Project network models with discounted cash flows. A guided tour through recent developments.

The vast majority of the project scheduling methodologies presented in the literature have been developed with the objective of minimizing the project duration subject to precedence and other constraints. In doing so, the financial aspects of project management are largely ignored. Recent efforts have taken into account discounted cash flow and have focused on the maximalization of the net present value (npv) of the project as the more appropriate objective. In this paper we offer a guided tour through the important recent developments in the expanding field of research on deterministic and stochastic project network models with discounted cash flows. Subsequent to a close examination of the rationale behind the npv objective, we offer a taxonomy of the problems studied in the literature and critically review the major contributions. Proper attention is given to npv maximization models for the unconstrained scheduling problem with known cash flows, optimal and suboptimal scheduling procedures with various types of resource constraints, and the problem of determining both the timing and amount of payments.Scheduling; Models; Model; Discounted cash flow; Cash flow; Project scheduling; Project management; Management; Net present value; Value; Problems; Maximization; Optimal;

Pre-emptive resource-constrained multimode project scheduling using genetic algorithm: a dynamic forward approach

Purpose: The issue resource over-allocating is a big concern for project engineers in the process of scheduling project activities. Resource over-allocating drawback is frequently seen after scheduling of a project in practice which causes a schedule to be useless. Modifying an over-allocated schedule is very complicated and needs a lot of efforts and time. In this paper, a new and fast tracking method is proposed to schedule large scale projects which can help project engineers to schedule the project rapidly and with more confidence. Design/methodology/approach: In this article, a forward approach for maximizing net present value (NPV) in multi-mode resource constrained project scheduling problem while assuming discounted positive cash flows (MRCPSP-DCF) is proposed. The progress payment method is used and all resources are considered as pre-emptible. The proposed approach maximizes NPV using unscheduled resources through resource calendar in forward mode. For this purpose, a Genetic Algorithm is applied to solve. Findings: The findings show that the proposed method is an effective way to maximize NPV in MRCPSP-DCF problems while activity splitting is allowed. The proposed algorithm is very fast and can schedule experimental cases with 1000 variables and 100 resources in few seconds. The results are then compared with branch and bound method and simulated annealing algorithm and it is found the proposed genetic algorithm can provide results with better quality. Then algorithm is then applied for scheduling a hospital in practice. Originality/value: The method can be used alone or as a macro in Microsoft Office Project® Software to schedule MRCPSP-DCF problems or to modify resource over-allocated activities after scheduling a project. This can help project engineers to schedule project activities rapidly with more accuracy in practice.Peer Reviewe

Four payment models for the multi-mode resource constrained project scheduling problem with discounted cash flows

In this paper, the multi-mode resource constrained project scheduling problem with discounted cash flows is considered. The objective is the maximization of the net present value of all cash flows. Time value of money is taken into consideration, and cash in- and outflows are associated with activities and/or events. The resources can be of renewable, nonrenewable, and doubly constrained resource types. Four payment models are considered: Lump sum payment at the terminal event, payments at prespecified event nodes, payments at prespecified time points and progress payments. For finding solutions to problems proposed, a genetic algorithm (GA) approach is employed, which uses a special crossover operator that can exploit the multi-component nature of the problem. The models are investigated at the hand of an example problem. Sensitivity analyses are performed over the mark up and the discount rate. A set of 93 problems from literature are solved under the four different payment models and resource type combinations with the GA approach employed resulting in satisfactory computation times. The GA approach is compared with a domain specific heuristic for the lump sum payment case with renewable resources and is shown to outperform it

A survey of variants and extensions of the resource-constrained project scheduling problem

The resource-constrained project scheduling problem (RCPSP) consists of activities that must be scheduled subject to precedence and resource constraints such that the makespan is minimized. It has become a well-known standard problem in the context of project scheduling which has attracted numerous researchers who developed both exact and heuristic scheduling procedures. However, it is a rather basic model with assumptions that are too restrictive for many practical applications. Consequently, various extensions of the basic RCPSP have been developed. This paper gives an overview over these extensions. The extensions are classified according to the structure of the RCPSP. We summarize generalizations of the activity concept, of the precedence relations and of the resource constraints. Alternative objectives and approaches for scheduling multiple projects are discussed as well. In addition to popular variants and extensions such as multiple modes, minimal and maximal time lags, and net present value-based objectives, the paper also provides a survey of many less known concepts. --project scheduling,modeling,resource constraints,temporal constraints,networks

