Application of System Dynamics to Strategic Project Management

This paper discusses the two approaches to project management: operational project management and strategic project management, where alignment of the management at the two levels is of great concern. As is generally accepted, traditional project management tools such as Work Breakdown Structure, Gantt Charts and PERT/CPM Networks, are inadequate when considering the multiple feedback processes and nonlinear relationships of a project. The paper also establishes a system dynamics model to help in aligning project management with the organizational strategic objectives. The model has four sectors. They are named project sector, profit sector, resource sector and knowledge sector. The components and intra relationships within each sector, as well as the interactions between the sectors are discussed. Although the model focuses on construction projects, it can be easily used in other areas with trivial modifications.