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Enhanced heuristic for finance-based scheduling of construction projects

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DOI: 10.1080/01446193.2015.1063676

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 Construction Management and Economics

ISSN: 0144-6193 (Print) 1466-433X (Online) Journal homepage: http://www.tandfonline.com/loi/rcme20

Enhanced heuristic for finance-based scheduling

of construction projects

Yuvraj Gajpal & Ashraf Elazouni

To cite this article: Yuvraj Gajpal & Ashraf Elazouni (2015) Enhanced heuristic for finance-
based scheduling of construction projects, Construction Management and Economics, 33:7,
531-553, DOI: 10.1080/01446193.2015.1063676

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Construction Management and Economics, 2015
Vol. 33, No. 7, 531–553, http://dx.doi.org/10.1080/01446193.2015.1063676

Enhanced heuristic for finance-based scheduling of

construction projects
YUVRAJ GAJPAL1 and ASHRAF ELAZOUNI2*
1
Asper School of Business, University of Manitoba, Winnipeg, Manitoba, R3T 5V4, Canada
2
SchedRight Inc., Ottawa, K2 K 3J5, Canada

Received 22 September 2014; accepted 14 June 2015

Typically, construction contractors operate under cash-constrained operating conditions. The lag between the
time when contractors spend money to accomplish work on site and the time when payments are actually made
by clients, which partially compensate contractors for the accomplished work, constantly creates a finance deficit.
Contractors often supplement finance deficits using external funds procured through establishing credit-line
bank accounts which typically allow contractors to withdraw cash up to specified credit limits. This makes the
task of project scheduling considering the constraints of specified finance very important for financial and opera-
tional planning. This scheduling concept and technique are referred to as finance-based scheduling. An enhanced
heuristic is proposed to devise finance-based schedules of multiple projects within contractors’ portfolios. The
enhancement is achieved by replacing the exhaustive enumeration technique employed in the heuristic to specify
activities’ start times with a polynomial shifting algorithm. This enhancement resulted in a substantial reduction
in the number of solutions explored before a feasible solution is encountered. The enhanced heuristic was vali-
dated through comparison with the integer programming technique using 240 problems of randomly generated
networks of sizes that range from 30 to 240 activities. Further, it was proved that the enhanced heuristic can be
easily scaled up to handle portfolios of multiple large-size projects.

Keywords: Cash flow management; financial planning; heuristic; project finance; scheduling

Introduction failures. The excessive level of construction business

Price and Shawa (1997, p. 232) defined project-related
finance as ‘a means to bring together a complete pack-
age of financial commitment from the lending bank and
certain guarantees from the borrower to execute a con-
struction project through linking the loan repayments
to the project’s own cash flow.’ Establishing bank over-
drafts has been one of the prevalent methods of financ-
ing construction projects (Ahuja, 1976). Surveys of
construction practitioners point to financial and bud-
getary factors as the leading causes of contractor fail-
ures (Kangari, 1988; Arditi et al., 2000; Kivrak and
Arslan, 2008). Among 34 identified causes of contrac-
tor failure in Saudi Arabia cash flow management has
been ranked as number eight (Al-Barrak, 1993). It
has been reported (Russell, 1991) that contractor lack
of finance experience along with contractor incompe-
tence comprised 77–95% of the total contractor
failures and their association with financial difficulties
have placed financial management in the forefront of
many business imperatives and highlighted the impor-
tance of cash flow management (Khosrowshahi and
Kaka, 2008). Accordingly, project finance has been
perceived as a crucial challenge for construction
contractors to run a sustainable business.
Typically contractors operate under cash-
constrained conditions due to the time lag that occurs
between the time when contractors actually spend
money to accomplish work on site and the time when cli-
ents make payments to compensate contractors for the
accomplished work. Moreover, payments are not paid
in full but portions thereof are retained to ensure satis-
factory project completion. Time lags and partial com-
pensation constantly create finance deficits which
contractors often supplement through the procurement
of funds from external sources including bank credit

*Author for correspondence. E-mail: aelazouni@schright.com

© 2015 Taylor & Francis

532
lines. Typically, banks allow contractors to withdraw
money up to specified credit limits. This makes the task
of project scheduling considering the constraints of
specified finance very important for financial and opera-
tional planning. This scheduling concept and technique
are referred to as finance-based scheduling in the litera-
ture. Finance-based scheduling helps both contractors
and clients diminish the chances of project failures due
to finance deficit. As it is a major concern of the whole
business rather than individual projects, contractors
typically manage the aspect of finance for the whole
business. Accordingly, it becomes more meaningful to
schedule projects within contractors’ portfolios con-
sidering the constraints on available funds.
Literature review
Referring to the research efforts related to the
incorporation of financial aspects in project scheduling,
Kazaz and Sepil (1996) reported that the issue of the
incorporation of financing cost in project scheduling
as indicated by the time value of money was entirely
omitted until the early 1970s when Russell (1970)
introduced a model to determine network event times
to maximize the net present value (NPV). However,
the assumption made in Russell’s model that cash
inflows occur at the realization times of some network
events during the course of the project was invalidated
later on by Kazaz and Sepil (1996). Accordingly, a
mixed IP formulation was developed by Kazaz and
Sepil (1996) to maximize the NPV where the cash
inflows occur as monthly payments for the work
accomplished during each month and cash outflows
occur at the completion of activities. However, Russell
(1970) and Kazaz and Sepil (1996) did not present any
resource-constrained scheduling technique.
Subsequently, the problem of NPV maximization
was expanded to include resource constraints (Russell,
1986; Padman et al., 1997). These two studies
evaluated the performance of heuristic rules in
resource-constrained project scheduling to maximize
the NPV of cash flows which occur during the course
of the project. Further, Chiu and Tsai (2002) developed
a priority-based heuristic rule for resource-constrained
project scheduling to maximize the project NPV
considering multi-project problems. However, cash-
constrained scheduling was not considered in these
research efforts.
In the late 1970s, the problem of NPV maximiza-
tion considering capital-constrained scheduling started
to attract researchers. Doersch and Patterson’s (1977)
study was the pioneer work investigating how to
maximize the NPV of project schedules under capital-
constrained conditions, and was followed by two
remarkable research efforts of Smith-Daniels and
Gajpal and Elazouni
Smith-Daniels (1987) and Smith-Daniels et al.
(1996). However, these models suffered from the major
drawback of using the time unit of a month to specify
the activities’ duration and determine activities’ shifts.
Typically, the working day is the prevailing time unit
used to estimate durations and determine shifts in con-
struction projects. In addition, these models assumed
that fixed amounts of cash inflow occur at the realiza-
tion times of some events during the course of the pro-
ject. Typically, cash inflows in construction projects
occur at the ends of fixed periods set forth in contract
provisions and also cash inflows are not fixed in amount
but are directly related to the accomplished work.
A finance-based scheduling method was proposed by
Elazouni and Gab-Allah (2004) for scheduling of
construction projects under cash-constrained condi-
tions. Elazouni and Gab-Allah (2004) developed an
integer programming (IP) model based on small-size
critical path method (CPM) networks employing the
objective of project-duration minimization under cash-
constrained conditions. However, optimal solutions to
the cash-constrained project scheduling problems are
impractical if not impossible to generate for large-size
projects since the general class of scheduling problems
is NP-hard combinatorial problems wherein optimality
is very cumbersome due to the huge and complex
solution space that causes the search process to take
exponential computational time (Garey and Johnson,
1979). To account for large-size projects, meta-
heuristics were developed for finance-based scheduling
of projects under cash-constrained conditions including
genetic algorithms (GAs) technique (Elazouni and
Metwally, 2005; Ali and Elazouni, 2009; Fathi and
Afshar, 2010), and shuffled frog-leaping algorithm
(SFLA) and simulated annealing (SA) technique
(Elazouni et al., 2015). However, it was observed that
the computation time of the meta-heuristics is substan-
tial (Elazouni et al., 2015) for average-size projects
let alone large-size projects and portfolios of multiple
projects. In order to cope with the prevailing trend of
developing heuristic procedures to solve complex
scheduling problems, Elazouni (2009) developed a
heuristic to solve finance-based scheduling problems
of multiple concurrent projects. Heuristic methods are
simple to understand, easy to apply, inexpensive to use
in computer programs and enable users to rationalize
the scheduling process and solve problems in large-size
projects (Hegazy, 1999).
Heuristic procedures have been extensively devel-
oped to solve scheduling problems including: proactive
scheduling of construction projects integrated with risk
management (Schatteman et al., 2008), resource
levelling (Harris, 1990; Martinez and Ioannou, 1993;
Neumann and Zimmermann, 1999; Son and
Skibniewski, 1999; Hiyassat, 2000; He and Zhang,
Finance-based scheduling 533

