Application of the System Dynamics Model in AddressingDelay Risk in a Construction Project - Essay Example

Application of the system dynamics model in addressing delay risk in a construction project Description of the problem This report presents an analysis of how the system dynamics model can be used to effectively manage a construction project so that the risk that is associated with delays in the implementation of the various activities that make up the project is effectively managed. The project that is referred to in this report involved the construction of a commercial building for use by a government department in China. The scope of the project entailed demolishing the structures that existed at the site of the project. Also, as part of the project, the contractor was supposed to carry out some drainage work before putting up the actual building at the site. Therefore, the contractor, the project team and the government department (the client) were the primary stakeholders to the project. Initially, the project had been scheduled to take 6 months. However, at the end of the scheduled time, the project had not been completed. Hence, delays in the implementation of the various activities that made up the project were the major risk that developed and affected the final outcome of the project. The final delay in the implementation of the project was caused by several factors that occurred at different stages of the project. Basically, bureaucratic problems, an extended rainy season and changes in design are the main risk factors that contributed to the maturation of the project risk in this case. Analysis of the problem The essence of the use of the system dynamics model in project management lies in the need to approach project in a manner that is holistic (Nasirzadeh, Afshar & Khanzadi 2008, p. 120; Wan & Liu 2014, p. 451). This means that the use of this approach to managing projects is based on the view that projects are complex systems that are made up of multiple factors. The different factors interact with each other in highly complicated ways. How the different factors interact with each other affects the final product or outcome of the project. Hence, by viewing projects as complex systems that are open to many unforeseen circumstances, the use of the system dynamics model helps project managers to manage projects in a better way. Under this approach, project management is seen as a cyclic process that is made up of three basic phases of planning, implementing and controlling (Lyneis & Ford 2007, p. 160). At the planning stage of the project management process, the work is fully defined and the activities that are supposed to be carried out at specific stages of the process defined. It is based on the actual outcome of the implementation phase that specific corrective measures are implemented. The corrective measures are based on addressing gaps or differences between the actual performance of the project and the specific plans developed at the planning stage. It is also important to note that the use of this model as a way of managing risks in projects is not new. For example, Boateng et al. (2012, p. 593) provide a model that can be used to successfully manage risks in projects by using the system dynamics approach as opposed to the traditional project management techniques. The idea is based on the observation that risks in projects can be analysed within the framework of different causative factors that can be summarised into social, technological, economic, environmental and political factors (Boateng et al. 2012, p. 594). The occurrence of these factors in the course of implementing a project is said to be a major contributor to the development and maturation of the risk of delays in the implementation of the project that is under consideration (Boateng et al. 2012, p. 595). In this case, the specific problem of delays in the implementation of the activities of the project is addressed using the rework cycle of the system dynamics model. In theory, the rework cycle is an important feature of the system dynamics model that can be used to address specific problems that may be encountered in the course of project implementation. The basis of the cycle is that many of the challenges that are experienced in the course of managing a project are a result of the occurrence of rework which gives rise to more rework (Lyneis & Ford 2007, p. 162). Thus, the cyclical nature of this problem is a major contributor to delays in the final implementation of a project. The following is a diagrammatic representation of analysis of the risk problem in the construction project as viewed under this model. The basic framework for the use of the model is made up of stock, flow and feedback loops. The stocks and flows represent how resources are utilised in the course of a project. They show how work is actually carried out in the course of a project. On the other hand, feedback loops form the basis for the decisions that the project management team has to carry out in the course of managing a project. It can be seen that the model contains four stocks: original work to do, work done, rework to do and undiscovered work. The original work to do stock contains all the work that was envisioned at the conceptualisation of the project. This involved destroying the premises that stood at the site of the project, carrying out the work that is related to drainage of the area and putting up the new office block. The movement from the original work to be done stock to the work done stock represents the progress of the report. Hence the work done stock represents the end result of the project. In practice, errors occur in the process of carrying out the different activities of the project. The occurrence of the errors gives rise to the undiscovered rework stock. The rework to do stock contains an accumulation of all the work that has been discovered to be erroneous. The discovery of erroneous work occurs in the course of the project. This therefore leads to an accumulation of work that requires to be redone in order for the objectives of the project to be achieved at the end. In this case, the rework part of the cycle was created by the development of three factors: an unprecedented extension of the rainy season, bureaucratic barriers and new demands by the client. Extension in the rain season delayed the actual implementation of the project since specific activities had to be paused for some time. It also led to an increase in rework since new work had to be carried out as a result of the effect of the rains on the project. Bureaucratic problems led to delays in the release of funds, and this caused the project to temporarily stop as the project management team waited for funds from the client. This in effect exacerbated the rework cycle in the project. Finally, the emergence of new demands for changes in the scope of work of the project had a direct effect on the rework to do stock of the project model. Insights and solutions that the method provides There are several insights and solutions that using the system dynamics approach to manage project risks provides. These can be seen within the context of the manner in which the methodology is highly adaptable to changes and its ability to provide specific benefits to the stakeholders of any project that is managed using the system. First, this methodology provides an accurate process of identifying potential risks in a construction project. In theory, risks in a project that is being managed using this approach are