A model for scheduling projects under the condition of inflation and under penalty and reward arrangements

A zero–one mixed integer linear programming model is developed for the scheduling of projects under the condition of inflation and under penalty and reward arrangements. The effects of inflation on time–cost trade-off curves are illustrated and a modified approach to time–cost trade-off analysis presented. Numerical examples are given to illustrate the model and its properties. The examples show that misleading schedules and inaccurate project-cost estimates will be produced if the inflation factor is neglected in an environment of high inflation. They also show that award of penalty or bonus is a catalyst for early completion of a project, just as it can be expected.