Contractors need financing throughout a project, mainly due to retainage, which is the money that the owner withholds to make sure that the... Show moreContractors need financing throughout a project, mainly due to retainage, which is the money that the owner withholds to make sure that the project is performed properly by the contractor. Even if an owner does not withhold retainage, financing is still necessary because the periodic payments made by the owner are usually delayed. All pertinent studies conducted so far have considered only one source of financing without any consideration of different sources and types of financing, times of cash provisions, interest rates, and repayment options. Actually, if one assumes a predetermined credit limit and one source of financing, as past researchers have done, the optimal financing cost and the schedule that satisfies all constraints may be different than when several sources of financing and undetermined credit limit are considered. The main objective of this research is to focus on the optimization of financing cost by developing a financing optimization model based on different financing alternatives. Far lower financing cost and higher profit are obtained by using the proposed model compared to all models developed in past research. The research is conducted in four stages of development. In Stage 1, a financing optimization model is developed for a schedule that uses normal (not accelerated) activities, and early activity start and finish times. This model can be used before the contract is signed to offer the lower bid or can be used after the contract is signed to obtain higher profit. In Stage 2, the time-cost tradeoff algorithm is added to the model developed in Stage 1, considering accelerated activities between the crash and normal durations. In Stage 3, the model developed in Stage 2 is augmented by considering variable activity start times. Finally, in Stage 4, the model developed in Stage 3 is further improved by expanding time-cost tradeoff to allow for time extensions beyond the contract duration. All models developed in these four stages provide not only minimum financing cost, but also the ideal work schedule that achieves minimum total cost and maximum profit. Moreover, these models provide specific timings for borrowing and repaying funds. Ph.D. in Civil Engineering, July 2017 Show less
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