A Simulation-Based Dynamic Scheduling Method in Project Cost Estimation Process

Abstract

Since project price is determined before the start of a project, project cost estimation is a critical work for the EPC (Engineering-Procurement-Construction) contractor in accepting profitable projects in competitive bidding situations. The contractor should devote significant time and resources to accurate cost estimation of project orders from clients. However, it is impossible for any contractor to devote significant time and resources to all the orders because such resources are usually limited. For this reason, the contractor must dynamically decide bid or no-bid on the orders at each order arrival, and allocate the limited resources to the chosen orders. In this paper, we develop a simulation model of the project cost estimation process by reference to a generic model of dynamic scheduling for the state-dependent work. Then we devise a simulation-based method for dynamic scheduling in the project cost estimation process by using the model to maximize the contractor’s profits. The method dynamically selects orders and allocates the limited resources to them, on the basis of the contractor’s resource utilization, and the expected profit from the order. The effectiveness of our method is demonstrated through simulation experiments.