2013), time-cost and time-resource trade-off problems The first component of It represents the financing
(Sunde and Lichtenberg, 1995; Ranjbar et al., 2009; cost for period t on the net cumulative balance Nt-1;
Hegazy and Menesi, 2012), resource-constrained pro- the second component approximates the financing cost
ject scheduling problems (Zhang et al., 2006; Kanit on Et for period t.
et al., 2009; Yan et al., 2009; Bhaskar et al., 2011; Bruni If the contractor decides to compound the periodi-
et al., 2011; Anagnostopoulos and Koulinas, 2012), cal interest It at an interest rate r, the cumulative bal-
multi-skilled resource scheduling (Hegazy et al., 2000; ance at the end of period t including accumulated
Wongwai and Malaikrisanachalee, 2011), scheduling financing costs is F^t , where:
of multiple projects sharing a common pool of
resources (Tsai and Chiu, 1996; Chiu and Tsai, F^t ¼ Ft þ I^t (4)
2002; Mittal and Kanda, 2009), and multi-mode The second term I^t represents the accumulated
capital-constrained project scheduling problems financing costs as of the end of period t, where:
(Özdamar and Dündar, 1997). The distinctive feature
X
t
of a finance-based scheduling heuristic is that time I^t ¼ Il ð1 þ rÞtl (5)
periods bounded by the cut-off dates, when client pay- l¼1
ments are collected, are set out to schedule activities
Similar to Equation 4, the net cumulative balance
within each period based on the amount of money
including accumulated financing costs at the end of
collected at the beginning of the period. This distinctive
period t is N^t , where:
feature makes the other scheduling heuristics
non-applicable to finance-based scheduling. N^t ¼ Nt þ I^t (6)
For period t-1, Figure 1 shows the cumulative bal-
Finance-based scheduling heuristic ance at the end of this period including accumulated
financing costs F^t1 , and the net cumulative balance
The scheduling heuristic procedure (Elazouni, 2009) N^t1 . In addition, Figure 1 shows the same parameters
determines the cash available to schedule activities dur- at the end of period t.
ing a given period; identifies the eligible activities and The objective of finance-based scheduling is to
determines their expenditures within the period; and search for a minimum-duration schedule wherein F^t
determines the necessary activities’ shifts if the values never top the value of the specified credit limit
expenditures have exceeded the available cash. The W throughout project duration of L periods. This cash
heuristic procedure proceeds one period at a time till constraint can be formulated as follows:
all project activities are scheduled. The three  
F^t   jW j t ¼ 1; 2; 3; . . .; L (7)
mentioned main steps of the heuristic procedure are
outlined in detail below. The maximum amount of cash available to schedule
activities at period t can be determined when Equation 7
Determine available cash turns to Equation 8. Then, Equations 9 and 10 can be
written in terms of Equations 4 and 2 respectively.
The equations in this section are presented conforming to
the financial terminology used by Au and Hendrickson F^t ¼ W (8)
(1986). A project cash outflow plus the overheads and
taxes during a typical project period t is represented by W ¼ Ft þ I^t (9)
Et, the corresponding cash inflow is received at the end
of the same period t and is represented by Pt.
The net cumulative balance at the end of period t
after receiving a cash inflow Pt is Nt, which is deter- Profit
mined based on the cumulative balance Ft, where: t-1 t
G

N t ¼ F t þ Pt (1) ˆ
N 1-t
ˆ
N t

Ft ¼ Nt1 þ Et (2) Fˆ 1-t Et Fˆ t

Pt-1
Accordingly, the total financing costs calculated Pt
Iˆt
based on the interest rate per period r at the end of per-
iod t is It, where:
Et
It ¼ rNt1 þ r (3)
2 Figure 1 Cash flow parameters
534
 
W ¼ ðNt1 þ Et Þ þ I^t
If Ut is the total of the cash outflow during period t
of the leftovers of the activities scheduled before plus
the overhead costs for period t and tax applied to the
total, Vt is the maximum amount of cash outflows of
activities yet to be scheduled during period t with tax
applied. Thus, the summation of Ut and Vt equals Et.
Et ¼ Ut þ Vt
The accumulated financing costs I^t at the end of
period t are equal to the accumulated financing costs
I^t1 at the end of the previous period t-1 compounded
for one period plus the financing cost It for period t.
Accordingly, Equation 10 can be rewritten as in
Equation 12.
 
W ¼ ðNt1 þ Ut þ Vt Þ þ I^t1 ð1 þ r Þ þ It (12)
Substituting for It as in Equation 3 and Et as
in Equation 11, Equation 12 can be written as
Equation 13 which is rearranged to Equation 16.
W ¼ Nt1 þ Ut þ Vt þ I^t1 þ I^t1 ðr Þ þ Nt1 ðr Þ
þ ðUt þ Vt Þðr=2Þ
W ¼ Nt1 þ Nt1 ðr Þ þ I^t1 þ I^t1 ðr Þ þ Ut ð1 þ r=2Þ
þ Vt ð1 þ r=2Þ
Vt ð1 þ r=2Þ ¼ W  Nt1  Nt1 ðr Þ  I^t1  I^t1 ðr Þ
 Ut ð1 þ r=2Þ
 
Vt ð1 þ r=2Þ ¼ W  Nt1 þ I^t1  Nt1 ðr Þ  I^t1 ðr Þ
 Ut ð1 þ r=2Þ
If Rt represents Vt including the financing cost
applied for one period t based on interest rate r,
Equation 16 is written as Equation 17.
Rt ¼ W  N^t1  Nt1 ðr Þ  I^t1 ðr Þ  Ut ð1 þ r=2Þ
Equation 17 indicates that the maximum amounts
of cash outflows of activities yet to be scheduled during
period t with tax included and financing costs should
not top the values of Rt so that the values of the negative
cumulative balance never top the credit limit of W.
Identify eligible activities
Eligible activities are considered for possible scheduling
during the cash inflow periods which are characterized
Gajpal and Elazouni
by the occurrence of cash inflows at their beginnings.
(10) Typically, the cash inflows occur regularly at the ends
of fixed periods stipulated in the contract. The heuristic
procedure works on a periodical basis to schedule
activities fulfilling the cash constraint of credit limit
and updates the cash flow as the scheduling process
proceeds. In addition, the scheduling heuristic achieves
the maximum utilization of the cash available during a
certain period. The objective is to schedule the project
(11) under the specified credit limit while minimizing the
project duration. At the beginning of the project the
cash outflow encompasses the mobilization costs and
bond premium and the cash inflow constitutes the
advance payment. For any period t, the available cash
to cover activities’ expenditures plus tax and financing
cost Rt is determined as explained earlier.
The activities eligible to start during a given period
are those whose predecessors were completed during
the current period. The costs of the eligible activities
with tax and financing costs included are calculated
and denoted by Ct. If scheduling the eligible activities
at their early start times results in a Ct value less than
Rt value then all the eligible activities can be scheduled
(13) to start at their early start times provided that their cor-
responding Rt+1 value is at least null to ensure that
there will be adequate cash to cover the cost of their
leftovers during the subsequent period. Otherwise,
shifting the start times of some activities becomes inevi-
(14) table. Activities’ shifting reduces the activities’ expendi-
tures during the current period and consequently
increases the possibility to meet the cash constraint.
However, for a proposed activity shifting, the new start
(15) times of activities are plugged into the CPM network
and the network computations are completed to deter-
mine the impact of the proposed shifting on project
duration.
(16)
Shift eligible activities
Technically, the shifting process in the scheduling
heuristic identifies the logically feasible start-time
combinations of the eligible activities during a given
(17) period and selects the combination which fulfils the
cash constraint with minimum delay in project comple-
tion. The process of identifying all possible start-time
combinations of the eligible activities during a given
period is referred to as exhaustive enumeration. Thus,
employing the exhaustive enumeration technique helps
to evaluate every single combination within the period
so that the global optimal combination which mini-
mizes the project duration and fulfils the cash con-
straint can be identified. The major disadvantage of
the exhaustive enumeration technique is obviously the
substantial computation time it consumes. It was
Finance-based scheduling 535

START

Determine Eo, and Po at t=0:

1. Add tax to the mobilization and bond Eo
2. Calculate advance payment Po

t = (t+1)

Calculate Ut, Rt

Identify the eligible activities and

determine their start times.

