Maximizing the net present value of a project subject to materials and capital constraints

Maximizing the net present value of a project subject to materials and capital constraints

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Article ID: iaor1990925
Country: United States
Volume: 7
Issue: 1/2
Start Page Number: 33
End Page Number: 45
Publication Date: Oct 1987
Journal: Journal of Operations Management
Authors: ,
Abstract:

Large projects in a variety of industries must be scheduled subject to constraints on capital availability with the objective of maximizing their net present value. The effects of capital and materials costs and constraints have been discussed separately in the project management literature, but they have yet to be treated in an integrated fashion. A framework summarizing the previous research on resource constrained project scheduling is presented in this article and the limited role of monetary objects in the previous research is illustrated. A new approach to the project scheduling problem is presented where the net present value of a project is maximized subject to capital and material constraints. The major benefit of this approach is that it allows managers to optimize the monetary objectives for a project.

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