Optimizing Cash Flows for Linear Schedules Modeled with Singularity Functions by Simulated Annealing
Publication: Journal of Construction Engineering and Management
Volume 137, Issue 7
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.
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Acknowledgments
The author thanks former M.S. student James P. Cooper III for noting the usefulness of the floor function operator; Dr. Nima Safaei, Postdoctoral Fellow at the University of Toronto, for the valuable discussion on optimization with simulated annealing; and Lawrence E. Moore II of Clark Concrete Contractors, Pedro Astudillo-Leos of American Infrastructure, and Richard C. Thompson Jr., doctoral student, for their feedback on the use and implications of advance payments, retainage, and liquidated damages. The support of the National Science Foundation (NSFGrant CMMI-0927455) for portions of the this work is gratefully acknowledged. Any opinions, findings, and conclusions or recommendations expressed in this material are those of the author and do not necessarily reflect the views of the National Science Foundation.
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Information & Authors
Information
Published In
Journal of Construction Engineering and Management
Volume 137 • Issue 7 • July 2011
Pages: 523 - 535
Copyright
© 2011 American Society of Civil Engineers.
History
Received: Apr 27, 2010
Accepted: Nov 5, 2010
Published online: Dec 3, 2010
Published in print: Jul 1, 2011
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