Calculate for the eligible activities: Ct, Rt+1

C t ≤ Rt Yes
and
Rt+1 ≥ 0
No

Generate N combinations such that in each combination

the start time of one activity is incremented by one day
and the other start times are fixed.

Calculate for the N combinations: Total poject duration, Ct, Rt+1

Select the combinations of minimum project

duration

No

No Ct ≤ Rt
More than one
and
cmbination?
Rt+1 ≥ 0

Yes
Yes
Select one combination based on the feasibility (Ct ≤ Rt and Rt+1 ≥ 0) of all
combinatins
- If only one combination is feasible, select this combination
- If more than one combination are feasible, select the combination of maximum Ct
-If none is feasible, select the combination of minimum Ct

No Ct ≤ R t
and
Rt+1 ≥ 0

Yes

Revise the project schedule and case flow:

1- Schedule the start times of the selected set
2- Calculate E , P , F , N ,I ,Fˆ , N
t t t t
ˆ and Iˆ
t t t t

No
All activities are
scheduled

Yes

END

Figure 2 Flow chart of the enhanced scheduling heuristic

536
observed that the scheduling heuristic employing
exhaustive enumeration takes prolonged computation
time which increased exponentially even with a slight
increase in the number of eligible activities. This short-
coming imposed huge limitations on the project size
and period length that could be dealt with. Thus, an
alternative shifting algorithm is proposed in this paper
to replace the exhaustive enumeration technique in
the scheduling heuristic.
The remaining part of this paper is organized in four
main sections. The methodology of developing the pro-
posed shifting algorithm is outlined in the first section.
The scheduling heuristic employing the shifting algo-
rithm is validated through comparison against the
heuristic employing the exhaustive enumeration and
the IP finance-based scheduling models in the second
section. The application of the enhanced scheduling
heuristic is demonstrated using two cases of a single
project and two concurrent projects in the third section.
Finally, the fourth section includes scalability testing of
the enhanced heuristic with respect to the size and
number of the concurrent projects within portfolios.
Methodology of developing shifting algorithm
The methodological approach of the development of
the proposed shifting algorithm involves the two stages
of: (1) identifying potential start-time combinations of
the eligible activities within a given period, and (2) eval-
uating feasibility of combinations. These two stages are
described in detail in this section. The logic of the shift-
ing algorithm and the integration with the scheduling
heuristic are outlined in the flow chart shown in
Figure 2.
Identify potential combinations
As discussed above, the main challenge in seeking to
overcome the disadvantage of the exhaustive enumera-
tion is to reduce the number of combinations. Thus,
the main idea of the proposed shifting algorithm is to
consider few combinations compared to the huge num-
ber of combinations generated by the exhaustive enu-
meration. Accordingly, a mathematical procedure was
established to identify few combinations which repre-
sent the potential combinations to be evaluated for
feasibility in terms of fulfilling the cash constraint and
minimizing delays in project completion. Given that
the shifting process is gradual in nature and proceeds
by continually incrementing the activities’ start times,
the shifting process is carried out in cycles and the
resulting combinations in each cycle are evaluated for
feasibility. A new cycle is carried out only if there is
Gajpal and Elazouni
no feasible combination encountered in the current
cycle. Accordingly, a feasible combination might be
encountered before the whole number of potential
combinations is generated which will then negate the
need to proceed with the remaining potential combina-
tions. Accordingly, the potential combinations in fact
represent the maximum number of combinations that
might be generated and evaluated.
For the purpose of demonstration, let N denote the
total number of eligible activities. Starting with the
early start times of the eligible activities, generate N
combinations such that the start time of one different
activity in each combination is incremented by one
day while the start times of the other activities are kept
intact. In other words, in the ith combination, the start
time of the activity of the ith order in the combination is
incremented by one day while the start times of the
other activities are kept intact. Then calculate for each
combination the total project duration, Ct value, and
Rt+1 value. The N combinations represent the first
cycle of the shifting algorithm which need to be evalu-
ated for feasibility. There will be as many cycles as
required to find a feasible solution.
For the purpose of comparing the proposed shifting
algorithm and exhaustive enumeration with respect to
the number of combinations, a scenario which involves
shifting eligible activities within a five-day week was
used. This scenario considers N eligible independent
activities of early start times which coincide with the
first day of the week. Consequently each activity can
possibly be shifted to start at the second, third, fourth,
and fifth days of the week. Should N in this scenario be
six eligible activities, wherein each activity can possibly
be scheduled to start at any one of the five days, the
number of combinations that have been generated
and explored using exhaustive enumeration equals
(5)N = (5)6 = 15 625. This represents an exponential
expression wherein a slight increase in the number of
eligible activities from six to seven increases the number
of combinations exponentially to 78 125.
On the other hand, the proposed shifting algorithm
in the same scenario of six eligible activities defines
cycles of six different combinations wherein the start
time of one different activity in each combination is
incremented by one day while the start times of the
other activities are kept fixed. Since a single activity
can possibly be shifted to start at a maximum of five
days, the total number of combinations generated by
shifting a single activity while fixing the start times of
the other activities equals N x 5 = 6 x 5 = 30. Accord-
ingly, the total number of combinations of six activities
equals N(N 5) = N 2 x 5 = 36 x 5 = 180. This repre-
sents a polynomial expression wherein the increase in
the number of eligible activities from six to seven
increases the number of combinations to only 245.
Finance-based scheduling
It should be emphasized here that the exhaustive
enumeration evaluates all 15 625 combinations while
the proposed shifting algorithm evaluates a maximum
of 180 combinations. Actually, the number of
combinations explored in the proposed shifting algo-
rithm is typically less than 180 because the generation
of combinations goes through cycles and a feasible
combination is predominantly encountered before
the completion of 180 combinations. Obviously, the
polynomial shifting algorithm drastically reduces
the number of explored combinations before a feasible
combination is encountered and consequently the
computation time.
Evaluate feasibility of combinations
The second stage in the shifting algorithm involves the
evaluation of the feasibility of the combinations within
a cycle and the continuation of the shifting process based
on the outcome which is outlined in the following steps:
(1) Select from the combinations of the cycle the ones
of minimum total project duration. If there is only
one combination with minimum project duration,
check the feasibility of this combination,
i.e., Ct ≤ Rt and Rt+1 ≥ 0. If the feasibility of
this combination is established then select this
combination and go to step 3 otherwise select this
combination to generate potential combinations
as explained in the first stage of the shifting algo-
rithm. If there is more than one combination of
the same minimum project duration proceed with
step 2.
(2) Check financial feasibility, i.e., Ct ≤ Rt and
Rt+1 ≥ 0 for each combination having the same
minimum project duration. If only one combina-
tion is feasible, select this combination and go to
step 3; if more than one combination is feasible,
select the combination of the maximum Ct and
go to step 3; if none of the sets fulfils the condi-
tions, select the combination of minimum Ct to
generate potential combinations as explained in
the first stage of the shifting algorithm.
(3) Revise the project schedule and update cash flow
to accommodate for the selected combination by
scheduling the start times of the activities and
calculating the cash inflow and outflow for the
current period and consequently the other finan-
cial parameters of the cash flow.
(4) Repeat the heuristic rule for the next period till all
the project’s activities are scheduled.
The following scenarios regarding the combinations
of minimum project duration possibly occur during the
537
evaluation performed in steps 1 and 2. The insight of
the decision-making regarding these scenarios is
explained below:
(1) If only one combination is available and this
combination is feasible, the algorithm stops
because a feasible combination has been
obtained.
(2) If only one combination is available and this
combination is infeasible, the algorithm returns
back to stage 1 for further shifting of activities
to generate more combinations with higher
potential for including a feasible combination.
(3) If more than one combination has the same
duration and only one of them is feasible, the
feasible solution is accepted and the algorithm
stops.
(4) If more than one combination has the same
minimum duration and more than one of them
is feasible, the combination with maximum Ct
is selected because it brings more cash inflow
when payment for the work accomplished during
the current period is made in the future which
helps in scheduling more activities when the pay-
ment is collected.
(5) If more than one combination has the same
minimum duration and none of them is feasible,
the combination with minimum Ct is selected
because it helps in finding a feasible combination
after a lower number of cycles is generated.
Validation of the proposed shifting algorithm
The idea of replacing the approach of exhaustively
enumerating all possible combinations within a given
period with another approach of identifying a small
number of potential combinations poses the pressing
question of whether the performance of the scheduling
heuristic employing the proposed shifting algorithm
will be satisfactory or not. Therefore, a rigorous
testing procedure of two levels was designed and
implemented to establish the validity of the proposed
shifting algorithm. The first level involves validation
by comparing the results of the scheduling heuristic
employing the proposed shifting algorithm in terms
of the project duration with the equivalent results
obtained from Elazouni (2009) for the scheduling
heuristic employing the exhaustive enumeration. The
second level introduces an additional validation
through comparing the results of the scheduling
heuristic employing the proposed shifting algorithm
with the equivalent results obtained by using the IP
finance-based scheduling model.
538 Gajpal and Elazouni

