Integrating financial planning, loaning strategies and project scheduling on a discrete-time model

Abstract In spite of the large amount of work relating project scheduling and cash-flows, less attention has been given to borrowing strategies for supporting projects’ costs. In many practical problems, loaning is not a choice but the unique option for initiating the process. In fact, an adequate loaning strategy is crucial, not just for launching the project but also for guaranteeing its financial success. In this work, we discuss project scheduling along a fixed horizon cash-flow stream that incorporates loaning strategies. There is an initial capital made available by the project owner (client), to be used to support the activities’ costs, together with cash in-flows brought by loans. These loans are assumed to be fully amortized within the given time horizon. After completion, the activities start generating profits, feeding back the financial stream. In addition, the project is not forced to be fully implemented, in the sense that the activities are allowed not to perform, although assuming the precedence relationships imposed. So, the problem is to determine when to launch the elected activities such that the cash-flow at the end of the planning horizon is maximized. We propose a mixed integer linear programming model for the problem and discuss applications involving different environments and specificities.