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Article
Business Strategy and Capital Allocation Optimization Model for Practitioners
Journal of Management in Engineering (2011)
  • Aiyin Jiang
  • Maged Malek, University of North Florida
  • Adel El-Safty, University of North Florida
Abstract
Construction engineering companies usually provide a variety of services. To be competitive, companies have to organize their operations strategically based on market demands within the limitations of their own resources. Optimization of these resources is of vital importance for these companies. Historically, decisions on resource allocations to various construction market segments were made exclusively based on intuitive judgment. In previous literature, the proposed models on capital allocation place emphasis on formulating cash-flow forecasting and planning strategy on project level. However, existing technologies and established mathematical methods provide a sound base for quantitative analysis on company-level business strategy and capital allocation. This note proposes a linear programming model that can be conveniently applied by construction practitioners. The model incorporates the project cost structure and considers the business constraints such as bonding capacity and borrowing capital capacity. Its objective is to achieve maximum profit through improving project management efficiency and setting appropriate sales goals in various market segments based on market
demands. It is a decision-making tool that provides “what-if” analysis. The solutions and alternatives of the model give the decision makers an excellent insight for making the best choice.
Keywords
  • Construction budgeting,
  • Cost analysis,
  • Linear programming,
  • Constraints,
  • Optimization models,
  • Sensitivity analysis
Publication Date
January, 2011
DOI
10.1061/  ASCE  ME.1943-5479.0000033
Citation Information
Aiyin Jiang, Maged Malek and Adel El-Safty. "Business Strategy and Capital Allocation Optimization Model for Practitioners" Journal of Management in Engineering Vol. 27 Iss. 1 (2011) p. 58 - 63 ISSN: 0742-597X
Available at: http://works.bepress.com/aiyin_jiang/2/