Civil and Project journal

Novel mathematical model for investing for Self-financing building construction project portfolios

https://doi.org/10.22034/cpj.2024.436305.1255
Volume 5, Issue 10 - Serial Number 56
January 2023
Pages 11-26
Civil and Project journal

Document Type : Research Article

Authors

Seyed Mahdi Mirkhorsandi 1
Hossein Khosravi 2
Alireza Davoodi 3
Seyed Mojtaba Movahedifar 1

1 Department of Civil Engineering, Neyshabur Branch, Islamic Azad University, Neyshabur, Iran

2 Department of Civil Engineering, Hakim Sabzevari University, Sabzevar, Iran

3 Department of Mathematics, Neyshabur Branch, Islamic Azad University, Neyshabur, Iran

Abstract
Financially, project portfolios can be completely self-reliant when their required liquidity is merely obtained through reinvesting the profit of the finished projects and the initial capital of the owners. However, the firm can only perform some profitable projects despite maximizing wealth owing to a shortage of funds. In such cases, projects’ implementation can be phased as a practical solution to satisfy financial deficiencies. Therefore, decision-makers are involved in finding the optimum selection and scheduling of the self-financing phase-able project portfolios. Some projects especially construction projects encompass a multi-stage process of repetitive activities, which pave the way for taking advantage of the economy of scale when organizing for development. This research proposes a mathematical model for the problem of building construction project portfolio with simultaneous consideration of the reinvestment strategy, phasing strategy, and economy of scale at the enterprise level. In this case, an integer programming model to maximize the investment's net present value is presented. The proposed model provides a decition support system for property developers to select and schedule self-financing phase-able building construction project portfolios, in this context, the model's applicability is illustrated in a case example.