Table 1 Project duration of the scheduling heuristics employing exhaustive enumeration and proposed shifting algorithm

Total network duration (day)

Number of Heuristic* with Heuristic with
network Original network Original maximum negative Credit limit exhaustive proposed shifting
activities duration (day) cumulative balance ($) values ($) enumeration algorithm
12 27 50 273 40 000 29 29
37 000 32 32
32 000 35 36
24 42 70 395 55 000 43 43
50 000 46 46
43 000 52 52
36 57 75 238 58 000 59 59
54 000 62 63
50 000 66 66
48 72 77 752 58 000 75 76
56 000 78 78
53 000 82 82
60 87 79 417 63 000 88 88
58 000 93 94
57 000 94 96
*From Elazouni (2009).

1200/0 2300/3 1800/5 Cost/day Total float

0 3 3 5 5 9
Aa Ab Ac Early ####/## Early
Start End
0 3 3 6 2 8 10 4 14

1900/0 1400/1 1700/4 Activity

3 7 7 10 10 13
Ba Bb Bc Late Late
Start Duration End
3 4 7 8 3 11 14 3 17

2000/0 2200/0 1600/1

7 11 11 16 16 20
Ca Cb Cc
7 4 11 11 5 16 17 4 21

1300/1 1500/0 1400/0

11 15 16 21 21 27
Da Db Dc
12 4 16 16 5 21 21 6 27

Figure 3 Network of 12-activity project (adopted from Elazouni, 2009)

Validation against heuristic employing exhaustive

enumeration
The scheduling heuristic employing the proposed shift-
ing algorithm was coded using C++ and run on a com-
puter of Quad Core Intel Xeon of 3.40 GHz CPU and
2 GB RAM, and Linux Enterprise Server 5.0 of 32-bit
operating system. Table 1 presents the project duration
results obtained by the scheduling heuristic employing
the proposed shifting algorithm and the results from
Elazouni (2009) obtained by the scheduling heuristic
Finance-based scheduling 539

Table 2 Percentage of the problems with deviations in duration between enhanced heuristic and IP models

Duration (day) Deviations in duration (day)

Number of network activities
Minimum Maximum 0 1 2 3 4 5 6 7 Average deviation (day)
30 36 53 53.3 33.3 6.7 3.3 3.3 0.0 0.0 0.0 1.4
60 78 100 26.7 50.0 6.7 10.0 6.7 0.0 0.0 0.0 1.4
90 114 139 33.3 30.0 16.7 3.3 10.0 0.0 6.7 0.0 1.2
120 148 180 23.3 23.3 33.3 3.3 6.7 6.7 0.0 3.3 1.1
150 170 238 40.0 30.0 6.7 13.3 3.3 3.3 3.3 0.0 0.7
180 234 278 36.7 20.0 16.7 10.0 10.0 0.0 6.7 0.0 0.6
210 263 313 36.7 26.7 13.3 10.0 10.0 0.0 3.3 0.0 0.5
240 312 374 36.7 40.0 13.3 0.0 3.3 6.7 0.0 0.0 0.3
Overall percentages – – 35.8 31.7 14.2 6.7 6.7 2.1 2.5 0.41 0.9

employing the exhaustive enumeration based on five
CPM networks of 12, 24, 36, 48, and 60 activities.
The values of the original network duration and the
maximum negative cumulative balance indicated by
the cash flow derived from the original networks are
presented in the second and third columns in Table 1.
Three credit limit values lower than the maximum
negative cumulative balance values were selected for
each network and are presented in the fourth column.
Accordingly, 15 different problems were created and
solved and their obtained results are presented in the
last column in Table 1. Out of the 15 problems repre-
senting five networks for each of three different credit
limits, the results in terms of the total project duration
were identical in 10 problems. However, there was a
minimal deviation of one day in the majority of the
remaining five problems (four out of five).
Figure 3 shows the CPM network of the project of
12 activities representing four basic activities A, B, C,
and D being implemented in three sections a, b, and
c. The 24, 36, 48, and 60-activity projects repeat the
same four basic activities for 6, 9, 12, and 15 times
respectively. For example, the 24-activity project
repeats the same four basic activities over six sections
(a, b, c, d, e, and f). For example, activities Ba, Bb,
and Bc are duplicated to activities Bd, Be, and Bf
with the same respective durations and daily cost as
indicated on the top of the activities in Figure 3 such

Cost/day

Early #### Early

Start Finish

Activity

2204 2718
6 8 10 15 Duration
2075 7 9 (day)
4 6 2 5
2
2202 2826 1334 1701 2290 2383
2
0 4 6 9 10 13 13 15 15 18 18 21
1 3 8 10 11 12
1661
4 3 3 2 3 3
4 5
4 1291 2202
1 6 10 10 11
5 6
4 1

Figure 4 Network of the first 12-activity project

540 Gajpal and Elazouni

1495 2638 2766 2784

1 2 2 5 6 7 10 15
2 4 6 8
2908 1684 1677
1 3 1 5
0 1 14 17 19 20
1 10 12
2865 1329 2215 1871
1 3 1
1 6 6 8 8 10 10 14
3 5 7 9
1954
5 2 2 4
14 19
11
5

Figure 5 Network of the second 12-activity project

Table 3 The financial data and the contract provisions of the two 12-activity projects

12-activity projects 100-activity projects

First Second First Second Third Fourth Fifth
Category Item project project project project project project project
Interest rate Interest rate per week 0.3 0.3 0.3 0.3 0.3 0.3 0.3
Financial Original duration (day) 21 20 583 536 566 528 542
data Original duration (week) 5 4 117 108 114 106 109
Overheads per week ($) 3500 2500 3500 3500 3500 3500 3500
Mobilization costs ($) 20 000 15 000 200 000 200 000 200 000 200 000 200 000
Tax percentage 2 2 2 2 2 2 2
Markup percentage 40 40 20 20 20 20 20
Bond premium ($) 2200 1300 50 000 50 000 50 000 50 000 50 000
Contract Advance payment percentage of 6 4 6 6 6 6 6
provisions bid price
Weeks to retrieve advance 5 4 117 108 114 106 109
payment
Retained percentage of pay 16 7 0 0 0 0 0
requests
Lag to pay retained money after 0 0 0 0 0 0 0
last payment (week)
Weeks to submit pay requests 1 1 1 1 1 1 1
regularly
Lag to pay payment requests 1 1 1 1 1 1 1
(week)

that Bd depends on Bc and Ad, Be depends on Bd Validation against IP models

and Ae, and Bf depends on Be and Af. The overhead
The second level introduces an additional validation
cost was considered as $3500 per week and the inter-
through comparing the results of the scheduling
est rate as 1.5% per week. The contract provisions
heuristic employing the proposed shifting algorithm
were such that the contract is for a cost-plus fee with
with the equivalent results obtained by using the IP
a markup percentage of 20% applied to the total
finance-based scheduling models. IP models were
weekly summation of activities’ cost plus the over-
formulated for 30, 60, 90, 120, 150, 180, 210, and
heads, the owner’s progress payments are obtained
240-activity networks. Special software was developed
one week after the submission of the weekly pay
in this study to generate random networks of different
requests with no advance payment, the retention per-
sizes. Ten different networks for each network size
centage amounts to 16% of each payment, and the
were generated randomly in terms of the activities’
retained money is to be paid eight weeks after the
duration (from one to five days), dependency between
completion of the projects.
Finance-based scheduling 541

