Lucko, G (2011) Optimizing cash flows for linear schedules modeled with singularity functions by simulated annealing. Journal of Construction Engineering and Management, 137(7), pp. 523-535. ISSN 0733-9364
Abstract
The ability of construction contractors to plan and manage cash flow is critical for their economic success. The cumulative interaction of outflows (labor, materials, and equipment costs) and inflows (progress payments less retainage) creates a profile with a complex zigzag shape. This could only be modeled by simplification, e.g., as values tabulated at discrete times; averaged S-curves without peaks; or envelopes of all possible constellations. Neither is suited for a fully integrated model that dynamically links schedules with their cash flows for optimization. Therefore, singularity functions, whose components define ranges of behavior between cutoffs, are used to flexibly yet accurately model cash flow profiles and their various payment terms. The new approach augments construction project management toward an integrated planning model and is validated with an example from the literature. Optimization with a simulated annealing algorithm shifts activity positions in a randomized but directed search for maximizing profits.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | budgets; financial management; financing; flow profiles; forecasting; line of balance; periodic function; project planning; scheduling |
| Index terms: | cash flow, s-curve, profit, construction contractor, interaction, construction project management, financing, scheduling, line of balance, integrated model, equipment cost, project planning, simulated annealing, simplification, financial management, forecasting |
| Subjects: | economic analysis, operations research, management, algorithms, prediction and forecasting, analytical methods, control systems, economics, behavioral psychology, financial management, project management theory and practice, practitioner |
| Topics: | Digital Applications, Cost Management, Project Management, Roles and Professions, Research Practice, Time Control, Business Strategy, Information Management |
| Descriptive scope: | 3 PCA |
N.B. Descriptive scope is a count of how many of the five facets of empirical research are indicated by the words used in title, abstract and keywords. It is not intended as a judgement on the research; merely a count of the kind of word we would expect to indicate Phenomenon, Concepts, Theoretical framing, Empirical techniques, Analytical techniques. If all five are present, then a code of “5 PCTEA” will indicate this. If you feel the coding for this record is questionable, we welcome discussion around the terms we matched or the way we categorized them. The facet you would expect may not be coded, or a facet may be coded inappropriately. This can also bear on a larger question, of which facets should be treated as defining in construction management research. Please get in touch, and we will look at it. More details here