Publication Type

Journal Article

Version

publishedVersion

Publication Date

4-2015

Abstract

We investigate project scheduling with stochastic activity durations to maximize the expected net present value. Individual activities also carry a risk of failure, which can cause the overall project to fail. In the project planning literature, such technological uncertainty is typically ignored and project plans are developed only for scenarios in which the project succeeds. To mitigate the risk that an activity’s failure jeopardizes the entire project, more than one alternative may exist for reaching the project’s objectives. We propose a model that incorporates both the risk of activity failure and the possible pursuit of alternative technologies. We find optimal solutions to the scheduling problem by means of stochastic dynamic programming. Our algorithms prescribe which alternatives need to be explored, and how they should be scheduled. We also examine the impact of the variability of the activity durations on the project’s value.

Keywords

Project scheduling, Uncertainty, Net present value, Alternative technologies, Stochastic activity durations

Discipline

Business Administration, Management, and Operations | Technology and Innovation

Research Areas

Operations Management

Publication

European Journal of Operational Research

Volume

242

Issue

2

First Page

465

Last Page

476

ISSN

0377-2217

Identifier

10.1016/j.ejor.2014.11.014

Publisher

Elsevier: 24 months

Embargo Period

8-29-2021

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