IDEAS home Printed from https://ideas.repec.org/a/spr/operea/v20y2020i1d10.1007_s12351-017-0326-5.html
   My bibliography  Save this article

A stochastic model and algorithms for determining efficient time–cost tradeoffs for a project activity

Author

Listed:
  • Pedro Godinho

    (University of Coimbra)

  • João Paulo Costa

    (University of Coimbra)

Abstract

We consider a stochastic model for the time–cost tradeoffs of an activity. In this model the activity can be undertaken by using several different resources, and the resource in use may change according to the way the activity is evolving. We present two algorithms for identifying strategies that are in a predefined neighborhood of the efficient set: one of them is based on a tree structure and the other is based on dynamic programming. Both algorithms take advantage of some mathematical properties of the model in order to reduce their running time and memory requirements. We present the results of some computational tests, as well as an application example. We conclude that the dynamic programming algorithm performs quite well, although it is sometimes necessary to adjust the parameters related to the neighborhood of the efficient set to be able to have reasonable running times.

Suggested Citation

  • Pedro Godinho & João Paulo Costa, 2020. "A stochastic model and algorithms for determining efficient time–cost tradeoffs for a project activity," Operational Research, Springer, vol. 20(1), pages 319-348, March.
    • Handle: RePEc:spr:operea:v:20:y:2020:i:1:d:10.1007_s12351-017-0326-5
    DOI: 10.1007/s12351-017-0326-5
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s12351-017-0326-5
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s12351-017-0326-5?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Azaron, Amir & Tavakkoli-Moghaddam, Reza, 2007. "Multi-objective time-cost trade-off in dynamic PERT networks using an interactive approach," European Journal of Operational Research, Elsevier, vol. 180(3), pages 1186-1200, August.
    2. Pindyck, Robert S., 1993. "Investments of uncertain cost," Journal of Financial Economics, Elsevier, vol. 34(1), pages 53-76, August.
    3. Majd, Saman & Pindyck, Robert S., 1987. "Time to build, option value, and investment decisions," Journal of Financial Economics, Elsevier, vol. 18(1), pages 7-27, March.
    4. Golenko-Ginzburg, Dimitri & Gonik, Aharon, 1998. "A heuristic for network project scheduling with random activity durations depending on the resource allocation," International Journal of Production Economics, Elsevier, vol. 55(2), pages 149-162, July.
    5. Jorgensen, Trond & Wallace, Stein W., 2000. "Improving project cost estimation by taking into account managerial flexibility," European Journal of Operational Research, Elsevier, vol. 127(2), pages 239-251, December.
    6. Tereso, Anabela P. & Araujo, M. Madalena T. & Elmaghraby, Salah E., 2004. "Adaptive resource allocation in multimodal activity networks," International Journal of Production Economics, Elsevier, vol. 92(1), pages 1-10, November.
    7. Amir Azaron & Hideki Katagiri & Masatoshi Sakawa, 2007. "Time-cost trade-off via optimal control theory in Markov PERT networks," Annals of Operations Research, Springer, vol. 150(1), pages 47-64, March.
    8. Godinho, Pedro & Branco, Fernando G., 2012. "Adaptive policies for multi-mode project scheduling under uncertainty," European Journal of Operational Research, Elsevier, vol. 216(3), pages 553-562.
    9. Gunther Friedl, 2002. "Sequential Investment And Time To Build," Schmalenbach Business Review (sbr), LMU Munich School of Management, vol. 54(1), pages 56-79, January.
    10. Gutjahr, Walter J., 2015. "Bi-Objective Multi-Mode Project Scheduling Under Risk Aversion," European Journal of Operational Research, Elsevier, vol. 246(2), pages 421-434.
    11. KIlIç, Murat & Ulusoy, Gündüz & Serifoglu, Funda Sivrikaya, 2008. "A bi-objective genetic algorithm approach to risk mitigation in project scheduling," International Journal of Production Economics, Elsevier, vol. 112(1), pages 202-216, March.
    12. W. J. Gutjahr & C. Strauss & E. Wagner, 2000. "A Stochastic Branch-and-Bound Approach to Activity Crashing in Project Management," INFORMS Journal on Computing, INFORMS, vol. 12(2), pages 125-135, May.
