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James M. Lyneis, Kenneth G. Cooper and Sharon A. Els recently published "Strategic management of complex projects: a case study using system dynamics" in System Dynamics Review (vol. 17, no. 3, pp. 237-260). In this article, they suggest using system dynamics models in strategic project management. The model would be particularly effective to limit costs and schedule overruns of complex projects. The use of system dynamics is illustrated with the case of the Peace Shield Air Defence System, a nation-wide ground-air defence for the Saudi Air Force.
Conceptual underpinning. In spite of the evolution of techniques and models in the field of project management in the past decades, difficulties in meeting projects costs and schedule targets still remain. This observation is corroborated by other authors, such as George Pitagorsky ("A scientific approach to project management", Machine Design, 2001, vol. 73, no. 14, pp. 78-82), who reports project failure rates up to 40 to 60%.
Understanding of project dynamic complexity may be at the source of these performance problem. System dynamics models offer a procedure to minimize occurrence of costs and schedule overruns by a planning process that considers both managers past experience and project complexity.
The model. The model is embedded in the strategic phase of project management. It borrows the classical life cycle of a project (project design, determining measurement and reward systems, evaluating risks & learning from past projects) using the system dynamics model for analytic purpose.
It also proposes tangible means of maximizing a project's efficiency and quality and of minimizing costs and schedule overruns. For example, use of a simulation model is strongly advised to identify possible risks in conducting the project and anticipate appropriate action.
Assessment. Although the model doesn't revolutionize the field of project management, it deepens the project's life cycle by proposing a dynamic and analytic approach for each of its phases.
Many theorists in project management consider unicity as a project's fundamental characteristic (see, for example, PMI, PMBOK Guide, A Guide to the Project Management Body of Knowledge, 2000 Edition, 2001: "A project is a temporary endeavor undertaken to create a unique product or service. Temporary means that every project has a define beginning and a define end. Unique means that the product or service is different in some distinguish way from all other products or services."). Nevertheless, this characteristic maintains the idea of sealed borders between projects that limits possible sharing of experience among similar projects.
What is particularly interesting with the system dynamics model is its capacity of studying information provided by similar projects, using lessons learned to reduce energy losses in designing the project and transmitting the information collected to subsequent generations of managers.
Although the use of the model requires meticulous investments during the planning steps as well as during the whole process, results illustrated by the Peace Shield Air Defence case proves that the investment is worthwhile. Use of the model takes all its importance when applied to a continuous learning perspective, to optimize the transfer of experience to subsequent projects.
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