Table 4 Price calculation of the activities of the first 12-activity project

Activity Duration (day) Cost per day ($) Total cost ($) Total price ($) Price per day ($)
1 4 2202 8808 6799 4890
2 2 2075 4150 8688 4608
3 3 2826 8478 13 599 6276
4 1 1661 1661 14 354 3689
5 4 1291 5164 7932 2867
6 1 2620 2620 9632 5819
7 2 2204 4408 15 110 4895
8 3 1334 4002 20 776 2962
9 5 2718 13 590 12 088 6036
10 2 1701 3402 9821 3777
11 3 2290 6870 14 165 5086
12 3 2383 7149 15 865 5292
Notes: The prices in this table do not include the financing cost. Total cost $70 302; overheads $17 500; mobilization costs $20 000; total cost,
overheads, and mobilization $107 802; taxes $2156; taxes, total cost, overheads, and mobilization $109 958; markup $43 983; markup, taxes,
total cost, overheads, and mobilization $153 941; bond premium $2200; total bid price $156 141; factor to determine price based on cash
outflow ($156 141.3 ÷ $70 302) = 2.2210.

activities (from one to three predecessors and succes-
sors), and daily activities’ cost (from $1000 to
$3000). Then, each one of the 10 networks was
solved using three different credit limits making 30
different problems for each network size and a total
of 240 different problems of all network sizes. The
IP models include objective functions that minimize
the project duration under the financial, sequence,
and activities’ shifting constraints. Special software
was developed (Elazouni, 2009) using C# to formu-
late the constraints of the IP model (Elazouni and
Gab-Allah, 2004) which allows the user to save the
formulations of the models in text files. The IP mod-
els were solved using the optimization software of
Lingo 11.
The overhead cost of the 240 networks was con-
sidered as $3500 per week and the interest rate as
1.5% per week. The contract provisions were such
that the contract type is considered cost-plus fee with
a markup percentage of 20% applied to the total
weekly summation of activities’ cost plus the over-
head cost, the owner’s progress payments are col-
lected one week after the submission of the weekly
pay requests with no advance payment, the retention
percentage amounts to 15% of each payment, and
the retained money is to be paid eight weeks beyond
the completion dates.
The results of the validation are presented in
Table 2. The minimum and maximum durations in
days of the randomly generated 10 networks of each

Table 5 Price calculation of the activities of the second 12-activity project

Activity Duration in (day) Cost per day ($) Total cost ($) Total price ($) Price per day ($)
1 1 2908 2908 5598 5598
2 1 1495 1495 2878 2878
3 5 2865 14 325 27 580 5516
4 3 2638 7914 15 236 5078
5 2 1329 2658 5117 2558
6 1 2766 2766 5325 5325
7 2 2215 4430 8529 4264
8 5 2784 13 920 26 800 5360
9 4 1871 7484 14 409 3602
10 3 1684 5052 9726 3242
11 5 1954 9770 18 810 3762
12 1 1677 1677 3228 3228
Notes: The prices in this table do not include the financing cost. Total cost $74 399; overheads $10 000; mobilization costs $15 000; total cost,
overheads, and mobilization $99 399; taxes $1988; taxes, total cost, overheads, and mobilization $101 387; markup $40 554; markup, taxes,
total cost, overheads, and mobilization $141 941; bond premium $1300; total bid price $143 241; factor to determine price based on cash
outflow ($143 241.8 ÷ $74 399) = 1.9253.
542 Gajpal and Elazouni

Cash($)

43486

15933 15931
0 1 2 3 2105
13295 4 Weeks
3902 5 6
29725 24541
22664 32419
40077
53948
60214

Original schedule: negative balance= 60214, duration=21 days

Cash($)

43484

15930 15929
0 1 2 3 4 Weeks
13295 2775 5 6
21865 8793
29725 32419
22664
40069
53948 57537

Credit limit = 58000, duration=21 days

Cash($)

43480

0 1 2 3 4 11480 11479
Weeks
13295 8571 5 6
17350
29725 32419 17041
22664
37621
53948 53023

Credit limit = 54000, duration=22 days

Cash($)

43463

0 1 2 3 4 7018 7016
Weeks
13295 14381 5 6
27280 22205
29725
22664 25302
48493 44570
48809
Credit limit = 49000, duration=23 days

Figure 6a Cash flow of the original schedule of the first 12-activity project and at different credit limits

network size are presented in the second and third col-
umns in Table 2. For instance, the durations of the 10
60-activity networks ranged from 78 to 100 days. The
percentages of the 30 problems of each network size
which exhibited a duration greater than the duration
obtained using the IP by 0, 1, 2, 3, 4, 5, 6, and 7 days
are presented in columns 4 to 11 in Table 2. For
instance, the results indicated that 26.7% of the 30
problems of 60-activity networks showed no deviation
from the durations obtained using the IP. It is
worth mentioning that the overall percentage of the
problems with no deviation was 35.8% of the 240
problems. Further, for the 60-activity networks,
50.0%, 6.7%, 10.0%, and 6.7% of the 30 problems
showed deviation values of 1, 2, 3, and 4 days respec-
tively with no incidents showing deviations above
4 days. Accordingly, the deviation values averaged
1.4 days across the 30 problems of the 60-activity
networks as presented in the last column of Table 2.
The average deviation values decreased consistently
from 1.4 days in the 30-activity networks to 0.3 day
in the 240-activity networks with an overall average of
0.9 day across the 240 problems. These satisfactory
results strongly validate the proposed shifting algorithm
Finance-based scheduling 543

Cash($)

43460

0 1 2 3 4 5 6 Weeks
13295 14434 2141 2147
29725 24642 24238
22664
30371
46172 45709 44369

Credit limit = 47000, duration=24 days

Cash($)

43446

0 1 2 3 4 5 6 Weeks
13295 14583 6413 6433
23075 25734
29725
22664
32860
44604 44342 44894

Credit limit = 45000, duration=25 days

Cash($)

39868

0 1 2 3 4 5 5995 5993
13295 12994 8985 6 7 Weeks
21756 26776
29725 17456
22664 30474
43285 42975 43224

Credit limit = 44000, duration=27 days

Cash($)

39828

0 1 2 3 4 5 6 7 Weeks
13295 18186 13061 2757 2765
27733 22590
29725
22664
39715 37411 39670 35835 35875

Credit limit = 40000, duration=29 days

Figure 6b Cash flow of the original schedule of the first 12-activity project and at different credit limits

and thus proved its robustness especially in the
large-size networks.
Application of the proposed heuristic
The heuristic procedure was demonstrated using two
cases of: a single 12-activity project and the portfolio
of two concurrent 12-activity projects. The networks
of the two 12-activity projects are shown in Figures 4
and 5. The two projects are set up such that the second
project starts one week after the start of the first project.
The duration of the two projects spans 21 and 20 work-
ing days which make five and four weeks respectively,
and the duration of the two projects together spans
25 working days which makes five weeks. The financial
data and the contract provisions of the two projects are
presented in Table 3. Tables 4 and 5 present the
calculations of the activities’ prices on a daily basis for
the first and second projects respectively. These price
calculations represent unit-price contracts wherein the
overheads, mobilization costs, tax, markup, and bonds
are prorated to the activities’ daily cost using the calcu-
lated factors of 2.2210 and 1.9253 for the first and
second projects respectively.
Single 12-activity project
The network and cash flow diagram of the initial
schedule of the 12-activity project are shown in
Figures 4 and 6a respectively. The maximum negative
cumulative balance amounted to $60 214 and the dura-
tion of the project spanned 21 days. Several credit limit
values were used to gauge the sensitivity of the
proposed heuristic and analyse the trade-off between
project duration and finance requirements. The cash
flow diagrams in Figure 6a indicate that using a credit
 544

