Applying System Dynamics to Strategic Project Management |
Project management has always been a fertile ground for applying system dynamics methodology. The questions that are best suited for system dynamics are mainly at the strategic level and not at the operational level. We will describes these briefly.
A project is a dynamic system composed of people and work to be done by these people. Projects are to be done within a predetermined time and budget and with a level of quality acceptable by the client. The success or failure of a project is, therefore, measured based on meeting the schedule, budget and quality goals. In real world situations, unexpected events such as a change in specifications or a change in the workforce cause the project to experience delays and overruns. These project performance problems are often tackled by the managers through known control mechanisms. One of the control mechanisms at manager's disposal is resource management. For example, if a project is behind schedule, the manager can require the team to work faster or longer hours. The manager may also bring new staff on board in order to bring the project back on track.
A simple project structure begins with two stocks, one for work to be done and one for the work completed:
This simple structure assumes that both resources and their productivity remain constant during the project execution and no rework is generated. In practice none of this is true. Looking at rework, for example, one will notice that in any project a certain amount of work done contains flaws and these flaws are undiscovered and passed on to the next phase. They are then discovered during QA and now have to be reworked.
This rework increases the size of the backlog and creates schedule pressure. This pressure then must be managed through a combination of control mechanisms. Each mechanism, however, has its own unintened consequence that might make the situation worse.
The following diagram reproduced from Ford and Sterman (Modeling Dynamic Development Processes. System Dynamics Review 15(1): 3-36., 1998) shows the work flow for a single project system.
Using a system dynamics model, managers can evaluate the impact of various control policies to bring the projects back on track with the minimum impact on budget or quality.
MapSys can be used to develop a model of a complex project and allow the user to play many what ifs in a matter of minutes.
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