A

BUSINESS MODEL FOR POWER GENERATION

CONSTRUCTION ORGANIZATIONS USING SYSTEM
DYNAMICS

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Power Crisis in Egypt

Egypt has experienced rapidly growing electricity
demand due to:
1. population growth,
2. Development of energy-intensive industries,
3. Use of electrical household appliances.
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Power Crisis in Egypt

Electricity Deficit: 6,180 MW.
Blackouts: 6 hours per day.
Target: Construction of power plants to cover the
electricity deficit.
Total Investments: $8 Billion
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Problem Statement:

Projects still fail

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Problem Statement:
Only 2.5% of companies successfully complete 100% of
their projects. Gallup Business Journal

The average cost overrun of all projects is 27%. Gallup

Business Journal

All

but one in six IT projects had a cost overrun of 200%

on average and a schedule overrun of almost 70%. Harvard
Business Review

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Power Crisis in Egypt

Causes of Power Projects Failure

Project
Management
40%

Finance
30%

Program &
Portfolio
Management
30%
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Problem Statement:

WHY Projects still fail?

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Problem Statement:

People run organizations and industries, devise

strategy, take strategic decisions based on their own
mental models.

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A Need for a Model:

Modelling helps people to share, clarify and improve

their mental models on the basis of outcome feedback
and adjusting their mental models.

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Business Strategic Map Model:

Strategic Business Map Model (Kaplan, R. , 2005)

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System Dynamics:
The purpose of a model is to:
1. Understanding of the system.
2. Capture mental models and serve as a communication tool and a
unifying medium.
3. Discover policies that improve system behaviour.

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System Dynamics:

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System Dynamics (contd) :

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Dynamic Hypothesis
Employee Skills Variables:
Employee
Creativity,
Learning Ability, Individual
Learning,
Employee
Commitment, Motivation,
Employee
Morale,
Personal Mastery, Job
Loading, Productivity &
Employee Fear.

Customer/Financial Variables:
Profit, Market Share, Client
Confident & Number of
Customers/Jobs.
Strategy Related Variables:
Visioning, Investment in
Human
Resources,
Investment in Admin Issues,
Provide Training, Bonus
Sharing, Improve Work
Conditions,
Shared
Commitment, Delegation
Level, Management Control
Level & Confess Level.

Internal Related Variables:

Schedule Variance, Cost &
Service Quality.
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Organization Related
Variables:
Organization
Learning,
Organizations Sophistication &
Skills,
Leadership,
team
Learning,
Organization
Alignment, More Perception of
the Changing Environment,
Respond to Environmental
Changes, Shared Vision &
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Shared Mental Model

Causal Loop Diagram:

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Stock & Flow Diagram:

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Dynamic Behavior Patterns:

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Constructed Interviews:
Objectives:
1. Investigate the causal relationships.
2. Determine the weight of effect.
3. Validate the dynamic behavior pattern.

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Constructed Interviews:
Example:
What are the factors that affect the organizations learning?
a.

The ability of the organization to respond to the changes taking place in

the business environment.

b.

Having a shared vision and a shared mental model between the

employees and the organization.

c.

The occurrence of team learning.

d.

The occurrence of employees that masters what they are doing as jobs.

e.

The existence of employees that have the capacity & and ability to learn.

f.

Other, please specify.

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Constructed Interviews:
Example:
What are the factors that affect the organizations learning?
a.

The ability of the organization to respond to the changes taking place in

the business environment. IIII IIII IIII II 17/25 68%

b.

Having a shared vision and a shared mental model between the

employees and the organization.
IIII IIII

19/25 36%

c.

The occurrence of team learning. IIII III 17/25 32%

d.

The occurrence of employees that masters what they are doing as jobs.

e.

The existence of employees that have the capacity & and ability to learn.

f.

Other, please specify.

IIII 5/25 20%

IIII IIII IIII I 16/25 64%

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Findings Analysis:
Equations Before Interviews:
Organization Learning = a + b + c + d + e
Equations After Interviews:
Organization Learning = (0.68a) + (0.36b) + (0.32c) + (0.20d) + (0.64e)
Where
a = Respond to Environmental Changes
b = Shared Vision & Mental Model
c = Team Learning
d = Personal Mastery
e = Individual Learning

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Models Output:
"Profit" Dynamic Behavior Pattern
2500

600000

500000

2000

1500
300000
1000

Before Survey

After Survey

400000

200000
500

100000

2012

2013

2014

2015

2016
Year

After Survey

2017

2018

2019

2020

Before Survey

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Sensitivity Analysis:
"Profit" Dynamic Behavior Pattern
180
160
140
120
100
80
60
40
20
0

2012

2013

2014

Investment Strategy

2015

2016
Year

2017

No investment in Human Capital

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2018

2019

2020

No Investment in ICT

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Sensitivity Analysis:
"Profit" Dynamic Behavior Pattern

250
200
150
100
50
0

2012

2013

2014

Investment Strategy #1

2015

2016
Year

2017

Investment Strategy #2

2018

2019

2020

Investment Strategy #3

Investment Strategy #1: 50% - 25% - 25%

Investment Strategy #2: 45% - 40% - 5%
Investment Strategy #3: 65% - 25% - 10%
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Expected Benefits:
It closes an open managerial gap between strategic planning and project
management.
Provides a common language for discussion among organizations personnel.
Managing projects as business units contributing to the organizations goals
and business objectives.
Provides a common mental model for managing projects and how the system
works.
Obtaining highly skilled employees loyal to the organization.
Improvement of the organizations performance.
Decision support system through sensitivity analysis.
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Thank You

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