A goal programming capital budgeting model under uncertainty in Construction industry

Document Type: Article


Department of industrial Engineering, Faculty of Engineering, Ferdowsi University of Mashhad, Mashhad, Iran, P.O.Box: 91775-1111


Due to the increase in investments in construction projects and the lack of practical models in this area developing new practical models is essential. In this paper, researchers suggest a new model in which (1) its assumptions are adopted based on the real world, (2) goal programming is used because of the soft nature of the budget constraints; and (3) risk of variations in cash flows is considered. The presented model chooses the most profitable portfolio of projects and determines their respective financing resources, area under construction, and pre-sale and sale amounts for each period such that the cumulative cash flow at the end of the time horizon is maximized. The fuzzy analytic hierarchy process (FAHP) is used to determine the weight of the objectives. The exact solution to the model is obtained using the ILOG CPLEX software. The presented solution seems efficient; since it yields very small elapsed times to exactly solve the real-world-sized problems. Also, the sensitivity analysis is performed and the results are deliberately studied and analyzed. Parameters such as pre-sale prices, mean and variance of the sale price and construction costs are among the highly sensitive parameters.


Main Subjects