Enhanced heuristic for finance-based scheduling of construction projects

Abstract

Typically, construction contractors operate under cash-constrained operating conditions. The lag between the time when contractors spend money to accomplish work on site and the time when payments are actually made by clients, which partially compensate contractors for the accomplished work, constantly creates a finance deficit. Contractors often supplement finance deficits using external funds procured through establishing credit-line bank accounts which typically allow contractors to withdraw cash up to specified credit limits. This makes the task of project scheduling considering the constraints of specified finance very important for financial and operational planning. This scheduling concept and technique are referred to as finance-based scheduling. An enhanced heuristic is proposed to devise finance-based schedules of multiple projects within contractors’ portfolios. The enhancement is achieved by replacing the exhaustive enumeration technique employed in the heuristic to specify activities’ start times with a polynomial shifting algorithm. This enhancement resulted in a substantial reduction in the number of solutions explored before a feasible solution is encountered. The enhanced heuristic was validated through comparison with the integer programming technique using 240 problems of randomly generated networks of sizes that range from 30 to 240 activities. Further, it was proved that the enhanced heuristic can be easily scaled up to handle portfolios of multiple large-size projects.

Keywords:

• Cash flow management
• financial planning
• heuristic
• project finance
• scheduling

Disclosure statement

No potential conflict of interest was reported by the authors.