Keywords

Building project portfolio management
Integer programming
Economy of scale
Phasing strategy
self-financing financial structure
Asta, S., Karapetyan, D., Kheiri, A., Özcan, E., & Parkes, A. J. (2016). Combining Monte-Carlo and hyper-heuristic
methods for the multi-mode resource-constrained multi-project scheduling problem. Information Sciences, 373, 476-498.
Belenky, A. S. (2012). A Boolean programming problem of choosing an optimal portfolio of projects and optimal schedules
for them by reinvesting within the portfolio the profit from project implementation. Applied Mathematics Letters, 25(10),
1279-1284.
Beşikci, U., Bilge, Ü., & Ulusoy, G. (2015). Multi-mode resource constrained multi-project scheduling and resource
portfolio problem. European Journal of Operational Research, 240(1), 22-31.
Chen, J., & Askin, R. G. (2009). Project selection, scheduling and resource allocation with time dependent returns.
European Journal of Operational Research, 193(1), 23-34.
Deng, Z., Bai, Y., Fang, S. C., Tian, Y., & Xing, W. (2013). A branch-and-cut approach to portfolio selection with marginal
risk control in a linear conic programming framework. Journal of systems science and systems engineering, 22(4), 385-400.
Dikmen, I., Birgonul, M. T., & Ozorhon, B. (2007). Project appraisal and selection using the analytic network process.
Canadian Journal of Civil Engineering, 34(7), 786-792.
Farris, J. T. (2001). The barriers to using urban infill development to achieve smart growth.
Geiger, M. J. (2017). A multi-threaded local search algorithm and computer implementation for the multi-mode, resourceconstrained
multi-project scheduling problem. European Journal of Operational Research, 256(3), 729-741.
Gyourko, J. E., & Rybczynski, W. (2000). Financing new urbanism projects: Obstacles and solutions. Housing Policy
Debate, 11(3), 733-750.
Jafarzadeh, M., Tareghian, H. R., Rahbarnia, F., & Ghanbari, R. (2015). Optimal selection of project portfolios using
reinvestment strategy within a flexible time horizon. European Journal of Operational Research, 243(2), 658-664.
Janssen, J., Manca, R., & Volpe, E. (2013). Mathematical finance: deterministic and stochastic models. John Wiley & Sons.
Kolisch, R., & Padman, R. (2001). An integrated survey of deterministic project scheduling. Omega, 29(3), 249-272.
Li, X., Fang, S. C., Guo, X., Deng, Z., & Qi, J. (2016). An extended model for project portfolio selection with project
divisibility and interdependency. Journal of Systems Science and Systems Engineering, 25, 119-138.
Li, X., Wang, Y., Yan, Q., & Zhao, X. (2019). Uncertain mean-variance model for dynamic project portfolio selection
problem with divisibility. Fuzzy Optimization and Decision Making, 18, 37-56.
Liberatore, M. J., Pollack-Johnson, B., & Smith, C. A. (2001). Project management in construction: Software use and
research directions. Journal of construction engineering and management, 127(2), 101-107.
Lim, A. E., & Wimonkittiwat, P. (2014). Dynamic portfolio selection with market impact costs. Operations Research
Letters, 42(5), 299-306.
Lova, A., Maroto, C., & Tormos, P. (2000). A multicriteria heuristic method to improve resource allocation in multiproject
scheduling. European journal of operational research, 127(2), 408-424.
Markowitz, H. M. (1952). Portfolio selecti -91.
Markovitz, H. M. (1959). Portfolio selection: Efficient diversification of investments. John Wiley.
Mirkhorsandi, S. M., Khosravi, H., Davoodi, A., & Movahedifar, S. M. (2024). Civil and Project, 5(10), 11-26.
26
Myers, S. C. (1977). Determinants of corporate borrowing. Journal of financial economics, 5(2), 147-175.
Mirkhorsandi Langaroudi, S. M., Khosravi, H., Davoodi, A., & Movahedifar, S. M. (2022). Resource planning for the
problem of selection and scheduling of self-financed project portfolio in project-oriented organizations. Journal of New
Researches in Mathematics, 32, 115-130
Mirkhorsandi Langaroudi, S. M., Khosravi, H., Davoodi, A., & Movahedifar, S. M. (2023). Cash holding management for
self-financing phase-able and non-phase-able project portfolio selection and scheduling problems. The Engineering
Economist, 1-17. DOI: 10.1080/0013791X.2023.2172242
Ott, S. H., Hughen, W. K., & Read, D. C. (2012). Optimal phasing and inventory decisions for large-scale residential
development projects. The Journal of Real Estate Finance and Economics, 45, 888-918.
Petit, Y. (2012) ‘Project portfolios in dynamic environments: Organizing for uncertainty’, International Journal of Project
Management. Elsevier, 30(5), pp. 539–553.
Engineering. NRC Research Press, 37(8), pp. 1082–1093.
Ranjbar, M., Nasiri, M. M., & Torabi, S. A. (2022). Multi-mode project portfolio selection and scheduling in a buildoperate-
transfer environment. Expert Systems with Applications, 189, 116134.
Shafahi, A., & Haghani, A. (2018a). Project selection and scheduling for phase-able projects with interdependencies among
phases. Automation in Construction, 93, 47-62.
Shafahi, A. and Haghani, A. (2018b). Project selection and scheduling for phase-able projects with interdependencies
among phases’, Automation in Construction. Elsevier, 93(September 2017), pp. 47–62. doi: 10.1016/j.autcon.2018.05.008.
Shoup, D. (2008). Graduated density zoning. Journal of Planning Education and Research, 28(2), 161-179.
Toffolo, T. A., Santos, H. G., Carvalho, M. A., & Soares, J. A. (2016). An integer programming approach to the multimode
resource-constrained multiproject scheduling problem. Journal of Scheduling, 19, 295-307.
Wang, B., & Song, Y. (2016). Reinvestment strategy-based project portfolio selection and scheduling with time-dependent
budget limit considering time value of capital. In Proceedings of the 2015 International Conference on Electrical and
Information Technologies for Rail Transportation: Transportation (pp. 373-381). Springer Berlin Heidelberg.
Wauters, T., Kinable, J., Smet, P., Vancroonenburg, W., Vanden Berghe, G., & Verstichel, J. (2016). The multi-mode
resource-constrained multi-project scheduling problem: The MISTA 2013 challenge. Journal of Scheduling, 19, 271-283.
Xue, X., Wang, S., & Lu, B. (2015). Computational experiment approach to controlled evolution of Zarjou, M., &
Khalilzadeh, M. (2022). Optimal project portfolio selection with reinvestment strategy considering sustainability in an
uncertain environment: a multi-objective optimization approach. Kybernetes, 51(8), 2437-2460.
Zhao, T., & Tseng, C. L. (2003). Valuing flexibility in infrastructure expansion. Journal of infrastructure systems, 9(3), 89-
97.
Zhong, Z., Li, X., Liu, X., & Lau, W. (2019). Opportunity cost management in project portfolio selection with
divisibility. Journal of the Operational Research Society, 70(7), 1164-1178.
Zuluaga, A., Sefair, J. A., & Medaglia, A. L. (2007, April). Model for the selection and scheduling of interdependent
projects. In 2007 IEEE Systems and Information Engineering Design Symposium (pp. 1-7). IEEE.
  • Receive Date 18 November 2023
  • Revise Date 28 November 2023
  • Accept Date 28 December 2023
  • First Publish Date 28 December 2023
  • Publish Date 22 December 2023

Home

Submit

Contact Us

Forthcoming Articles