Risks and buffer analysis in critical chain management by system dynamics (Case study: Oil refinery)

Document Type : Research Paper


1 Department of Industrial Management, Islamic Azad University, Science and Research branch, Tehran, Iran

2 School of Industrial Engineering, Iran University of Science and Technology, Tehran, Iran


In this paper, risks in oil construction projects are identified, analyzed and considered for buffers in system dynamics modeling. To do so, all important and effective variables and risks within an oil construction project are determined, including internal and external variables and then, conceptual model is developed using system thinking approach. Based on the conceptual model, state and flow model is obtained and the relations between variables are established. In order to show efficiency and effectiveness of the proposed method, a real case study is considered and solved. Moreover, sensitivity analysis is provided, by using real data and this model. The primary goal of this research is to investigate the impact of different risks that exist in oil construction risks on key variables; these key variables include human resources, facilities and materials. The results demonstrate that the initial plan of each resource is not consistent with the actual need of them. In other words, based on the existing risks in the model, the proposed approach determines what level the actual resources requirement would be placed at and given existing risks, which buffer should be considered for each resource. Furthermore, the impact of risks in performing activities is forecasted and the model shows what impact the risks have on the delay in initial progress of the project as time passes. Finally, it is studied how changes in key and input variables affect the all project.


Main Subjects

Aleshin A., (2001). Risk management of international projects in Russia, International Journal of Project Management, 19, 207-222.
Araújo de Lima, P. F., Marcelino-Sadaba, S., & Verbano, C. (2021). Successful implementation of project risk management in small and medium enterprises: a cross-case analysis. International Journal of Managing Projects in Business.
Arena M., Arnaboldi M., Azzone G., (2010). The organizational dynamics of Enterprise Risk Management. Accounting, Organizations and Society 35, 659–675.
Barton T, Shenkir W, Walker P. (2002). Making enterprise risk management payoff: how leading companies implement risk management. New York: Financial Times Prentice Hall.
Bell T, Peecher M, Solomon I., (2002) The strategic-systems approach to auditing. In: Bell T, Solomon I, editors. Cases in strategic-systems auditing. KPMG, LLP; 1– 34.
Chapman, R. J. (2008). Simple tools and techniques for enterprises risk management. Chichester: John Wiley & Sons, Ltd.
Chung G, Lansey K, Blowers P, Brooks PW, Stewart S, Wilson P (2008) A general water supply planning model: Evaluation of decentralized treatment. Environ Model Softw 23:893–905
Ford A (1999) Modelling the environment: An introduction to system dynamics modeling of environmental systems. Island Press, Washington, DC.
Forrester J (1961) Industrial dynamics. Pegasus Communications, Waltham, MA.
Haines S., (200) The systems thinking approach to strategic planning and management. New York7 St. Lucie Press.
Heravi, G., & Gholami, A. (2018). The influence of project risk management maturity and organizational learning on the success of power plant construction projects. Project Management Journal, 49(5), 22-37.
Hortono B., Sulistyo S.R., Praftiwi P.,Hasmoro D., (2013). Project risk: Theoretical concepts and stakeholders' perspectives. International Journal of Project Management. In press.
Hwang B.G., Zhao X., Toh L.P., (2013). Risk management in small construction projects in Singapore: Status, barriers and impact. International Journal of Project Management
Kim D., (1999) Introduction to systems thinking. Waltham, MA7 Pegasus Communications Inc.
Knechel R. (2002). The role of the independent accountant in effective risk management. J Econ Manag 65– 86.
Love P.E.D., Holt G.D., Shen L.Y., Li H., Irani Z., (2002) Using systems dynamics to better understand change and rework in construction project management systems. International Journal of Project Management 20, 425–436.
Marcelino-Sádaba S., Pérez-Ezcurdia A., Lazcano A.M.E., Villanueva P., (2013) Project risk management methodology for small firms. International Journal of Project Management, In press.
Mulligan M, Wainwright J (2004) Modelling and model building. In: Wainwright J, Mulligan M (eds) Environmental modelling: Finding simplicity in complexity: West sussex. England, UK, pp 7–73
O’Donnel E., (2005) Enterprise risk management: A systems-thinking framework for the event identification phase. International Journal of Accounting Information Systems 6, 177– 195.
Peng M., Peng Y., Chen H., (2013). Post-seismic supply chain risk management: A system dynamics disruption analysis approach for inventory and logistics planning. Computers & Operations Research. In press.
Perry J.G., (1986). Risk management – an approach for project managers. Butterworth & Co (Publishers) Ltd., 4(4), 211-216.
Raz T., Michael E., (2001), Use and benefits of tools for project risk management. International Journal of Project Management 19 (2001) 9-17
Shimizu T., Park Y., Choi S., (2013). Project managers and risk management: A comparative study between Japanese and Korean firms. International Journal of Production Research. In press.
Simister S.J., (1994). Usage and benefits of project risk analysis and management. International Journal of Project Management, 12 (1) 5-8.
Simonovic S (2002) World water dynamics: Global modelling of water resources. Journal of Environmental Modelling 66:249–267
Sterman JD (2000) Business dynamics, systems thinking and modeling for a complex world. Irwin/McGraw-Hill, New York
Sušnik J., Molina J.L., Vamvakeridou-Lyroudia L.S., Savić D.A., Kapelan Z., (2013) Comparative Analysis of System Dynamics and Object-Oriented Bayesian Networks Modelling for Water Systems Management. Water Resource Management 27, 819–841.
Szczepański R. & Światowiec-Szczepańska J., (2012). Risk management system in business relationships—Polish case studies.Industrial Marketing Management 41, 790–799
Thompson B.P., Bank L.C., (2010). Use of system dynamics as a decision-making tool in building design and operation. Building and Environment 45, 1006–1015
Ward S.C. & Chapman C.B., (1991), Extending the use of risk analysis in project management. Butterworth Heinemann Ltd, 9(2), 117-123.
Volume 14, Issue 1 - Serial Number 1
January 2021
Pages 76-110
  • Receive Date: 06 August 2021
  • Revise Date: 08 October 2021
  • Accept Date: 14 November 2021
  • First Publish Date: 06 January 2022