The issue of performance measurement is getting more critical to the public-sector organizations as well as the private domain as environmental changes become more dynamic and complex. Recognizing the importance of intangible assets, the public organizations have started to introduce Balanced Scorecard as a means of managing and measuring their performance. Unfortunately, however, BSC, a wisdom of the private sector’s, is not properly workable unless it is modified by reflecting the unique characteristics of the public organization. In addition, the traditional BSC fails to accommodate into its model the dynamic structure within which indicators are interrelated and interacting with time delays. Therefore this paper aims to devise a dynamic-BSC model appropriate for the public organizations by introducing the system dynamics concept with a focus on the effect of casual relations and the interactions among the key indicators and taking into account the impact of delayed feedback caused by new policy and legislative changes.