A model for work packages optimization in results-based-finance projects

Abstract

PurposeIn many developing countries, the sanitation sector constitutes a major part of their strategic plans of reform. Yet with the very limited budget of the public treasury, countries opt to major lending institutions for funds. “Results-Based-Finance” is a new funding mechanism that has proven its efficiency in achieving the necessary reform in sanitation sectors. Due to the complexity of the funding tool, it is crucial to be able to decompose the project into smaller packages to be able to effectively control the project. The objective of this paper is to reach an optimum packaging scheme that enables the project to be successfully managed through better planning and cost control practices.Design/methodology/approachWith the aid of Unified Modelling Language (UML), an algorithm is developed to map the logic behind the model suggested with detailed illustrations of its different modules. Object-oriented processes and operations are modeled using different diagrams of the language, which automatically generate the optimum packaging combination. The packaging model is then implemented via a number of computer-aided programs. The Microsoft Excel 2019 is used for calculation purposes. Visual Basic for Applications (VBA) programming language is used to make the model user-friendly for non-engineering stakeholders. The Palisade's Decision Tools Suite is used for the optimization processFindingsThe model is validated through a case study of a mega sanitation project located in Egypt. The model output is not only the content of the packages but also a complete managing plan which demonstrates many useful information to the decision-makers and government officials.Originality/valueThe research aim is to provide the construction industry with a tool that makes the packaging process of mega projects funded through the “Results-Based-Finance” mechanism, done in an automated manner. Moreover, the packages are selected in a way to optimize the project cashflow. Having the optimum package size shall ensure better planning and a more accurate cost control. Yet it is a challenging task; especially, when the project cash flow is very sensitive and intolerant to delays like in the “Results-Based-Finance” mechanism.