An Integrated Model for Simultaneous Time–Cost Optimization of Construction Projects through the Integration of System Dynamics, Earned Value Management, and the Simulated Annealing Algorithm

Mahdi  Moradi; Elmira Mashayekhi Nezamabadi; Soheila  Khishtandar

Authors

Mahdi Moradi Ph.D. Candidate, Department of Management and Accounting, Qa.C., Islamic Azad University, Qazvin, Iran Author https://orcid.org/0000-0002-9811-6815
Elmira Mashayekhi Nezamabadi Department of Management and Accounting, Qa.C., Islamic Azad University, Qazvin, Iran Corresponding author https://orcid.org/0009-0006-3023-2269
Soheila Khishtandar Department of Management and Accounting, Qa.C., Islamic Azad University, Qazvin, Iran Author https://orcid.org/0000-0002-7876-7290

Keywords:

Construction Project Management; Time–Cost Optimization; System Dynamics; Earned Value Management; Simulated Annealing; Project Control; Resource Allocation

Abstract

This study aimed to develop and evaluate an integrated model for the simultaneous optimization of time and cost in construction projects by combining System Dynamics, Earned Value Management, and the Simulated Annealing algorithm. This applied, quantitative, modeling-based study was conducted using data from 24 construction companies in Tehran and 96 project management, planning, cost control, and engineering professionals. One representative construction project from each company was selected, yielding 24 projects for model calibration and evaluation. Project schedule, cost, resource, progress, rework, and productivity data were extracted from organizational records, while expert assessments were used to validate causal relationships among dynamic variables. Earned Value Management indicators, including SPI, CPI, SV, and CV, were incorporated into a System Dynamics model representing interactions among project progress, schedule pressure, resource utilization, productivity, rework, remaining work, and cumulative cost. The validated model was then linked to a Simulated Annealing algorithm to optimize activity durations and resource allocation under project constraints. Sensitivity analyses and repeated optimization runs were used to assess model stability and robustness. The integrated model significantly improved project performance relative to the baseline condition. Mean project duration decreased from 30.91 to 26.96 months, representing a 12.78% improvement, while mean total project cost decreased from 2,078.54 to 1,898.63 billion rials, corresponding to an 8.66% reduction. Schedule delay relative to baseline declined by 96.84%, while cost growth decreased by 76.25%. SPI increased from 0.88 to 0.99 and CPI from 0.91 to 0.98. Rework decreased by 38.89%, and corrective-action delay decreased by 65.50%. Repeated optimization runs also demonstrated stable convergence toward comparable near-optimal solutions. Integrating System Dynamics, Earned Value Management, and Simulated Annealing provides an effective dynamic decision-support framework for simultaneously improving construction project time and cost performance while reducing rework and improving responsiveness to project deviations.

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