Using system dynamics to analyse disruption and delay in complex projects for litigation: can the modelling purposes be met?

System dynamics (SD) is a modelling approach that has been used to analyse disruption and delay (D&D) for litigation in a number of cases over the last 30 years. However, there is a lack of literature addressing the question of whether or not it is actually a suitable modelling approach to take in this environment. This paper explores this question by considering whether or not SD is capable of meeting the modelling purposes of analysing D&D for litigation. The author's experience as part of a team which has carried out post-mortem analysis on projects for a number of litigation cases is used to consider the degree to which SD can meet these modelling purposes. This process highlights limitations of using SD. An understanding of these limitations is important, so that a modeller can make an informed decision about the appropriateness of SD as a modelling approach to support any specific claim for compensation.     

Choice of modelling technique for evaluating health care interventions

Economic evaluation, such as cost effectiveness analysis, provides a method for comparing healthcare interventions. These evaluations often use modelling techniques such as decision trees, Markov processes and discrete event simulations (DES). With the aid of examples from coronary heart disease, the use of these techniques in different health care situations is discussed. Guidelines for the choice of modelling technique are developed according to the characteristics of the health care intervention.The choice of modelling technique is shown to depend on the acceptance of the modelling technique, model ‘error’, model appropriateness, dimensionality and ease and speed of model development. Generally decision trees are suitable for acute interventions but they cannot model recursion and Markov models are suitable for simple chronic interventions. It is further recommended that population based models be used in order to provide health care outcomes for the likely cost, health benefits and cost effectiveness of the intervention. The population approach will complicate the construction of the model. DES will allow the modeller to construct more complex, dynamic and accurate systems but these may involve a corresponding increase in development time and expense. The modeller will need to make a judgement on the necessary complexity of the model in terms of interaction of individuals and model size and whether queuing for resources, resource constraints or the interactions between individuals are significant issues in the health care system.     

The technical elements of the system dynamics approach

The paper examines the general nature of problem-solving, and it is argued that System Dynamics is appropriate, for certain problem types, both for enhancing understanding and for more formal analysis. This leads to a discussion of some of the more technical modelling issues related to the use of SD as a method of problem analysis in dynamical systems.The technical steps described include influence diagramming, model formulation, validation, and solution procedures, illustrated by a practical application of the SD approach to improving the controllability of a manufacturing system.The paper ends with an examination of the characteristics of, and requirements for, three distinctly different types of SD models.     

CASM—The Right Environment for Simulation

The modeller approaching discrete-event simulation has expected and received a high degree of computer support. The processing power simply to run a model and analyse the results would, of course, be taken for granted, but support has gone far beyond this in promoting the easier and speedier construction of models through specialized program structures, languages and lately program generators. Computer graphics capabilities of mini- and microcomputers have been exploited to secure a readier acceptance of simulation models and results. These support facilities constitute the computer environment within which the fortunate modeller works at present. What more could be expected?The work of an L.S.E. group of researchers is guided by a picture of an ideal environment for simulation modelling. We shall describe this picture and illustrate the progress made towards its implementation. Our principal intention is to promote discussion amongst simulation practitioners about their own ‘ideal’ of a computer support environment and the nature of deficiencies in the current systems.     

Alternative Models of Salesmen's Response to Financial Incentives

The assumption underlying any sales force incentive compensation plan is that salesmen react to financial incentives according to some definite and consistent pattern. In order to influence salesmen's activities through financial compensation a manager must know the “rule” salesmen follow in reacting to money incentives. There is relatively little theoretical and empirical research in this area and the partial findings do not support the presence of a single behavioural pattern in response to financial incentives.This paper describes a model mainly based on a series of linear programs simulating salesmen's reactions to financial incentives under alternative basic behavioural hypotheses. By determining which hypothesis best explains actual data, a sales manager can possibly identify and infer the rule followed by his salesmen, and adjust the compensation scheme accordingly. The implications of such results for compensating salesmen are noted and a sample application of the model to an actual situation is described.     

A Model of the Dynamics of the Third World War — An Exercise in Technology Transfer

The paper discusses two scenarios for a Third World War in Europe, and argues that it is often convenient to supplement a scenario by a formal model. The problems of creating such a model are examined, and a model is formulated for land, air, and sea combat in Europe and the Atlantic, using the System Dynamics approach, which has not hitherto been widely employed for military analysis.The model confirms the results of the two scenarios, and its use for the analysis of alternative force configurations is illustrated. Some implications in the interpretation of Soviet military literature are discussed, and the paper ends with speculations on the role and value of such models.     