Client-contractor bargaining on net present value in project scheduling with limited resources

The client-contractor bargaining problem addressed here is in the context of a multi-mode resource constrained project scheduling problem with discounted cash flows, which is formulated as a progress payments model. In this model, the contractor receives payments from the client at predetermined regular time intervals. The last payment is paid at the first predetermined payment point right after project completion. The second payment model considered in this paper is the one with payments at activity completions. The project is represented on an Activity-on-Node (AON) project network. Activity durations are assumed to be deterministic. The project duration is bounded from above by a deadline imposed by the client, which constitutes a hard constraint. The bargaining objective is to maximize the bargaining objective function comprised of the objectives of both the client and the contractor. The bargaining objective function is expected to reflect the two-party nature of the problem environment and seeks a compromise between the client and the contractor. The bargaining power concept is introduced into the problem by the bargaining power weights used in the bargaining objective function. Simulated annealing algorithm and genetic algorithm approaches are proposed as solution procedures. The proposed solution methods are tested with respect to solution quality and solution times. Sensitivity analyses are conducted among different parameters used in the model, namely the profit margin, the discount rate, and the bargaining power weights

Client-contractor bargaining on net present value in project scheduling with limited resources

The client-contractor bargaining problem addressed here is in the context of a multi-mode resource constrained project scheduling problem with discounted cash flows, which is formulated as a progress payments model. In this model, the contractor receives payments from the client at predetermined regular time intervals. The last payment is paid at the first predetermined payment point right after project completion. The second payment model considered in this paper is the one with payments at activity completions. The project is represented on an Activity-on-Node (AON) project network. Activity durations are assumed to be deterministic. The project duration is bounded from above by a deadline imposed by the client, which constitutes a hard constraint. The bargaining objective is to maximize the bargaining objective function comprised of the objectives of both the client and the contractor. The bargaining objective function is expected to reflect the two-party nature of the problem environment and seeks a compromise between the client and the contractor. The bargaining power concept is introduced into the problem by the bargaining power weights used in the bargaining objective function. Simulated annealing algorithm and genetic algorithm approaches are proposed as solution procedures. The proposed solution methods are tested with respect to solution quality and solution times. Sensitivity analyses are conducted among different parameters used in the model, namely the profit margin, the discount rate, and the bargaining power weights

Toward the Integration of Economics and Outdoor Recreation Management

The general theme of this bulletin is that improved management of public-sector recreational resources is a multidisciplinary task. To this end, we attempt to integrate elements of outdoor recreation management theory and economics. The bulletin is written for both resource managers and researchers. For the former, our intent is to emphasize the importance of being aware of economic implications-at least conceptually-of management actions that influence the character and availability of recreational opportunities. To researchers involved in developing recreation management theory, we draw attention to the parallel between recreation management theory and the traditional managerial economic model of the firm. To economists, particularly those involved in developing and applying nonmarket valuation techniques, we draw attention to the types of decisions faced by resource managers. We argue that the most important resource allocation issues are of the incremental variety, so nonmarket valuation should also yield incremental values. These values alone, however, are not sufficient economic input into rational public choice analysis. The missing link , or nexus, between outdoor recreation management theory and economic analysis is the integration of supply and demand, as called for by traditional managerial economics. Collaborative research to develop recreation supply response functions akin to agricultural production functions is an essential step that is missing from both literatures. Theoretical and applied work assume greater practical importance if they feed information into this broadened framework. It is our hope that this bulletin will bring the disciplines closer to that realization

An equitable approach to the payment scheduling problem in project management

This study reports on a new approach to the payment scheduling problem. In this approach, the amount and timing of the payments made by the client and received by the contractor are determined so as to achieve an equitable solution. An equitable solution is defined as one where both the contractor and the client deviate from their respective ideal solutions by an equal percentage. The ideal solutions for the contractor and the client result from having a lump sum payment at the start and end of the project respectively. A double loop genetic algorithm is proposed to solve for an equitable solution. The outer loop represents the client and the inner loop the contractor. The inner loop corresponds to a multi-mode resource constrained project scheduling problem with the objective of maximizing the contractor's net present value for a given payment distribution. When searching for an equitable solution, information flows between the outer and inner loops regarding the payment distribution over the event nodes and the timing of these payments. An example problem is solved and analyzed. A set of 93 problems from the literature are solved and some computational results are reported

Algorithms for scheduling projects with generalized precedence relations.

