DISCOUNTED CASH FLOW TIME-COST TRADE-OFF PROBLEM OPTIMIZATION; ACO APPROACH

Traditional time-cost trade-off (TCTO) analysis in construction management problems disregards time value of money. In fact, the value of money decreases with time and, therefore, discounted cash flows should be considered when solving TCTO optimization problem. As a combinatorial optimization problem one may apply heuristics and/or optimization techniques to solve time–cost trade-off problems. The combinatorial nature of the discrete TCTP, in which the solution space of the problem increases exponentially with the increment in the number of activities and/or the number of potential implementation modes, demands special solution algorithm. A multi-objective ant colony optimization (ACO) based model for project TCTO problem is developed, which minimizes project direct cost taking into account discounted cash flows. The model locates the near optimum Pareto front with a set of non-dominated solutions in which precise discrete activity time-cost function may be used. No simplifying assumptions are needed to implement the discount factor into the modeling structure and solution procedure, as required with mathematical optimization techniques. Details of model formulation are illustrated by an example project. The results show that inclusion of discounted cash flow results in different modes of construction as well as activities’ durations and costs and consequently optimal project duration. The proposed approach can help the practitioners in considering net present value in time-cost decisions leading to identification of the best option.