    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. Öncü Hazir & Gündüz Ulusoy, 2020. "A classification and review of approaches and methods for modeling uncertainty in projects," Post-Print hal-02898162, HAL.
    2. Hazır, Öncü & Ulusoy, Gündüz, 2020. "A classification and review of approaches and methods for modeling uncertainty in projects," International Journal of Production Economics, Elsevier, vol. 223(C).
    3. Gutjahr, Walter J., 2015. "Bi-Objective Multi-Mode Project Scheduling Under Risk Aversion," European Journal of Operational Research, Elsevier, vol. 246(2), pages 421-434.
    4. Godinho, Pedro & Branco, Fernando G., 2012. "Adaptive policies for multi-mode project scheduling under uncertainty," European Journal of Operational Research, Elsevier, vol. 216(3), pages 553-562.
    5. Sascha Mölls & Karl-Heinz Schild, 2012. "Decision-making in sequential projects: expected time-to-build and probability of failure," Review of Quantitative Finance and Accounting, Springer, vol. 39(1), pages 1-25, July.
    6. Xiong, Jian & Leus, Roel & Yang, Zhenyu & Abbass, Hussein A., 2016. "Evolutionary multi-objective resource allocation and scheduling in the Chinese navigation satellite system project," European Journal of Operational Research, Elsevier, vol. 251(2), pages 662-675.
    7. Jonathan B. Berk & Richard C. Green & Vasant Naik, 1998. "Valuation and Return Dynamics of New Ventures," NBER Working Papers 6745, National Bureau of Economic Research, Inc.
    8. Madlener, Reinhard & Kumbaroglu, Gurkan & Ediger, Volkan S., 2005. "Modeling technology adoption as an irreversible investment under uncertainty: the case of the Turkish electricity supply industry," Energy Economics, Elsevier, vol. 27(1), pages 139-163, January.
    9. Gabriel P. Mathy, 2020. "How much did uncertainty shocks matter in the Great Depression?," Cliometrica, Springer;Cliometric Society (Association Francaise de Cliométrie), vol. 14(2), pages 283-323, May.
    10. Viju, Crina & Kerr, William A., 2010. "Is The Subsidy For Biofuels The Way To Go?," 14th ICABR Conference, June 16-18, 2010, Ravello, Italy 188117, International Consortium on Applied Bioeconomy Research (ICABR).
    11. Kort, P.M., 1996. "Optimal R&D Investments of the Firm," Discussion Paper 1996-47, Tilburg University, Center for Economic Research.
    12. Davis, Graham A. & Owens, Brandon, 2003. "Optimizing the level of renewable electric R&D expenditures using real options analysis," Energy Policy, Elsevier, vol. 31(15), pages 1589-1608, December.
    13. Ahsan Abbas & Eatzaz Ahmed & Fazal Husain, 2019. "Political and Economic Uncertainty and Investment Behaviour in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 58(3), pages 307-331.
    14. Cortazar, Gonzalo & Casassus, Jaime, 1998. "Optimal Timing of a Mine Expansion: Implementing a Real Options Model," The Quarterly Review of Economics and Finance, Elsevier, vol. 38(3, Part 2), pages 755-769.
    15. Weeds, Helen, 1999. "‘Reverse Hysteresis’: R&D Investment With Stochastic Innovation," Economic Research Papers 269349, University of Warwick - Department of Economics.
    16. Siqian Shen & J. Cole Smith & Shabbir Ahmed, 2010. "Expectation and Chance-Constrained Models and Algorithms for Insuring Critical Paths," Management Science, INFORMS, vol. 56(10), pages 1794-1814, October.
    17. Gordon Briest & Elmar Lukas & Sascha H. Mölls & Timo Willershausen, 2020. "Innovation speed under uncertainty and competition," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 41(8), pages 1517-1527, December.
    18. L. Sereno, 2006. "The Valuation of New Ventures," Working Papers 554, Dipartimento Scienze Economiche, Universita' di Bologna.
    19. Bardia Kamrad & Akhtar Siddique & Ricardo Ernst, 2012. "Partial equilibrium in risk‐based production decisions," Naval Research Logistics (NRL), John Wiley & Sons, vol. 59(1), pages 1-17, February.
    20. Gomes Santana Félix, Elisabete, 2003. "Opções reais: tipologias e sua avaliação [Real options: typologies and its evaluation]," MPRA Paper 6186, University Library of Munich, Germany.

    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:spr:operea:v:20:y:2020:i:1:d:10.1007_s12351-017-0326-5. 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: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.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.