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Nonlinear optimisation and rational cash flow

Václav Beran (Faculty of Civil Engineering, Technical University of Prague, Thakurova, Czech Republic)
Petr Dlask (Faculty of Civil Engineering, Technical University of Prague, Thakurova, Czech Republic)

Engineering, Construction and Architectural Management

ISSN: 0969-9988

Article publication date: 8 May 2007

Abstract

Purpose

The problem of diverse cash flows associated with a construction “project” appear in four progressive cycles. These are the initiating construction cycle and closing deconstruction cycle (devaluation cycle). The effectiveness of any project is given by capitalisation cycle. The optimisation of payback (credit return) cycle is critical for any project.

Design/methodology/approach

For calculate of activity durations, cash flows and even we may use the spreadsheet table as a tool for expression of calculation formulas. This approach may offer a mechanism for answers regarding the sensitivity of manageable parameters (say changes in costs, construction speeds, duration of activity). The problem of optimal capacity expansion of construction work as a time dependent problem is studied in many different applied contexts. Traditional capacity planning usually begins with a forecast of demand on the basis of organisational or technological needs.

Findings

The implementation of a technical project carried out in conditions of high production speeds and low time reserves requires changes in technologies, organisation and preparation of construction. In each specific case, a civil engineer needs to know the economic impacts (the capability of applicable calculations).

Originality/value

It is obvious from the given example, which has the same features as the execution of a series of construction projects in recent years, that the myth of the importance of executing works in large volumes ahead of the deadlines has significant financial consequences.

Keywords

Citation

Beran, V. and Dlask, P. (2007), "Nonlinear optimisation and rational cash flow", Engineering, Construction and Architectural Management, Vol. 14 No. 3, pp. 277-292. https://doi.org/10.1108/09699980710744917

Publisher

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Emerald Group Publishing Limited

Copyright © 2007, Emerald Group Publishing Limited