A Present Value Approach to Determine Optimum Project Duration

Abstract

A present value approach to determine the optimum project duration is presented in this paper. The duration could be shortened (or prolonged) to minimize the total cost. Rosenblatt h Roll analyzed a similar duration shortening problem using the future value approach. We demonstrate that optimization of the future worth does not optimize the present worth. In addition, we extend the model to include bonus (or penalty) and project cash inflows, which are derived from the revenues before and after completion of the project.