Progress payments in project scheduling problems

In this paper we study the unconstrained project scheduling problem with discounted cash flows where the net cash flows are assumed to be dependent on the completion times of the corresponding activities. Cash outflows occur when an activity is completed whereas cash inflows are incurred as progress payments at the end of some time period. The objective is to schedule the activities in order to maximize the net present value of the project subject to the precedence constraints and a fixed deadline. This paper extends the ever-growing amount of research concerning the financial aspects in project scheduling in which cash flows are time-dependent. We introduce a branch-and-bound algorithm which computes upper bounds by making piecewise linear overestimations. In doing so, the algorithm transforms the problem into a weighted earliness-tardiness project scheduling problem. The algorithm is extended with two new rules in order to reduce the size of the branch-and-bound tree. Computational results are reported. (C) 2002 Elsevier Science B.V. All rights reserved.