability criteria for choosing and allocating resources among projects that comprise the portfolio. Publications such as those by Koellner et al (), Silvius et al (), Khalili‐Damghani and Tavana () and Martinsuo and Killen () propose the adoption of environmental indicators in the portfolio, such as materials used, energy and water consumption, impact on biodiversity, and emissions of pollutants, among others.…”

Integrando sustentabilidade ambiental e gestão de portfólio de projetos: estudo de caso em uma empresa de energia

“…Given the integration of product portfolio and environmental sustainability, the work of Brook & Pagnanelli (2014) suggests that environmental decision-making in portfolio management should consider aspects such as: (i) strategic alignment: projects must be aligned with the company's sustainability agenda; (ii) brand: projects should strengthen the firm's position on sustainability; (iii) CO 2 emissions/biomaterials: projects should contribute to zero emission levels, and be based on biomaterials; (iv) strengthening technology capabilities: improving the company's technological capabilities in relation to sustainability. Dobrovolskienė & Tamošiūnienė (2016) also emphasize that it is relevant to adopt specific sustainability criteria for choosing and allocating resources within the project portfolio. Silvius et al (2012) and Khalili-Damghani & Tavana (2014) propose the adoption of environmental indicators in project portfolios, such as: the materials to be used; the consumption of energy and water; impacts on biodiversity; emissions, effluents and waste, and transport.…”

Sustainability-Oriented Financial Resource Allocation in a Project Portfolio through Multi-Criteria Decision-Making

“…A higher value means a higher level of sustainability of a project. The methodology for constructing a composite sustainability index can be found in Dobrovolskiene and Tamosiuniene [27]. It should be noted that only 15 sustainability criteria, comprising four economic, five social and six environmental criteria, were selected as being important for practitioners in the construction industry.…”

“…In our previous research [27], we proposed a method to measure the sustainability of a business project in the construction industry. We developed a composite sustainability index of a project (CSIP) which is calculated as follows:…”