IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v16y2023i1p244-d1308320.html
   My bibliography  Save this article

Integrated Agent-Based Simulation and Game Theory Decision Support Framework for Cash Flow and Payment Management in Construction Projects

Author

Listed:
  • Dalia H. Dorrah

    (Department of Civil and Mineral Engineering, University of Toronto, Toronto, ON M5S 1A4, Canada)

  • Brenda McCabe

    (Department of Civil and Mineral Engineering, University of Toronto, Toronto, ON M5S 1A4, Canada)

Abstract

Effective cash flow management has become crucial for projects and stakeholders given the wide payment-related problems and financial risks encountered in the construction industry worldwide. Previous studies mostly addressed cash flow and payments from the perspective of a specific stakeholder, resulting in an imbalanced cash flow management culture that is further intensified by the power asymmetry of the top-down payment decision-making process. This research proposes an adaptive decision support framework for evaluating and negotiating payment options in construction projects while incorporating the individual and collective financial roles of stakeholders. The framework is comprised of three modules for data acquisition, payment simulation, analysis, and negotiation, as well as decision support. It integrates agent-based simulation, data envelopment analysis, and game theory for a multi-level study of project performance while capturing the driving forces of stakeholders in payment negotiations. A case study project is used to demonstrate the framework implementation under varying payment conditions and interest rates. The results provide quantitative profiles of stakeholders to identify incurred charges, balanced payment conditions, and suitable compensation. Finally, the framework can be utilized by stakeholders and jurisdictions to move towards enhanced contractual arrangements that alleviate economic and financial risks with the informed collaboration of its entities.

