A dynamic feasibility analysis of public investment projects: An integrated approach using system dynamics and agent-based modeling

• Published in: International journal of project management 2015-11, Vol.33 (8), p.1863-1876
• Main Authors: Jo, Haejin, Lee, Hakyeon, Suh, Yongyoon, Kim, Jieun, Park, Yongtae
• Format: Article
• Language: English
• Subjects: Agent-based modeling; Bridges; Dynamic feasibility; Feasibility studies; Government spending; Highway construction; Integrated approach; Public investment projects; Public sector; System dynamics
• ISSN: 0263-7863; 1873-4634
• DOI: 10.1016/j.ijproman.2015.07.002

Increasingly, public sector investment projects face a dynamic environment that incorporates both macroscopic system and microscopic individuals. Prior attempts to analyze the feasibility of those projects, however, have been subject to limitations in accommodating such environmental changes. As a remedial measure, the combination of system dynamics (SD) and agent-based modeling (ABM) is proposed due to their complementary strengths. Consequently, this paper suggests a new approach to dynamic feasibility analysis for public investment projects through an integrated simulation model using SD and ABM. The former SD part elucidates the relationships among system elements that constitute project's benefits and costs, while the latter ABM part depicts users’ emergent behavior with their heterogeneity. A bridge construction case study demonstrates the applicability of the proposed approach. The findings show that the proposed approach can provide a valuable and flexible framework for analyzing project feasibility in a dynamic environment. •The paper proposes a new approach for dynamic feasibility analysis.•The proposed approach uses a combined system dynamics and agent-based modeling.•A case study considers a public sector bridge construction project.•The proposed approach offers a useful framework for analyzing project feasibility.•The proposed approach guides investment decisions.