Table 6 The original values of the cumulative negative balance of the portfolio and the values of the individual projects and the portfolio at three credit limits

$100 000 $90 000 $80 000

1–2 2–1 1–2 2–1 1–2 2–1

Original First Second First Second First Second First Second First Second First Second
values of project project Portfolio project project Portfolio project project Portfolio project project Portfolio project project Portfolio project project Portfolio
Week portfolio ($) ($) ($) ($) ($) ($) ($) ($) ($) ($) ($) ($) ($) ($) ($) ($) ($) ($) ($)

0 –22 664 –22 664 0 –22 664 –22 664 0 –22 664 –22 664 0 –22 664 –22 664 0 –22 664 –22 664 0 –22 663 –22 664 0 –22 664
1 –46 376 –29 725 –16 651 –46 376 –29 725 –16 651 –46 376 –29 725 –16 651 –46 376 –29 725 –16 651 –46 376 –29 725 –16 651 –46 376 –29 725 –16 651 –46 376
2 –91 745 –53 948 –37 797 –91 745 –53 948 –37 797 –91 745 –53 948 –35 102 –89 050 –51 696 –37 797 –89 493 –53 948 –25 259 –79 207 –41 033 –37 797 –78 830
3 –113 671 –55 800 –43 391 –99 191 –45 732 –53 457 –99 189 –45 732 –43 383 –89 115 –36 085 –53 457 –89 542 –45 732 –33 742 –79 474 –31 550 –48 369 –79 919
4 –80 564 –37 629 –19 631 –57 260 –32 825 –40 487 –73 312 –32 825 –24 361 –57 186 –32 235 –40 487 –72 722 –32 825 –34 590 –67 415 –42 693 –33 912 –76 605
5 –38 797 –11 963 –43 078 –55 041 –30 360 –34 895 –65 255 –30 360 –43 084 –73 444 –45 549 –34 895 –80 444 –30 360 –46 833 –77 193 –38 421 –40 372 –78 794
6 24 441 11 486 –30 562 –19 076 2757 8510 11 267 2757 –30 568 –27 811 −9387 8510 −877 2757 –41 176 –38 419 –18 587 −5533 –24 120
7 – – 11 022 54 508* – – – – 11 016 54 492* 10 447 – 50 580* – –14 585 28 891* –21 228 21 543 315
8 – – – – – – – – – – – – – 21 922 65 398* −2070 – 35 518*
*The profit of the project completed earlier was added.
Gajpal and Elazouni
Finance-based scheduling 545

Table 7 The start and end times of the activities of the initial schedule and schedules at three credit limits of the two 12-activity
projects

$100 000 $90 000 $80 000

Original
schedule 1–2 2–1 1–2 2–1 1–2 2–1
Activities start end start end start end start end start end start end start end
First project 1 0 4 0 4 0 4 0 4 0 4 0 4 0 4
2 4 6 4 6 4 6 4 6 4 6 4 6 4 6
3 6 9 6 9 6 9 6 9 7 10 6 9 9 12
4 4 5 4 5 4 5 4 5 4 5 4 5 4 5
5 6 10 6 10 6 10 6 10 6 10 6 10 8 12
6 10 11 15 16 15 16 15 16 15 16 15 16 15 16
7 6 8 6 8 6 8 6 8 9 11 6 8 15 17
8 10 13 11 14 12 15 12 15 15 18 12 15 17 20
9 10 15 10 15 13 18 13 18 15 20 13 18 17 22
10 13 15 14 16 15 17 15 17 18 20 15 17 25 27
11 15 18 16 19 18 21 18 21 20 23 18 21 27 30
12 18 21 19 22 21 24 21 24 23 26 21 24 30 33
Second project 1 5 6 5 6 5 6 5 6 5 6 6 7 5 6
2 6 7 6 7 6 7 7 8 6 7 15 16 6 7
3 6 11 6 11 6 11 6 11 6 11 7 12 6 11
4 7 10 7 10 7 10 8 11 7 10 16 19 7 10
5 11 13 15 17 11 13 15 17 11 13 15 17 12 14
6 11 12 15 16 11 12 15 16 11 12 19 20 15 16
7 13 15 17 19 13 15 17 19 13 15 19 21 14 16
8 15 20 19 24 15 20 19 24 15 20 22 27 16 21
9 15 19 19 23 15 19 19 23 15 19 21 25 16 20
10 19 22 23 26 19 22 23 26 19 22 25 28 23 26
11 19 24 23 28 19 24 23 28 19 24 25 30 20 25
12 24 25 28 29 24 25 28 29 24 25 30 31 26 27

Table 8 The duration and profit of the two 12-activity projects and portfolio, and the portfolio maximum negative cumulative
balance at three credit limits

$100 000 $90 000 $80 000

Original
Data schedule 1–2 2–1 1–2 2–1 1–2 2–1
Total duration of the first project (day) 21 22 24 24 26 24 33
Total duration of the second project (day) 20 24 20 24 20 26 22
Total duration of the portfolio (day) 25 29 25 29 26 31 33
Profit of the first project ($) 43 486 43 486 43 476 43 476 39 875 43 476 36 250
Profit of the second project ($) 40 133 37 564 40 133 37 557 40 133 34 952 37 588
Profit of the portfolio ($) 83 619 81 050 83 609 81 033 80 008 78 428 73 838
Maximum negative cumulative balance of the –113 671 –99 191 –99 189 –89 115 –89 542 –79 474 –79 919
portfolio ($)

limit of $58 000 maintains the original duration of
21 days. This allows contractors to reduce finance
requirements from $60 214 to $58 000 without sacri-
ficing the early completion time. Using credit limits
below $58 000 causes a delay of one day to the project
completion which sustains till the credit limit reaches
$54 000. Should a one-day delay in project completion
be acceptable, finance requirements can be reduced
from $60 214 to $54 000. The rest of the cash flow dia-
grams shown in Figures 6a and 6b can be interpreted
similarly. The anticipated profit at the end of the pro-
ject varied slightly for credit limits above $45 000
which can be attributed exclusively to the variation in
financing cost. However, credit limits below $45 000
546 Gajpal and Elazouni

increased the duration beyond 25 days which results in
extending the project duration by one week. Since the
overheads are added on a weekly basis to the cash flow
calculations as indicated in Table 3, the anticipated
profit was commensurately reduced in the cash flow
at the credit limits of $44 000 and $40 000 as shown
in Figure 6b.
Portfolio of two 12-activity projects
For the case of the portfolio of two 12-activity projects,
three schedules were devised at the credit limits of
$100 000, $90 000 and $80 000. At each credit limit,
two schedules were devised with priorities assigned to
one of the two projects. The notations of 1–2 and 2–1
denote that the priorities are assigned to the first then
the second project and the second then the first project
respectively. Assigning priority to a given project
implies that during the same week, the total available
cash is first allocated to find a feasible combination
for this project and the remaining cash, if any, is
allocated to find a feasible combination for the second
project. The weekly values of the cumulative negative
balance of the original schedule of the portfolio are pre-
sented in the second column in Table 6. In addition,
Table 6 presents, for each credit limit and priority
assignment, the weekly values of the cumulative nega-
tive balance of the first project, second project, and
the portfolio. Table 7 presents the activities’ start and
finish times of the original schedule of the two projects
and corresponding values of the schedules developed at
the three credit limits. Table 8 presents the duration
and profit of the individual projects and the portfolio,
and the maximum negative cumulative balance values
of the portfolio. Table 9 presents the cash flow calcula-
tions that correspond to the schedules of the individual
projects at the credit limit of $80 000 with priority
assigned to the second project. Figure 7 shows the cash
flow of the two projects individually and the cash flow
of the portfolio at the credit limit of $80 000 with prior-
ity assigned to the second project. Figure 8 shows the
original schedule of the two projects and the schedules
at the credit limit of $80 000 with priorities assignment
to each one of the two projects.
Table 10 presents the cycles performed by the
enhanced heuristic to schedule the activities during
the third week at the credit limit of $80 000 with prior-
ity given to the first project. The situation before
scheduling activities at the beginning of the third week
was such that activities 1, 2, 3, 4, 5, and 7 were com-
pleted. The set of activities eligible for scheduling dur-
ing the third week, as shown in Figure 4, encompasses
activities 6, 8, 9, and activity 10 conditional on the
completion of activity 8. The initial combination indi-
cates that the early start times of activities 6, 8, 9,
and 10 are at days 10, 10, 10, and 13 respectively.
The fact that the R3 value which amounts to $10 167
is less than the C3 value of $24 122 renders this
combination infeasible as presented in Table 10. Thus,
four different combinations of activities 6, 8, 9, and 10
are specified in the first iteration as presented in
Table 10 such that the start time of one different

