Application of system dynamics in the assessment of project portfolio performance

Effective assessment of a Project Portfolio Performance (PPP) has been widely claimed to hold great promise for the effective management of organizations. The current literature is confined to assessing a PPP either statically or by taking a separate view of each project within a portfolio. Advocated here is the development of a dynamic assessment model that assists with the understanding of the overall performance of a portfolio at any given point in time. In this context, this paper proposes a System Dynamics (SD) modeling approach by creating a link between a portfolio and its constituent projects. The proposed SD model attempts to answer a question of particular interest: How changes in the state of projects within a portfolio affect the overall performance of the project portfolio over time? Within this framework, a new index as a function of various factors that affect a project portfolio is developed. Building on an SD model based on the results of a survey…, this paper measures the overall performance of the portfolio over time in response to changes in the performance of its projects. As expected, the level of PPM maturity has a direct impact on the performance of the portfolio. On the one hand, the implementation of an effective resource management as well as designing a sound measurement system lead to the improvement of the overall status of the portfolio performance. On the other hand, shifting priorities due to the lack of a coherent business strategy as well as resistance to changes because of the internal politics and/or insufficient information result in the delay and cost overrun in projects, thereby decelerating the improvement in the status of the projects within portfolio.