Suggested Citation

  • Dalia H. Dorrah & Brenda McCabe, 2023. "Integrated Agent-Based Simulation and Game Theory Decision Support Framework for Cash Flow and Payment Management in Construction Projects," Sustainability, MDPI, vol. 16(1), pages 1-25, December.
    • Handle: RePEc:gam:jsusta:v:16:y:2023:i:1:p:244-:d:1308320
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/16/1/244/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/16/1/244/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Asadabadi, Mehdi Rajabi & Zwikael, Ofer, 2021. "Integrating risk into estimations of project activities' time and cost: A stratified approach," European Journal of Operational Research, Elsevier, vol. 291(2), pages 482-490.
    2. Nalini Dayanand & Rema Padman, 2001. "Project Contracts and Payment Schedules: The Client's Problem," Management Science, INFORMS, vol. 47(12), pages 1654-1667, December.
    3. Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, vol. 2(6), pages 429-444, November.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Khezrimotlagh, Dariush & Kaffash, Sepideh & Zhu, Joe, 2022. "U.S. airline mergers’ performance and productivity change," Journal of Air Transport Management, Elsevier, vol. 102(C).
    2. Estévez-Fernández, Arantza, 2012. "A game theoretical approach to sharing penalties and rewards in projects," European Journal of Operational Research, Elsevier, vol. 216(3), pages 647-657.
    3. Christian Growitsch & Tooraj Jamasb & Christine Müller & Matthias Wissner, 2016. "Social Cost Efficient Service Quality: Integrating Customer Valuation in Incentive Regulation—Evidence from the Case of Norway," International Series in Operations Research & Management Science, in: Joe Zhu (ed.), Data Envelopment Analysis, chapter 0, pages 71-91, Springer.
    4. Franz R. Hahn, 2007. "Determinants of Bank Efficiency in Europe. Assessing Bank Performance Across Markets," WIFO Studies, WIFO, number 31499, August.
    5. Alperovych, Yan & Hübner, Georges & Lobet, Fabrice, 2015. "How does governmental versus private venture capital backing affect a firm's efficiency? Evidence from Belgium," Journal of Business Venturing, Elsevier, vol. 30(4), pages 508-525.
    6. Wang, Zhao-Hua & Zeng, Hua-Lin & Wei, Yi-Ming & Zhang, Yi-Xiang, 2012. "Regional total factor energy efficiency: An empirical analysis of industrial sector in China," Applied Energy, Elsevier, vol. 97(C), pages 115-123.
    7. repec:lan:wpaper:1115 is not listed on IDEAS
    8. Azarnoosh Kafi & Behrouz Daneshian & Mohsen Rostamy-Malkhalifeh, 2021. "Forecasting the confidence interval of efficiency in fuzzy DEA," Operations Research and Decisions, Wroclaw University of Science and Technology, Faculty of Management, vol. 31(1), pages 41-59.
    9. Ruiqing Yuan & Xiangyang Xu & Yanli Wang & Jiayi Lu & Ying Long, 2024. "Evaluating Carbon-Emission Efficiency in China’s Construction Industry: An SBM-Model Analysis of Interprovincial Building Heating," Sustainability, MDPI, vol. 16(6), pages 1-16, March.
    10. Costa, Marcelo Azevedo & Lopes, Ana Lúcia Miranda & de Pinho Matos, Giordano Bruno Braz, 2015. "Statistical evaluation of Data Envelopment Analysis versus COLS Cobb–Douglas benchmarking models for the 2011 Brazilian tariff revision," Socio-Economic Planning Sciences, Elsevier, vol. 49(C), pages 47-60.
    11. Kristiaan Kerstens & Ignace Van de Woestyne, 2018. "Enumeration algorithms for FDH directional distance functions under different returns to scale assumptions," Annals of Operations Research, Springer, vol. 271(2), pages 1067-1078, December.
    12. Bo Li & Muhammad Mohiuddin & Qian Liu, 2019. "Determinants and Differences of Township Hospital Efficiency among Chinese Provinces," IJERPH, MDPI, vol. 16(9), pages 1-16, May.
    13. Ahmad, Usman, 2011. "Financial Reforms and Banking Efficiency: Case of Pakistan," MPRA Paper 34220, University Library of Munich, Germany.
    14. Nijkamp, P. & Stough, R. & Sahin, M., 2009. "Impact of social and human capital on business performance of migrant entrepreneurs - a comparative dutch-us study," Serie Research Memoranda 0017, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
    15. Bowlin, W. F., 1995. "A characterization of the financial condition of the United States' aerospace-defense industrial base," Omega, Elsevier, vol. 23(5), pages 539-555, October.
    16. Zhang, Chonghui & Bai, Chen & Su, Weihua & Balezentis, Tomas, 2024. "The centralised data envelopment analysis model integrated with cost information and utility theory for power price setting under carbon peak strategy at the firm-level," Energy, Elsevier, vol. 292(C).
    17. Mika Kortelainen & Timo Kuosmanen, 2007. "Eco-efficiency analysis of consumer durables using absolute shadow prices," Journal of Productivity Analysis, Springer, vol. 28(1), pages 57-69, October.
    18. Ashrafi, Ali & Seow, Hsin-Vonn & Lee, Lai Soon & Lee, Chew Ging, 2013. "The efficiency of the hotel industry in Singapore," Tourism Management, Elsevier, vol. 37(C), pages 31-34.
    19. Büschken, Joachim, 2009. "When does data envelopment analysis outperform a naïve efficiency measurement model?," European Journal of Operational Research, Elsevier, vol. 192(2), pages 647-657, January.
    20. repec:lan:wpaper:4471 is not listed on IDEAS
    21. Muhammad Jam e Kausar Ali Asghar & Abdul Zahid Khan & Hafiz Ghufran Ali Khan, 2019. "Economies of Scale and Efficiency of Mutual Funds in Pakistan," Global Regional Review, Humanity Only, vol. 4(1), pages 96-103, March.
    22. António Afonso & Ana Patricia Montes & José M. Domínguez, 2024. "Measuring Tax Burden Efficiency in OECD Countries: An International Comparison," CESifo Working Paper Series 11333, CESifo.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:16:y:2023:i:1:p:244-:d:1308320. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.