Project portfolio implementation under uncertainty and interdependencies: A simulation study of behavioural responses

Wang, Lin, Kunc, Martin and Li, Jianping (2019) Project portfolio implementation under uncertainty and interdependencies: A simulation study of behavioural responses. Journal of the Operational Research Society. (doi:10.1080/01605682.2019.1609890).

Record type: Article

Abstract

Even though systems thinking has been highlighted in portfolio management theory, independent project control logic still dominates its implementation process. This paper constructs a system dynamics model for portfolio monitoring and control. Considering the on-going portfolio as a complex social system, the impacts of project interdependencies ( ) on portfolio decision-making are investigated under a behavioral paradigm. Our findings indicate the remedial actions, affected by behavioral factors like planning fallacy and ‘Pet project’ effects, may generate escalation of commitment under specific levels of uncertainty and interdependencies. Thus, portfolio coordination decisions should be made from a strategic perspective with the consideration of complexities embedded in the system and behavioral responses from portfolio managers.

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