AUTHOR COPY Journal of Intelligent & Fuzzy Systems 23 (2012) 203–215 DOI:10.3233/IFS-2012-0510 IOS Press 203 A Fuzzy Simulated Annealing approach for project time-cost tradeoff Milos Milenkovic a,∗ , Nebojsa Bojovic a , Rita Almeida Ribeiro b and Natasa Glisovic c a The Faculty of Transport and Traffic Engineering, University of Belgrade, Belgrade, Serbia b UNINOVA Campus da FCT/UNL, Monte de Caparica, Caparica, Portugal c Mathematical Institute of The Serbian Academy of Sciences and Arts, Belgrade, Serbia Abstract. Managers often face difficulties when making project decisions that involve large number of interrelated activities – the planning and scheduling of which is project management. Most problems often arise in areas such as product development, production planning and control and setting up the production facilities. One important aspect of project management is activity crashing, i.e. reducing the activity time by adding more resources such as workers, overtime and so on. It is important to decide the optimal crash plan to complete the project within the desired time period. A fuzzy simulated annealing crashing method is introduced in this paper to evaluate project networks and determine the optimum crashing configuration that minimizes the average project cost, due to lateness penalties and crashing costs in the presence of vagueness and uncertainty. Through a real project example the proposed approach is shown effective and efficient in conducting time-cost tradeoff analysis. Keywords: Project management, project crashing, fuzzy linear programming, simulated annealing 1. Introduction “Crashing” is a tool for project management that is used by many companies to help improve performance and competitiveness (e.g. [12, 15, 18]). Projects and their execution, in general, require resources. Project management, which is characterized by techniques, intended to provide a better use of project resources could positively impact the profitability of a company. Successful applications of project management tech- niques in various projects are numerous and mostly reflect very large time and financial savings. In the past, the scheduling of a project (over time) was done with little planning. The one of the best-known “planning” tools is the Gantt bar chart, which specifies the start and finish times for each activity on a horizontal ∗ Corresponding author. Milos Milenkovic, The Faculty of Transport and Traffic Engineering, University of Belgrade, Belgrade 11000, Serbia. Tel.: +381 11 3091343; E-mail: m.milenkovic@sf.bg.ac.rs. time scale. Its disadvantage is that the interdependency between the different activities (which mainly controls the progress of the project) cannot be determined from the bar chart. The growing complexities of today’s projects have demanded more systematic and more effective planning techniques with the objectives of optimizing the efficiency of executing the project. Effi- ciency here implies affecting the utmost reduction in time required to complete the project while accounting for the economic feasibility of using available resources (Taha [25]). An important aspect of project management is risk management. Different types of risk are present in any given project, but the emphasis of this research will be focused on schedule/time risk and associated costs. The schedule/time risk essentially implies not completing project activities on time, resulting in a late completion of the project. Late project completion generally has negative effects for the company such as penalty costs and customer dissatisfaction. If a project is running late 1064-1246/12/$27.50 © 2012 – IOS Press and the authors. All rights reserved