Predicting the long-run profit impact of a contemplated sales force compensation plan

Analytical sales force compensation research offers only limited answers to sales managers who try to devise effective compensation plans, because it often rests on restrictive assumptions, and it considers only simple compensation plan structures. In practice, sales managers need to predict how alternative and relatively complex compensation schemes would affect sales revenues and profits, as well as their likely impacts on sales force morale and turnover. This is why they typically obtain key salespeople’s prior reactions to a new scheme, or pretest the new plan on a limited scale. These procedures, however, may not provide accurate long-run predictions, and they can be applied to only one or two schemes at a time. The paper proposes the application of a simple Markovian model for assessing the long-run impacts of alternative compensation plans on sales and profits, taking into account the associated benefits and/or costs of variations in sales force motivation and turnover. A simple application is provided and implementation issues are discussed.     

A Case Study in Community Care Using Systems Thinking

This paper uses a recent application of System Dynamics in community care to contribute to a clarification of the role of System Dynamics as a framework for strategic debate. A revised framework for System Dynamics within a philosophy of ‘modelling as learning’ is summarized. This framework is now referred to as Systems Thinking and combines knowledge acquisition and both qualitative and quantitative modelling, supported by microworlds and archetypes to aid dissemination of insights. The emphasis of the paper is on using qualitative models interactively with different groups of participants in the problem domain. The purpose is to assist the development of a shared understanding of how culture, power and politics combine to affect the behaviour of a process, when subjected to externally superimposed changes in responsibility.     

Criteria sensitivity analysis: a new approach to parameter sensitivity

The problem of parameter sensitivity is not well defined. This paper aims to make it well defined. This is done by requiring the modeller to provide a performance indicator l(X,t,β) which is a measure of how the behaviour of the system is to be judged. This forces the modeller to be precise about what he/she regards as acceptable behaviour. Mathematically we define behaviour to be acceptable at β if l >0 for that β, and we define the system as sensitive if the set of acceptable β's is small. The analysis which is required is termed criteria sensitivity analysis. This method is applicable to many different kinds of models. The basic ideas of criteria sensitivity analysis are presented here. A static model is used to demonstrate major points. The power of this new approach is illustrated by an application to a dynamic model.     

Linear,Integer, Separable and Fuzzy Programming Problems: A Unified Approach towards Reformulation

For mathematical programming (MP) to have greater impact as a decision tool, MP software systems must offer suitable support in terms of model communication and modelling techniques. In this paper, modelling techniques that allow logical restrictions to be modelled in integer programming terms are described, and their implications discussed. In addition, it is illustrated that many classes of non-linearities which are not variable separable may be, after suitable algebraic manipulation, put in a variable separable form. The methods of reformulating the fuzzy linear programming problem as a max-min problem is also introduced. It is shown that analysis of bounds plays a key role in the following four important contexts: model reduction, reformulation of logical restrictions as 0-1 mixed integer programmes, reformulation of non-linear programmes as variable separable programmes and reformulation of fuzzy linear programmes. It is observed that, as well as incorporating an interface between the modeller and the optimizer, there is a need to make available to the modeller software facilities which support the model reformulation techniques described here.     

Building confidence in models for multiple audiences: The modelling cascade

This paper reports on a model building process developed to enable multiple audiences, particularly non-experts, to appreciate the validity of the models being built and their outcomes. The process is a four stage reversible cascade. This cascade provides a structured, auditable/transparent, formalized process from “real world” interviews generating a rich qualitative model through two intermediate steps before arriving at a quantitative simulation model. There are a number of advantages of the cascade process including; achieving comprehensiveness, developing organizational learning, testing the veracity of multiple perspectives, modeling transparency, achieving common understanding across many audiences and promoting confidence building in the models. The paper, based on extensive work with organizations, discusses both the cascade process and its inherent benefits.     

System dynamics in project management: assessing the impacts of client behaviour on project performance

The influence of client behaviour on a project is complex, including schedule restrictions on milestones, high demand on progress reports, delays in approving documents, and changes to workscope throughout the life-cycle. Quantifying these effects is important to project managers, in particular for effective communication with the client. Traditional planning and control tools have proved ineffective at providing quick and reliable information. Their tendency to incorporate more detail has increased their complexity, inhibiting practical strategic analyses. System Dynamics provides an alternative view in which these major influences are considered and quantified explicitly. This approach dispenses with much of the detail required by the traditional tools, but enables modelling of the systemic effects which traditional tools cannot model. The authors have developed a conceptual framework in which System Dynamics models are combined with traditional tools providing complementary support, and validated it in a large software project. This paper describes the use of this framework to assess and quantify the impacts of client behaviour. A practical example is discussed.     

