The Multi-Mode Capital-Constrained Net Present Value Problem

Abstract

This chapter deals with a special resource-constrained multi-mode net present value problem, i.e., the capital-constrained multi-mode project payment scheduling problem where the objective is to assign activity modes and payments so as to maximize the net present value (NPV) of the contractor under the capital constraint. With the different payment patterns adopted, four optimization models are constructed using the event-based method. Metaheuristics, including tabu search and simulated annealing, are developed and compared with other two simple heuristics based on a computational experiment performed on a data set generated randomly. The results indicate that the loop nested tabu search is the most promising procedure for the problem studied. Moreover, the effects of key parameters on the NPV are studied and the following conclusions are drawn: The NPV rises with the increase of the initial capital availability, the payment number, the payment proportion, or the project deadline; the marginal return decreases as the initial capital availability goes up; the NPVs under the milestone event based payment pattern are not less than those under the other three payment patterns.