Analysis of project profitability and schedule overruns using system dynamics, a case study of trigeneration system

Abstract

Combined heat and power systems also known as trigeneration and cogeneration systems are capable of providing electricity, heating and cooling powers using one fuel simultaneously. Natural gas, biogas and landfill gas can also be used as fuel for these systems. Natural gas is the most popular power source that is used in trigeneration systems and common fuel in the Turkish market due to its accessibility and sustainability. Trigeneration system projects are complex and require interdisciplinary engineering study and coordination. An active and effective project management is requirement because of high initial investment costs. In general, one can say that a project is successful if requirements are met on schedule within budget and delivers a good return on investment. In today's competitive market failures such as project delays or excessive budget use are not uncommon but costly. Though management of risk associated with these failures are the main concern of a successful project manager. In traditional project management, whole project consists of independent processes where no interaction exists. However, as projects get complicated and larger this assumption needs to be reconsidered. System dynamics approach can be an alternative solution by its ability in understanding interactions and its feedback structures. In this research, the factors that affect budget and timeliness of trigeneration system projects is analyzed using system dynamics. Alternative scenarios are developed and reduction of gap between planned and realized budget and schedule target are examined. It is showed that developed model can be used by project managers as a decision support system. © IEOM Society International.