Studying transition dynamics via focusing on underlying feedback interactions

The emerging need for societal transitions raises the need for a better understanding of the dynamic nature of large scale societal systems, and therefore the development of an analytical approach for drawing dynamic conclusions based on system’s dynamic mechanisms, feedback relationships and interacting components. The objective of this study is to explore the degree to which System Dynamics as an approach enhances the process of understanding transition dynamics in socio-technical systems. In other words, it is aimed to reveal the type of insights that can be developed about such systems and their dynamic behaviour using the approach, as well as the shortcomings of the approach in this challenging task. In order to do so, a modeling study aiming to understand the underlying mechanisms of the waste management transition in the Netherlands is conducted. The quantitative model developed is based on the historical case of the waste management transition of the Netherlands, and it portrays issues as the dynamics of actors’ preferences, development of infrastructure and environmental consequences of dominant mode of functioning and provides an instance for demonstrating and evaluating the feedback-focused perspective discussed in this paper. Finally, the paper discusses a set of points regarding the utilized approach, System Dynamics, observed during this study both in general and in the specific context of transitions. In short, System Dynamics stands as a promising approach mainly due to its strength in explaining the source of complex dynamics based on interacting feedback loops, but it also has certain drawbacks in the context of transitions.

System Dynamics Modelling for Residential Energy Efficiency Analysis and Management

A System Dynamics model to simulate the substitution of installed household appliances by more efficient ones is presented. The model allows the construction of scenarios and also the analyses of several other issues such as: alternatives for technology penetration, electricity consumption growth, gas consumption growth and effects of pricing policies on various energy demands. The proposed methodology has been applied to assist the decision process in relation to gas penetration policies. The model also supports policy making on energy efficiency and it allows the calculation of total energy savings under different scenarios. Furthermore, government underpricing policies on tariffs and appliance acquisition (longer loan terms, lower interest rates and grace periods) may also be analysed.     

Optimal Investment by the Principal in Order to Increase the Probability of Favourable States of Nature in the Principal-Agent Model with Moral Hazard

In this paper we analyse the single agent, principal-agent model with moral hazard. This model differs from other models that have been formulated in that in this model the principal is allowed to make an investment that increases the probability of higher levels of output. The principal must take into account the agent's reaction to the investment in making the investment decision. We also show that conventional wisdom about the relationship between compensation and uncertainty, and the optimal level of investment may only hold under restrictive assumptions when the principal is allowed to invest.     

On the challenges of healthcare modelling and a proposed project life cycle for successful implementation

OR methods and tools are being increasingly applied within the health services domain to support objective decision-making for the effective and efficient provision of resources. Healthcare modelling, however, is beset with many challenges and this paper examines a number of issues that define the primary challenges faced by the modeller in this field. It is fair to say that their resolution determines the likely success or failure of healthcare modelling in general. Working with a number of participating health service organizations, a proposed framework towards successful implementation has evolved and is presented in this paper     

The Effects of Design Changes and Delays on Project Costs

This paper describes a study of a large design and manufacture engineering project, undertaken as part of a Delay and Disruption litigation. Design changes and delays in design approval would have caused delay to the project; in order to fulfil a tight time-constraint, management had to increase parallel development in the network logic, reducing delay but setting up feedback loops that markedly increased total project spend. Cognitive mapping was used to elicit the relationships, which suggested the use of System Dynamics to quantify the effects. Results are described that show the effect of levels of design changes and approval delays, and their compounding effect. The wider implications on modelling projects are also discussed.     

Optimal Compensation Plans for Salesmen Who Trade-off Leisure Time Against Income

This paper discusses the minimum requirements for an adequate salesmen's compensation plan structure to lead to profit maximization by inducing non-income maximizing salesmen (1) to deploy the highest profitable activity level, and (2) to optimally allocate their time among various selling activities. It is found that a commission-quota-bonus plan is such a structure. These results hold under a large set of plausible behavioral patterns of salesmen's responses to financial incentives. In addition, the analysis supports the use of challenging sales quotas for improved sales force efficiency.     

Optimal sales force compensation plans: an operational procedure

This paper describes an operational procedure for identifying optimal sales force compensation plans featuring salary, commissions and/or quota/bonus. Utility-maximising salespeople's behaviours and reactions to given compensation plans are simulated, and the resulting sales, costs and long-term expected profits are assessed. Then, a search technique attempts to identify the long-term profit-maximising compensation plan structure. Operationally, the simulation model parameters are calibrated so as to reflect those of an actual sales force, and consequently the optimal compensation scheme for this specific sales force can be identified. The concept is illustrated in an actual case study.     

Various theoretical frameworks in concept construction and how to move forward as a field: A commentary to Pegg and Tall

This paper first summarises and discusses Pegg and Tall's (2005) fundamental cycle model of conceptual construction from action to object and its relationship to other theories. Then the paper compares this with another model of different psychological theories of learning mathematics and discusses how these models can either be merged or complement each other. This leads to a general discussion about the problem of having many different theories and fashions. how knowledge grows and accumulates, and if there is a unifying theory to be found. The paper concludes that the development of metatheories, such as in the work of Pegg and Tall, is necessary rather than uncritical complementarism.