Impact of Engineering Changes on Value Movement in Fund Flow: Monte Carlo-System Dynamics Modeling Approach

Abstract

A healthy fund flow system is crucial for the successful construction of any project. Project fund flow management has made significant progress, increasingly aligning with real-world applications. However, due to the uncertainties associated with Engineering Changes (ECs) in projects, the actual fund flow may still deviate from expectations. These systems still require improvements and corrections of flaws to enhance the efficiency of construction projects and reduce exposure to risks associated with ECs. Construction projects are complex and involve many processes. Each process represents a specific part of the project; therefore, an EC in one area can impact resource scheduling and fund balance. In our analysis, we found that ECs are directly related to fund demands and may result in the need for more materials, labor, and duration. Furthermore, ECs can alter construction progress and payment schedules, exacerbating project risks. As a result, effective management of fund flexibility becomes highly necessary. To explore the impact of ECs on the value dynamics of fund flow, it is important to understand and describe the stochastic paths of fund flow and discern the dynamic changes at each stage. Given this, we introduced a system dynamics model based on the Monte Carlo simulation. This model adeptly characterizes project risks and quantifies uncertainty variables, thereby making the simulation more aligned with reality. Moreover, the model illuminates the intricate relationship between project risk and project productivity, highlighting the origins of fund flow fluctuations. It is imperative to identify project risks early and address ECs promptly and effectively. Through sensitivity analysis and strategies, we ensure the stability of fund flow. This study offers a pivotal framework for understanding and managing fund flow in projects, emphasizing the central role of system dynamics in this process.

Keywords

• engineering changes
• fund flow
• value movement
• system dynamics
• Monte Carlo simulation