Finance-Based Scheduling: Tool to Maximize Project Profit Using Improved Genetic Algorithms

Abstract

Contractor’s ability to procure cash to carry out construction operations represents a crucial factor to run profitable business. Bank overdrafts have always been the major source to finance construction projects. However, it is not uncommon that bankers set a limit on the credit allocated to an established overdraft. Bankers’ interest rates and consequently contractors’ financing costs are basically determined based on the allocated credit limits. Furthermore, project indirect costs are directly proportional to the project duration which is affected by the allocated credit limit. Thus, the credit limit affects project financing costs and indirect costs which in turn affect project profit. However, finance-based scheduling produces financially executable schedules at specified credit limits while maintaining the demand of time minimization. Thus, finance-based scheduling provides a tool to control the credit requirements. This control enables contractors to negotiate lower interest rates which reduce financing costs. Thus, finance-based scheduling enables contractors to reduce project indirect costs and financing costs. This paper utilizes genetic algorithm’s technique to devise finance-based schedules that maximize project profit through minimizing financing costs and indirect costs.