University of Oulu

Pargar, Farzad; Kujala, Jaakko (2021) A system dynamics analysis of value creation in project context. Engineering Project Organization Journal 10(2), 1-28.

A system dynamics analysis of value creation in project context

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Author: Pargar, Farzad1; Kujala, Jaakko2
Organizations: 1Utrecht University School of Economics, Utrecht University, Utrecht, the Netherlands
2Industrial Engineering and Management, Faculty of Technology, University of Oulu, Oulu, Finland
Format: article
Version: published version
Access: open
Online Access: PDF Full Text (PDF, 2.2 MB)
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Language: English
Published: Informa, 2021
Publish Date: 2022-01-14


The focus of this paper is on analyzing the value creation dynamics in the project implementation phase. By value creation, we mean the activities, processes, and strategies that the project team uses to increase benefits and/or reduce costs in the project. By synthesizing the literature on project management and system dynamics, we developed a simulation model with various structures underlying project dynamics. We considered four structures that influence project realized value: project team features, project characteristics, project controls and value creation processes, and project remedial actions due to ripple effects. The resulting model can systematically examine the interplay of value creation processes: work progression, rework, redesign and innovation, and rescheduling. We used the model to explain how the project team’s capability, motivation, and speed of making the best- for-project decisions ensure that the value creation goals are met. We simulate various scenarios that show the significance of the processes and their influencing structures on the realized value. The results present how endogenous and exogenous drivers of system behavior unfold over time and provide a richer understanding of the effect of various model structures such as project complexity and uncertainty on value creation.

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Series: Engineering Project Organization journal
ISSN: 2157-3727
ISSN-E: 2157-3735
ISSN-L: 2157-3727
Volume: 10
Issue: 2
Pages: 1 - 28
DOI: 10.25219/epoj.2021.00112
Type of Publication: A1 Journal article – refereed
Field of Science: 222 Other engineering and technologies
Copyright information: © 2021 Engineering Project Organization Society.