Table 9 The cash flow calculations of the schedule at credit limit of $80 000 with priority assigned to the second project

Weeks
12-activity
Financial parameter Projects 0 1 2 3 4 5 6 7 8
Expenditures E ($) First –22 644 –16 364 –11 202 –11 968 –23 137 −9114 –14 047 –10 862 0
Second 0 –16 626 –26 802 –10 442 –26 623 –18 790 −5978 0 –
Income P ($) First 9368 0 21 529 12 086 13 488 33 916 8267 19 163 38 320
Second 0 5729 0 41 141 12 422 40 826 27 076 16 044 –
Cumulative balance F ($) First –22 644 –29 640 –40 842 –31 281 –42 332 –37 958 –18 089 –20 684 −1521
Second 0 –16 626 –37 699 –48 141 –33 623 –39 991 −5143 21 933 –
Net balance N ($) First –13 276 –29 640 –19 313 –19 195 –28 844 −4042 −9822 −1521 36 799
Second 0 –10 897 –37 699 −7000 –21 201 835 21 933 37 977 –
Finance costs I ($) First −19.9 −64.3 −105.7 −75.9 −92.2 −100.2 −33.2 −45.7 −4.6
Second 0 −24.9 −72.8 −128.7 −60.9 −91.7 −8.9 0 –
Accumulated finance First −19.9 −84.3 −190.3 −266.7 −359.8 −461.1 −495.7 −542.8 −549
costs I´($) Second 0 −24.9 −97.9 −226.9 −288.6 −381.2 −391.1 −392.4 –
Cumulative balance First –22 664 –29 725 –41 033 –31 550 –42 693 –38 421 –18 587 –21 228 −2070
with finance costs Ft0 ($) Second 0 –16 651 –37 797 –48 369 –33 912 –40 372 −5533 21 543 –
Portfolio –22 664 –46 376 –78 830 –79 919 –76 605 –78 794 –24 120 315 35 518*
Net balance with finance First –13 295 –29 724 –19 503 –19 462 –29 204 −4503 –10 318 −2063 36 250
costs Nt0 ($) Second 0 –10 921 –37 796 −7227 –21 489 454 21 542 37 588 –
*Profit of the second project was added.
Finance-based scheduling 547

Project 1
Cash( )

36250

0 1 2 3 4 5 6 7 8 Weeks
13295 19504 4505 10319 2064 2070
19463
22664 29725 29205 18587 21228
31550
41033 42693 38421

Project 2
Cash( )

37588
21544
21543
0 1 2 3 454 5 6
10921 Weeks
7227 4 5533
21489
16651
33912 40372
37797
48369

Portfolio
Cash( )

73838

35524
35518
11225
0 1 2 3 4 5 315 8 Weeks
13295 4051 6 7
26690
22664 40646 24120
50694
46376 57301

78830 79919 76605 78794

Figure 7 Cash flow of the two 12-activity projects and the portfolio at the credit limit of $80 000 with priority assigned to the
second project

activity in each combination is incremented by one day
and the start times of the remaining activities are kept
unchanged while maintaining dependency. The C3
and R4 of the four combinations are calculated as pre-
sented in Table 10. The first combination is the only
one which exhibits the minimum project duration of
21 days but it is infeasible since its C3 is higher than
R3 and thus, the first combination is selected for the
second cycle. The same scenario of the first cycle hap-
pened in the second to fifth cycles resulting in the selec-
tion of the first combination to proceed from a given
cycle to the next one.
In the sixth cycle, the continuous shifting of activi-
ties resulted in pushing activity 6 entirely outside the
span of the third week which modified the set of
eligible activities to include activities 8, 9, and 10
and accordingly the number of generated combina-
tions to three. The three combinations resulted in a
minimum project duration of 22 days. Since the three
combinations are infeasible based on the values of C3
and R3 as presented in Table 10, the second combina-
tion of the minimum C3 value is selected for the sev-
enth cycle. In the seventh cycle, the first and third
combinations resulted in minimum project duration
of 22 days. Since these two combinations are infeasible
based on the values of C3 and R3 as presented in
Table 10, the first combination of the minimum is
selected randomly for the eighth cycle since the two
schedules have an identical C3 value of $16 931. The
situations in cycles 8 and 9 are similar to the situations
in cycles 6 and 7 respectively, thus the combination
selections followed the same rule. In the tenth cycle,
activity 10 is pushed entirely outside the span of the
third week which modified the set of eligible activities
548 Gajpal and Elazouni

Activities

1
2
3

First project
4
5
6
7
8

Initial schedule
9
10
11
12

1
2
3

Second project
4
5
6
7
8
9
10
11
12

1
2
3
4

First project
5
6

Priority to first project

7
8
9
10
11
12

1
2

Second project
3
4
5
6
7
8
9
10
11
12

1
2
3
First project

4
5
6
7
Priority to second project

8
9
10
11
12

1
2
3
Second project

4
5
6
7
8
9
10
11
12
Days
0 5 10 15 20 25 30 35

Figure 8 The original schedule of the two 12-activity projects and the schedules at credit limit of $80 000

to include activities 8 and 9 and accordingly the num-
ber of generated combinations to only two. In the
tenth cycle, a feasible combination was reached by
scheduling activities 8 and 9 to start at days 12 and
13 respectively with a C3 value of $9641 which is lower
than the R3 value of $10 167 leaving an unutilized cash
of $526. Since the remaining cash of $526 is not
enough to schedule any of the activities of the second
project, no activities can be scheduled in the second
project during the third week.
Finance-based scheduling 549

Table 10 The cycles of the third week of the two 12-activity projects at credit limit of $80 000 with priority assigned to the first
project

Combination
Cycle Rt activities Combination start times Total duration Ct Rt+1 Feasible
– 10 167 6 8 9 10 10 10 10 13 21 24 122 34 635 No*
1 10 167 6 8 9 10 11 10 10 13 21 24 122 34 635 No*
10 11 10 14 22 22 384 34 640 No
10 10 11 13 22 21 345 34 643 No
10 10 10 14 22 22 384 34 640 No
2 10 167 6 8 9 10 12 10 10 13 21 24 122 34 635 No*
11 11 10 14 22 22 384 34 640 No
11 10 11 13 22 21 345 34 643 No
11 10 10 14 22 22 384 34 640 No
3 10 167 6 8 9 10 13 10 10 13 21 24 122 34 635 No*
12 11 10 14 22 22 384 34 640 No
12 10 11 13 22 21 345 34 643 No
12 10 10 14 22 22 384 34 640 No
4 10 167 6 8 9 10 14 10 10 13 21 24 122 34 635 No*
13 11 10 14 22 22 384 34 640 No
13 10 11 13 22 21 345 34 643 No
13 10 10 14 22 22 384 34 640 No
5 10 167 6 8 9 10 15 10 10 13 21 21 446 37 319 No*
14 11 10 14 22 22 384 34 640 No
14 10 11 13 22 21 345 34 643 No
14 10 10 14 22 22 384 34 640 No
6 10 167 – 8 9 10 – 11 10 14 22 19 708 37 324 No
– 10 11 13 22 18 669 37 327 No*
– 10 10 14 22 19 708 37 324 No
7 10 167 – 8 9 10 – 11 11 14 22 16 931 37 333 No*
– 10 12 13 23 15 893 37 336 No
– 10 11 14 22 16 931 37 333 No
8 10 167 – 8 9 10 – 12 11 15 23 15 194 40 813 No
– 11 12 14 23 14 155 37 341 No*
– 11 11 15 23 15 194 40 813 No
9 10 167 – 8 9 10 – 12 12 15 23 12 417 40 821 No*
– 11 13 14 24 11 378 37 349 No
– 11 12 15 23 12 417 40 821 No
10 10 167 – 8 9 – – 13 12 – 24 11 055 40 825 No
– 12 13 – 24 9641 40 830 Yes
*Selected combination for the next cycle.

