Stochastic Project Financing Analysis System for Construction

Abstract

This paper presents an automated tool named the stochastic project financing analysis system (SPFA). The system makes use of critical path method (CPM) schedule data exported from Primavera Project Planner (P3), computes the best-fit probability distribution functions (PDFs) of historical activity durations, assigns to respective activities the probability density functions identified, simulates the schedule network, computes the deterministic and stochastic project cashflows, plots the corresponding cash-flow diagrams, and estimates the best-fitPDFs of overdraft and net profit of a project without user intervention at any time. The SPFA improves the reliability of project cash-flow analysis by effectively dealing with the uncertainties of the activities’ durations and costs, increases the usability of the schedule data obtained from commercial CPM software, allows the user to incorporate the contractual terms of payment into the cashflow, and effectively handles the variability of the overdrafts and net profits by finding their best-fitPDF. It is implemented as an easy-to-use computer tool programmed in matrix laboratory (MATLAB). The SPFA allows a financial manager to estimate the extent of cash-flow problems in a specific period by using both deterministic and stochastic modes. Two test cases verify the usability and validity of the system in practice