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Integrated Agent-Based Simulation and Game Theory Decision Support Framework for Cash Flow and Payment Management in Construction Projects

Author

Listed:
  • Dalia H. Dorrah

    (Department of Civil and Mineral Engineering, University of Toronto, Toronto, ON M5S 1A4, Canada)

  • Brenda McCabe

    (Department of Civil and Mineral Engineering, University of Toronto, Toronto, ON M5S 1A4, Canada)

Abstract

Effective cash flow management has become crucial for projects and stakeholders given the wide payment-related problems and financial risks encountered in the construction industry worldwide. Previous studies mostly addressed cash flow and payments from the perspective of a specific stakeholder, resulting in an imbalanced cash flow management culture that is further intensified by the power asymmetry of the top-down payment decision-making process. This research proposes an adaptive decision support framework for evaluating and negotiating payment options in construction projects while incorporating the individual and collective financial roles of stakeholders. The framework is comprised of three modules for data acquisition, payment simulation, analysis, and negotiation, as well as decision support. It integrates agent-based simulation, data envelopment analysis, and game theory for a multi-level study of project performance while capturing the driving forces of stakeholders in payment negotiations. A case study project is used to demonstrate the framework implementation under varying payment conditions and interest rates. The results provide quantitative profiles of stakeholders to identify incurred charges, balanced payment conditions, and suitable compensation. Finally, the framework can be utilized by stakeholders and jurisdictions to move towards enhanced contractual arrangements that alleviate economic and financial risks with the informed collaboration of its entities.

Suggested Citation

  • Dalia H. Dorrah & Brenda McCabe, 2023. "Integrated Agent-Based Simulation and Game Theory Decision Support Framework for Cash Flow and Payment Management in Construction Projects," Sustainability, MDPI, vol. 16(1), pages 1-25, December.
    • Handle: RePEc:gam:jsusta:v:16:y:2023:i:1:p:244-:d:1308320
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    References listed on IDEAS

    as
    1. Nalini Dayanand & Rema Padman, 2001. "Project Contracts and Payment Schedules: The Client's Problem," Management Science, INFORMS, vol. 47(12), pages 1654-1667, December.
    2. Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, vol. 2(6), pages 429-444, November.
    3. Asadabadi, Mehdi Rajabi & Zwikael, Ofer, 2021. "Integrating risk into estimations of project activities' time and cost: A stratified approach," European Journal of Operational Research, Elsevier, vol. 291(2), pages 482-490.
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    Cited by:

    1. Sameh Al-Shihabi & Ashraf Elazouni, 2025. "Modified Finance-Based Scheduling with Activity Splitting," Mathematics, MDPI, vol. 13(1), pages 1-15, January.

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