Resource-constrained construction project scheduling model for profit maximization
considering cash flow
Shu-Shun Liu
a,
⁎
, Chang-Jung Wang
b,1
a
Department of Construction Engineering, National Yunlin University of Science and Technology, No. 123, Section 3, University Road, Touliu, 640, Taiwan, ROC
b
Graduate School of Engineering Science and Technology, National Yunlin University of Science and Technology, No. 123, Section 3, University Road, Touliu, 640, Taiwan, ROC
ABSTRACTARTICLE INFO
Article history:
Accepted 7 April 2008
Keywords:
Resource-constrained project scheduling
Profit maximization
Cash flow
Constraint programming
Regarding project scheduling problems, resource-constrained issue is generally considered essential for
contractors as a means. Researchers have thus devoted considerable efforts to investigating this issue over the
past decade. Furthermore, since adequate cash flow management benefits cost control and assists profit
acquisition for contractors, numerous techniques have recently been developed for project scheduling in
situations involving cash flow. However, most of these studies simplified resource utilization, and assumed that
cash out flows are directly related to activities without considering resource usage. Fundamentally, resources
incur activities' costs, project cash flow, which conforms to resource utilization. It is thus regarded as a main
issue in this study. This study establishes a resource-constrained project scheduling model based on constraint
programming, whose solution can be found by using combinatorial optimization algorithms. The proposed
model integrates the issues involving resource-constrained problems and cash flow, and maximizes net project
cash flow to optimize project profit from the perspective of contractors. Model validation and two scenarios,
including multi-resource, resource combination selection, and various constraints such as resource limit, are
performed to demonstrate the model capability and applications. Contractors thus can evaluate appropriate
project schedules under associated constraints, and arrange activities and resources to maximize project profit.
© 2008 Elsevier B.V. All rights reserved.
1. Introduction
Numerous researches have examined scheduling problems in an
attempt to achieve optimization of project cost or total duration under
various constraints, such as in situations where resources are limited. One
of main issues related to project scheduling focuses on resource utilization
in a resource-constrained environment to arrange activities for project
objective attainment. Resource usage involves the implementation of
resource allocation, resource leveling, or time-cost trade-off to boost
project performance. Therefore, many studies have discussed ways of
enhancing resource utilization under specified constraints, such as
contract date or resource limit, and these studies have employed various
techniques for project duration or total cost minimization.
For project scheduling problems, resources are utilized in accor-
dance with activity requirement and implementation time, and
relevant cash flow are generated in construction. That is, resource
usage for activity execution indicates contractors' expenses during
construction, and represents related cash out on project cash flow. On
the other hand, since over 60% of construction contractor failures have
financial causes [1], financial aspects of project scheduling recently
have received considerable attention. Various financial factors, such
as interest rate, payment condition, and credit limit, not only affect
project cash flow, but also influence the amount and timing of resource
usage. Therefore, considering scheduling problems with resource
usage and cash flow benefits project objective such as profit maximi-
zation by arranging resources and activities properly, and generates a
reliable cash flow forecasting plan to avoid project financial failure.
This study proposes a novel optimization model for solving con-
struction resource-constrained project scheduling problems consider-
ing cash flow, by adopting Constraint Programming (CP) techniques.
The proposed model integrates resource constraints and cash flow
management issues, and maximizes net cash flow to optimize project
profit from the contractors' perspective. Multi-resource usage and
resource combination selection are incorporated in the proposed
model, and cash flow and related financial factors are also involved.
Moreover, two scenarios with various resource limits and credit limits
are conducted and illustrated to demonstrate model applications.
2. Cash flow to construction projects
Cash flow consists of the flows of cash into and out of a business
[2]; typical cash out flows on a construction project include interest,
material, labor cost, etc., and cash in flows include various payments,
such as bonuses. Numerous approaches have been developed for
investigating cash flow in construction. For example, Barbosa and
Automation in Construction 17 (2008) 966–974
⁎ Corresponding author. Tel.: +886 5 5342601x4724; fax: +886 5 5312049.
E-mail addresses: liuss@yuntech.edu.tw (S.-S. Liu), g9210817@yuntech.edu.tw
(C.-J. Wang).
1
Tel.: +886 5 5342601x4792; fax: +886 5 5312049.
0926-5805/$ – see front matter © 2008 Elsevier B.V. All rights reserved.
doi:10.1016/j.autcon.2008.04.006
Contents lists available at ScienceDirect
Automation in Construction
journal homepage: www.elsevier.com/locate/autcon