Project scheduling under the assumption of renewable resource constraints and generalized precedence relations, i.e. arbitrary minimal and maximal time lags between the starting and completion times of the activities of the project, constitutes an important and challenging problem. Over the past few years considerable progress has been made in the use of exact solution procedure for this problem type and its variants. We review the fundamental logic and report new computational experience with a branch-and-bound procedure for optimally solving resource-constrained project scheduling problems with generalized precedence relations of the precedence diagramming type, i.e. start-start, start-finish, finish-start and finish-finish relations with minimal time lags for minimizing the project makespan. Subsequently, we review and report new results for several branch-and -bound procedures for the case of generalized precedence relations, including both minimal and maximal time lags, and demonstrate how the solution methodology can be expected to cope with other regular and nonregular objective functions such a smaximizing the net present value of a project.Networks; Problems; Scheduling; Algorithms; Functions; Net present value;

Resource-constrained project scheduling.

Abstract: Resource-constrained project scheduling involves the scheduling of project activities subject to precedence and resource constraints in order to meet the objective(s) in the best possible way. The area covers a wide variety of problem types. The objective of this paper is to provide a survey of what we believe are important recent in the area . Our main focus will be on the recent progress made in and the encouraging computational experience gained with the use of optimal solution procedures for the basic resource-constrained project scheduling problem (RCPSP) and important extensions. The RCPSP involves the scheduling of a project its duration subject to zero-lag finish-start precedence constraints of the PERT/CPM type and constant availability constraints on the required set of renewable resources. We discuss recent striking advances in dealing with this problem using a new depth-first branch-and-bound procedure, elaborating on the effective and efficient branching scheme, bounding calculations and dominance rules, and discuss the potential of using truncated branch-and-bound. We derive a set of conclusions from the research on optimal solution procedures for the basis RCPSP and subsequently illustrate how effective and efficient branching rules and several of the strong dominance and bounding arguments can be extended to a rich and realistic variety of related problems. The preemptive resource-constrained project scheduling problem (PRCPSP) relaxes the nonpreemption condition of the RCPSP, thus allowing activities to be interrupted at integer points in time and resumed later without additional penalty cost. The generalized resource-constrained project scheduling (GRCPSP) extends the RCPSP to the case of precedence diagramming type of precedence constraints (minimal finish-start, start-start, start-finish, finish-finish precedence relations), activity ready times, deadlines and variable resource availability's. The resource-constrained project scheduling problem with generalized precedence relations (RCPSP-GPR) allows for start-start, finish-start and finish-finish constraints with minimal and maximal time lags. The MAX-NPV problem aims at scheduling project activities in order to maximize the net present value of the project in the absence of resource constraints. The resource-constrained project scheduling problem with discounted cash flows (RCPSP-DC) aims at the same non-regular objective in the presence of resource constraints. The resource availability cost problem (RACP) aims at determining the cheapest resource availability amounts for which a feasible solution exists that does not violate the project deadline. In the discrete time/cost trade-off problem (DTCTP) the duration of an activity is a discrete, non-increasing function of the amount of a single nonrenewable resource committed to it. In the discrete time/resource trade-off problem (DTRTP) the duration of an activity is a discrete, non-increasing function of the amount of a single renewable resource. Each activity must then be scheduled in one of its possible execution modes. In addition to time/resource trade-offs, the multi-mode project scheduling problem (MRCPSP) allows for resource/resource trade-offs and constraints on renewable, nonrenewable and doubly-constrained resources. We report on recent computational results and end with overall conclusions and suggestions for future research.Scheduling; Optimal;