A System Dynamics Approach to Managing Material Cost Overruns in Industrial Building Projects2

Sunday, August 3, 2025, 1:15 PM

Session: Student Plenary #1 (Morning, 3rd of August)

Cost overruns remain a critical challenge in industrial construction projects, often undermining project success. This study applies a system dynamics approach to model and mitigate risks contributing to material cost deviations. The research identifies nine key risk events—including material price fluctuations, distribution inefficiencies, procurement delays, and specification changes—that significantly impact actual costs. By integrating these risk factors into a dynamic feedback model, the study simulates the cascading impacts on project cost performance. Simulation results demonstrate how effective preventive and corrective actions can reduce cost overruns while balancing mitigation expenditures. The model also reveals the limitations of traditional static risk assessment tools, emphasizing the superior adaptability of system dynamics in reflecting real-world project complexities. The proposed model serves as a decision-support tool for contractors and project managers, enabling more accurate cost forecasting and risk control. The findings contribute to advancing risk-informed cost management practices in industrial building construction.