Portfolio management in construction

When a construction company invests in a variety of projects, the combination can be viewed as a portfolio of projects. Such a portfolio is efficient if the contractor can diversify the projects. In general, a diversified portfolio of projects is less risky than the average of the individual projects considered alone. It is important to recognize that investment in construction projects differs somewhat from that in securities. For example, construction projects typically are not divisible, whereas securities are. These differences have caused many difficulties in the application of the portfolio theory in construction. The objective of this paper is to explore these problems and present solutions for them.