Proposing a portfolio balancing model in project-based organizations considering organization’s budget and inflation rate of construction and housing in Iran

Subject Areas :

Reza Rajabi ¹ , Siamak Haji Yakhchali ²

1 - Department of Civil Engineering, Science and Research Branch, Islamic Azad University, Tehran, Iran
2 - School of Industrial Engineering, College of Engineering, University of Tehran, Tehran, Iran

Received: 2024-09-01 Accepted : 2024-12-04 Published : 2025-05-13

Keywords: Portfolio balancing, Portfolio optimization, Portfolio management, Cash flow, Budget, Inflation, Boom and bust cycles,

Abstract :

Cash inflows and outflows in construction project-based organizations often lack balance due to delays between expenses and revenue throughout the duration of portfolio, primarily attributable to the temporal discrepancy between incurred expenditures and realized revenues. The intrinsic characteristics of construction project portfolio necessitate a long period for project completion and subsequent readiness for sale to facilitate revenue generation for the organization. consequently, organizations reliant on construction projects now run the danger of experiencing severe negative cash flow and mounting financial strain. Thus, the goal of this study is to maximize profit from the perspective of the organization, taking into account factors such as construction costs inflation, house prices inflation during boom-and-bust cycles, and the organization's capital. The amount of cumulative capital injection sets the maximum negative level of cumulative portfolio cash flow so that the optimal solution of the model is fully proportional to the capital brought into portfolio. Three meta-heuristic algorithms including water cycle algorithm, differential evolution and teaching-learning-based optimization are used to solve the algorithm. A portfolio of five real construction projects in Tehran is optimized in order to verify the model. The objective function showed a notable improvement when the optimization findings were compared to the analysis carried out using the traditional method by the Project Management Office (PMO). Additionally, WCA performed better in this problem when compared to other algorithms.

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