Abstract for: A System Dynamics Approach to Managing Material Cost Overruns in Industrial Building Projects

Material-related cost overruns are a significant challenge in industrial construction, arising from various dynamic and interdependent risks such as price instability, supply chain delays, and specification adjustments. Traditional risk assessment models often fall short in addressing the complex interactions between these risks, resulting in suboptimal risk management. This study utilizes a system dynamics approach to capture and analyze the feedback structures between critical risk factors that influence project costs. Nine essential risk drivers were identified through literature synthesis and expert insights. These drivers were incorporated into a dynamic, quantitative simulation model, structured into sub-models representing risks such as material price variability, distribution inefficiencies, and rework. The simulation demonstrates that applying targeted preventive and corrective actions effectively limits cost deviations and improves cost performance. Additionally, the model highlights how the interrelationship among various risks can intensify cost overruns if left unaddressed. The system dynamics model serves as a strategic decision-making tool, offering project stakeholders a comprehensive means to forecast and control cost deviations. Further research is recommended to integrate real-time project data and artificial intelligence to enhance the model’s adaptability and extend its relevance across broader construction domains. Translate in English grammatically