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This paper reviews a number of ways of estimating UMTS system performance through simulation. The focus is on the modelling of the physical layer performance within a dynamic system simulator. The dynamics of the system can be studied over two different timescales, short-term and long-term. If the long-term approach has been proven useful in voice-dominated systems, it is inadequate to capture the effects on the inner power control loop of rapidly changing conditions due to e.g. scheduling of variable rate packet data services. A new approach is proposed whereby a number of functions traditionally affected to the physical layer simulation are moved at the system level. Whilst improving significantly the system model, considerable simplification of the physical layer simulator is also achieved at the same time by removing the dependency on the system parameters.