Strategic Project Planning: Optimal Contracting and Resource Allocation

In this work, we describe the development of a robust optimization model aimed at determining an optimal strategy for contracting and allocating resources within the context of development and implementation of capital projects. The proposed model selects a set of activity execution modes – which differ from each other in terms of related costs and expected durations – and risk-mitigation measures – associated with uncertainties due to incomplete knowledge of the activities’ exact scope – so as to balance the trade-off between incurred costs and the project's completion date. Computational results are provided to illustrate the proposed approach.