Scalability of the proposed heuristic
It was explained above that employing the exhaustive
enumeration technique in the scheduling heuristic
exponentially increases the computation time and
hence puts huge limitations on the size of projects
that can be solved. Thus, the scalability of the
scheduling heuristic employing the proposed shifting
algorithm was tested with respect to the size and
number of the projects within portfolios. The investi-
gation involved scheduling five concurrent large-size
100-activity projects within a portfolio. The five pro-
jects were generated randomly in terms of the activity
duration (from one to five days), dependency
between activities (from one to three predecessors
and successors), and daily activities’ cost (from
$1000 to $3000). The five 100-activity projects were
set up in the portfolio such that each project starts
two weeks beyond the start of the preceding project
in the portfolio. The original duration, financial data,
and the contractual provisions of the five projects are
presented in Table 3.
The five projects within the portfolio were sched-
uled at five credit limits of the range which has a start
of $260 000, end of $280 000, and increment of
$5000. At each credit limit, five scheduling problems
were devised by assigning different priorities to a differ-
ent project of the five projects. For instance, a schedul-
ing problem denoted by 1–2–3–4–5 assigns highest
priority to the first project and lowest priority to the
 550

Table 11 Results of the portfolio of five 100-activity projects

Total duration of projects (day)

Project First Second Third Fourth Fifth Duration of the Profit of the Maximum negative
Scenario priority project project project project project portfolio (day) portfolio ($) cumulative balance ($)
Original schedule – 583 536 566 528 542 586 2 978 149 356 580
Credit 260 000 1–2–3–4–5 583 544 595 573 582 622 2 889 464 259 959
limit ($) 2–1–3–4–5 594 540 589 573 583 623 2 889 328 259 969
2–3–1–4–5 610 540 581 563 588 628 2 885 648 259 743
2–3–4–1–5 618 542 581 555 586 626 2 882 207 259 912
2–3–4–5–1 625 536 585 560 575 625 2 889 479 259 971
265 000 1–2–3–4–5 583 541 579 559 580 620 2 916 471 264 997
2–1–3–4–5 587 536 584 560 573 613 2 916 503 264 997
2–3–1–4–5 603 539 570 550 577 617 2 920 122 264 982
2–3–4–1–5 603 539 574 545 582 622 2 916 394 264 854
2–3–4–5–1 612 537 575 550 568 612 2 916 378 264 733
270 000 1–2–3–4–5 583 539 572 552 571 611 2 932 029 269 930
2–1–3–4–5 583 536 576 554 570 610 2 932 025 269 959
2–3–1–4–5 588 536 566 559 572 612 2 928 504 269 924
2–3–4–1–5 602 536 566 535 580 620 2 931 977 269 998
2–3–4–5–1 619 536 566 532 559 612 2 935 372 269 689
275 000 1–2–3–4–5 583 537 573 547 565 605 2 943 465 274 887
2–1–3–4–5 583 536 573 549 564 604 2 943 451 274 950
2–3–1–4–5 587 536 566 546 571 611 2 936 340 274 972
2–3–4–1–5 595 536 566 529 537 613 2 947 058 274 910
2–3–4–5–1 609 536 566 529 552 609 2 950 478 274 911
280 000 1–2–3–4–5 583 536 572 541 563 603 2 947 578 279 927
2–1–3–4–5 583 536 572 541 563 603 2 947 578 279 927
2–3–1–4–5 587 536 566 539 568 608 2 947 553 279 968
2–3–4–1–5 592 536 566 529 565 605 2 954 831 279 927
2–3–4–5–1 601 536 566 529 550 601 2 958 214 279 927
Gajpal and Elazouni
Finance-based scheduling
fifth project through second, third, and fourth projects.
This setting created 25 different cash-constrained
scheduling problems as presented in Table 11. The
duration, profit, and maximum negative cumulative
balance values of the original portfolio are presented
in the first row of Table 11. In addition, Table 11 pre-
sents the values of the solutions of the 25 scheduling
problems. The ability of the scheduling heuristic to
solve 25 portfolios encompassing a considerable num-
ber of five projects each of a fairly big number of 100
activities without having issues regarding computation
time is a clear indication that the problems handled
by the enhanced scheduling heuristic can be scaled up
to real-life project portfolios.
Conclusion
An enhanced scheduling heuristic was successfully
implemented to devise finance-based schedules of
multiple projects within contractors’ portfolios. The
enhancement was achieved by replacing the exhaustive
enumeration technique employed in the heuristic to
specify activities’ start times within a given period with
a polynomial shifting algorithm. The heuristic employ-
ing the exhaustive enumeration technique takes
considerable computation time which increases expo-
nentially with the increase in the number of concurrent
activities and the period span of time. This shortcoming
imposed huge limitations on the heuristic to solve real-
life projects. The main idea of the proposed shifting
algorithm was to identify a few combinations which
represent the potential combinations to be evaluated
for feasibility in terms of fulfilling the cash constraints
and minimizing delays in project completion. Given
that the shifting process is gradual in nature and pro-
ceeds by continually incrementing the activities’ start
times, the shifting process is carried out in cycles such
that once a feasible combination is encountered, the
shifting process is terminated in order to save the time
needed for generating and evaluating the remaining
potential combinations.
The approach of identifying a small number of
potential combinations poses the pressing question of
whether the performance of the scheduling heuristic
employing the proposed shifting algorithm is satisfac-
tory or not. Thus, the proposed shifting algorithm
was validated by comparing the results of the heuristic
employing the proposed shifting algorithm with those
of the heuristic employing the exhaustive enumeration
technique. Further validation was conducted by com-
paring the results of the heuristic employing the pro-
posed shifting algorithm with the equivalent results
obtained by using the IP finance-based scheduling
models using 240 problems of randomly generated
551
networks of sizes that range from 30 to 240 activities.
This rigorous validation was carried out because it is
well known that heuristic methods are generally prob-
lem-dependent and their rules of thumb could not be
equally applied to all cases. The results of the heuristic
employing the proposed shifting algorithm were very
close to the exact results obtained by using the IP mod-
els which strongly establishes the validation of the
enhanced heuristic.
Trade-off analysis was performed between project
completion time and credit limit values. The enhanced
heuristic demonstrated high sensitivity in reflecting the
impact of varying the credit limit on the project
completion time. Practically, trade-off analysis helps
managers make effective decisions regarding the req-
uisitions of finance from banks. Further, the scalability
of the proposed heuristic was tested in terms of the size
and number of projects using five concurrent randomly
generated large-size 100-activity networks within a sin-
gle portfolio. The heuristic was able to schedule the five
projects at five different credit limit values without hav-
ing issues with the computation time which proves that
the heuristic can easily be scaled up to handle portfolios
of multiple large-size projects.
Though the projects used for demonstration are
hypothetical, the data used including activities’
expenditure and payment modes, CPM networks,
financial data, and contract provisions were very much
comparable to those of real projects that are collected
and used for the same planning purpose of construction
projects. Thus, there is no valid reason to preclude the
hypothetical projects from being used to validate and
demonstrate the scheduling heuristic with the proposed
shifting algorithm in this paper. Although the assump-
tions made in this paper regarding cash flow might not
apply in some projects, including: payments are related
to the work accomplished, expenditures are linearly dis-
tributed with the duration of activities, and periods of
the projects within the portfolio coincide with each
other, the concept of using the shifting algorithm pre-
sented in this paper to fulfil the cash constraints
remains valid. Finally, despite the satisfactory perfor-
mance of the enhanced heuristic, continuous research
efforts are always justified for further enhancement.
Disclosure statement
No potential conflict of interest was reported by the authors.
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