Farshchian, M M; Heravi, G and Abourizk, S (2017) Optimizing the owner's scenarios for budget allocation in a portfolio of projects using agent-based simulation. Journal of Construction Engineering and Management, 143(7): 04017022, ISSN 0733-9364
Abstract
Budget deficits or owners' cash-flow problems are often blamed for construction delays and construction cost increases that may be caused by these delays. Although many studies have focused on resource allocation, cash-flow management, and budget allocation in a portfolio of construction projects from the contractors' perspective, few studies have been conducted to investigate the allocation of budget, as the main resource of construction projects, from the owner's perspective. This paper presents an agent-based simulation model used to simulate budget allocation and its effects on projects' progress in an owner's portfolio of construction projects. In addition to simulating budget-allocation scenarios and predicting the future state of the projects in the portfolio, the model can reveal efficient ways to manage a limited budget based on defined preferences. The model considers increased costs during the construction period and income growth after completion. It uses the earned schedule (ES) concept to simulate the progress of projects and takes into account the probability of increased progress if there is a budget surplus. The proposed simulation model contributes to the portfolio management body of knowledge by helping organizations optimize budget-allocation scenarios and find an efficient scenario that could lead to earlier commissioned projects, reduced construction costs, and fewer construction delays. The model is validated using historical data from a portfolio of transportation projects, and four optimization scenarios are examined to find an efficient budget-allocation scenario. The results show the model can identify feasible optimized solutions for managing projects with limited budgets.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | agent-based simulation; budget allocation; optimization; portfolio of projects |
| Index terms: | agent, preference, body of knowledge, construction project, construction delay, transportation project, income, construction cost, owner, portfolio management, resource allocation |
| Subjects: | infrastructure and transport systems, sociology, project controls, production management, decision-making and reasoning, resource management, economic analysis, financial and cost management, knowledge management, practitioner |
| Topics: | Research Practice, Project Management, Information Management, Engineering Principles, Business Strategy, Cost Management, Stakeholder Management, Roles and Professions, Time Control, Site Management |
| Descriptive scope: | 2 PC |
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