Schedule and cost overrun analysis for R&D projects using ANP and system dynamics

Purpose Schedule and cost overrun analysis for a typical research & development (R&D) project is necessary to identify and mitigate the non-feasible alternatives at the design stage. Typically, this should include an analysis of technological and economic factors of R&D project. This paper aims to discuss these issues. Design/methodology/approach This research proposes an integrated analytic network process (ANP) and reusable system dynamics (SD) model for a quick and strategically consistent decision making. The technological and economic factors of R&D project were first identified and compiled through a systematic literature review. An ANP model was first developed for calculating Risk Priority Index (RPI) for set of technological and economic factors. The computed RPI are considered as an input to SD models. Two SD models (technological and economic) are developed to undertake a detailed investigation on effect of individual factor on schedule and cost overrun. The approach is exemplified for a case of government R&D project in India. Findings ANP identifies “Testing & qualification facility” and “Raw material availability” as the highest RPI factors. A detailed sensitivity analysis of SD models suggests that technological factors such as “Design Changes,” “Hidden Activities,” and “Lack of Expertise” and economic factors such as “Project delays,” “Unexpected incidents” and “Conflicts” have the highest influence on schedule and cost overrun. Practical implications The outcomes of this research can help managers to estimate the severity of various technological and economic factors on cost and schedule overrun and develop an adequate risk mitigation contingency plan. Originality/value In case of R&D projects where systems are being developed for the first time, changes are inevitable, and hence schedule and cost management plays a very important role in its success. This paper proposes an integrated reusable approach of ANP and SD for analyzing the influence of technological and economic factors on schedule and cost overrun of R&D project.