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Abstract
In progress-payment contracts, the contractor is paid for the work performed based on progress reports made at specified intervals. The owner holds back a percentage of the payments until the project is completed. The optimal project schedule is dictated by the schedule of the project incomes and costs. In this paper, a mixed-integer optimization model that maximizes the contractor's profit for progress-payment contracts is developed. Other scheduling objectives such as levelling the overdraft and minimizing the maximum overdraft are formulated. Constraints related to network precedence, budget limitations, and required available total floats are incorporated in the model. The model can be used to examine the sensitivity of the profit to different progress report intervals and different interest rates. The flexibility of the model to accommodate other practical situations is discussed.