Model based on system dynamics for project portfolio management in industries

Abstract

Strategic decision-making is one of the biggest challenges for organizations. This research follows the first three steps of Peter Checkland's Soft System Methodology for the root definition. The conceptual model of feedback loops is built with this RD and with Peter Senge's approach. Subsequently, causal relationships are translated into a flow model or Forrester diagram following the steps proposed by John Sterman's construction of dynamic models. The model construes the interactions of strategic thinking, project portfolio management, project management and production management as a new mathematical approach that explains the forms of growth and decline in the real system. To validate the model, it was applied in the Colombian poultry sector. Findings showed that the growing behavior curves of production and productivity corresponded with the system's real behavior. The contribution of this research is a new mathematical tool based on the incorporation of differential equations in a dynamic model in contrast to classic portfolio management models.