identified by analysing the relationship between feedback loops. Feedback loops show how different activities affect those that are to be carried out in the future as well as those that have already been carried out (Minami, Madnick & Rhodes 2008, p. 1). Thus, feedback loops may have a negative or a positive effect on the preceding or future activities of a project. Therefore, analysing feedback loops provides an understanding of the decisions that managers need to take to avoid the consequences that may arise as a result of the causative effect of the processes that are carried out in the course of implementing the project. It should be noted that in the case of the construction project that this report is based on, one of the main problems that was encountered was that the project management team failed to accurately identify and prioritise the risk factors that they faced. The project managers identified the rainy season and possible changes in the design of the building as some of the risks factors that they needed to manage. However, it can be seen that they failed to accurately identify and prioritise the risk that is associated with poor communication between the project management team and the client. Further, they failed to accurately predict the impact of the maturation of the risk factors that they had accurately identified. Nevertheless, it can be seen that using the system dynamics risk framework to manage risks of the project provides a methodology that can be used to qualitatively identify and prioritise all the risks that are associated with the project. As well, the system dynamics methodology provides insight about the manner in which specific risks interact with each other and affect the overall outcome of project. Essentially, the complex manner in which risks interact with each other, the likelihood of occurrence of risks and what their impact on the project would be if they occur form the core of the risk analysis process. It is based on the risk analysis process that project managers are able to carefully plan on how to respond to the different risk occurrences in the course of the project. Using the system dynamics methodology to analyse risks in the construction project that is under consideration in this report provides a useful framework for analysing the different risks that are associated with the project. This is done by analysing how the different feedback loops in the model interact with each other and affect of the different activities of the project. In this case, it can be seen that analysing the different feedback loops indicates how the risk factors associated with the project interact with each other and how this is likely to affect the outcome of the project. By helping project managers to determine this, this methodology helps to increase the likelihood of the objectives of the project being achieved, thus helping to benefit all the different stakeholders of the project. Potential of the methodology The potential of using the system dynamics approach to managing risk in a construction project can be assessed by comparing this approach with the traditional project risk management methods. First, this methodology has the potential to offer project managers a higher degree of control over specific aspects of the project. For example, the methodology provides a mechanism which managers can use to analyse their staff needs and determine how to address problems that are related to delays in the implementation of the activities of the project (Marco & Rafele 2008, p. 1). When managers are faced with such a problem in the course of implementing a project, they have to determine whether to hire more employees or to simply make better use of the employees that they have. When they decide to simply make better use of their workforce, managers may have to change the working schedules of the employees in order to ensure that more work is done within the remaining time of the project. In either case, there are consequences that managers have to grapple with. Adding more employees is bound to increase the costs of the project. On the other hand, changing the working schedules of the current workforce may affect the productivity of the employees and this may, in turn, affect the quality of the work that is done. However, using the system dynamics methodology to analyse project risks provides managers with a better understanding of the effects of using any of these strategies to avoid delays in the implementation of the project. Similarly, this approach to managing risk offers managers better control over a project because it offers them all the information that they need to make decisions about different issues of the project, apart from the issue of deciding whether or not to hire more employees. Managers may use the information that is provided by this framework to identify needs for rework. Furthermore, they may use the information that is provided by this framework to determine the best approach of handling rework activities in the course of the project. Therefore, it can be seen that using the system dynamics framework to manage project risks offers a great potential in that it can help project managers to make better decisions when managing future projects. This can contribute to improving the overall manner in which future construction projects are managed. Lastly, the system dynamics approach of managing project risk has the potential of helping to reduce chances of project failure. In practice, project failure occurs when any of the objectives of a project are not achieved (Salleh 2009, p. 36). Incidentally, failure of projects is common in the construction sector because of the complexity of the projects (Salleh 2009, p. 1). When managers attempt to manage construction projects using traditional methods, they may not be in a position to gain a holistic view of the project as is the case when they use any of the system dynamics models that have been developed. Using the system dynamics approach helps managers to gain a holistic view of projects and in so doing, helps them to foresee and avoid common pitfalls in construction projects. If this is used, it can help to reduce chances of project failure in the construction projects that will be carried out in the future. References Boateng, P, Chen, Z, Ogunlana, S & Ikediashi, D 2012, ‘A system dynamics approach to risk description in megaprojects development,’ Organization, Technology and Management in Construction, an International Journal, vol. 4, no. 3, pp. 593-603. De Marco, A & Rafele, C 2008, ‘Using system dynamics to understand and project performance,’ viewed 16 May 2016, . Lyneis, JM & Ford, DN 2007, ‘System dynamics applied to project management: a survey, assessment and directions for future research,’ System Dynamics Review, vol. vol. 23, no. 2-3, pp. 157-189, viewed 16 May 2016, . Minami, NA, Madnick, S & Rhodes, D 2008, ‘A systems approach to project management,’ viewed 16 May 2016, . Nasirzadeh, F, Afshar, A & Khanzadi, M 2008, ‘System dynamics approach for construction risk analysis,’ International Journal of Civil Engineering, vol. 6, no. 2, pp. 120-131, viewed 16 May 2016, . Salleh, R 2009, Critical success factors of project management for Brunei construction projects: improving project performance, PhD thesis, Queensland University of Technology, viewed 17 May 2016, . Wan, J & Liu, Y 2014, ‘A system dynamics model for risk analysis during project construction process,’ Open Journal of Social Sciences, vol. 2, pp. 451-454, viewed 16 May 2016, via . Read More