Abstract. Systems thinking is a discipline that has developed substantially over the last few decades but most project managers remain unaware of its potential power in helping analyse, refine and deliver their complex projects. In fact, over the past 30 years several hundred of the world's largest and most complex projects have successfully used the technology to improve their outcome. Traditionally, a time-consuming technique to implement, it has only been utilised for the most complex projects. However, these methods are fast becoming more accessible for large projects in general.Through modelling the rework cycle and the feedback loops that drive it, using system dynamics it is possible to analyse and hence improve the dynamic behaviour of our projects. In this paper we show how a system dynamics model of a project is constructed and used to assess project outcome. Examples of its application include: cost versus schedule trade-offs, project improvement strategies, risk assessment and assessing resource constraints. The ability to deliver such answers quickly and accurately during the bid and project definition phases provides the project management team with a powerful decision making tool for project strategy formulation. The improvement in project outcome that can be achieved at this stage of the project is massive because of the low cost of change combined with a high leverage into project commitment, risk mitigation and outcome that is available early in the project's lifecycle. WHAT IS SYSTEM THINKING?Introduction Systems thinking has its roots in the soft systems methodologies of Checkland and system dynamics analysis methods originated by Forrester (1961). Some people still dismiss these methods as being esoteric, imprecise or too "soft" for use in realworld applications, although in reality they have been used to great success on hundreds of the world's largest and most complex projects. Its applications have included: improving the accuracy of bid estimates, risk assessment and mitigation, optimising project strategy, improving the accuracy of progress monitoring and project reporting and in about 15% of the cases in resolving disputes arising from troubled projects. The applications have included complex projects in sectors as diverse as civil infrastructure, shipbuilding, aerospace, defence, railways, and telecommunications.We shall show that using a system dynamics approach to modelling the rework cycle and the feedback loops that drive it, makes it is possible to analyse and then manage the dynamic behaviour of our projects. This paper demonstrates how a system dynamics model of a project can be constructed and used to assess and manage project outcomes.In order to understand how system thinking can be applied to complex projects there are two concepts that need to be understood. First, the rework cycle and how it acts within complex projects. Second, the feedback loops which exist within projects that drive the project dynamics.The Rework Cycle. The majority of complex projects fail to deliver...

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As our world becomes ever more complex, engineering solutions to meet our needs become more difficult to realise. OverviewToday's large engineering projects face significant organisational and operational complexityl involving joint ventures, consortium working, international stakeholders and participants, special purpose companies, project fmancing, prime contracting, etc. Often such projects face conflicting political pressures as socio-economic impacts cross party divides. Contractual arrangements add to management difficulties as customers seek to transfer more risk to prime contractors using risk shareline concepts. As the project moves through its life cycle, organisational and operational issues, together with changing requirements, can adversely impact project schedules and costs, often with dire consequences. Many recent projects have experienced cost overruns in excess of 300%, and 150% to 200% is becoming acceptable. So, how can complex projects be managed effectively?System dynamics have been shown to hold the key to managing complex projects, by understanding and using the feedback loops in those projects. A project belongs to a category of systems called "managed systems". These systems display unusual behaviour originating from the existence of positive and negative feedback loops occurring concurrently in day to day operations. Typically, project control utilises negative loops only, with the positive loops being either ignored or constrained. This ignorance has been shown to be a major contributor to project failure since it is the many positive 132