Cash holding management for self-financing phase-able and non-phase-able project portfolio selection and scheduling problems

Abstract This article presents a novel mathematical model for managing the level of cash reserves for the self-financing phase-able as well as non-phase-able project portfolio selection and scheduling problems. Practically, the executive managers of project-oriented organizations tend to keep cash within their organization to increase their decision-making power. Although this allows managers and investors to invest in future economic projects, it imposes opportunity costs on owners and investors, in which case maintaining cash reserves can turn out to be a major challenge between owners and executive managers. This issue becomes more acute when the project-based organization operates self-financing. Because the financing is limited to the revenues of the finished projects, money withdrawn from the project account without proper management exacerbates financial constraints. Consequently, managers will bypass some future valuable investment opportunities. In this article, from the point of view of cash holding, the expectations of managers and investors in a self-financing phase-able and non-phase-able project-based organization will be met simultaneously. The proposed model is a nonlinear integer program. After linearization, an example is provided to illustrate the applicability and performance of the proposed model.