Using System Dynamics to Support Strategic Digitalization Decisions

Abstract

Although digitalization has become a prospect that is counted on for many problems in the construction industry, there have been limited attempts at exploring decision-making processes in construction firms concerning the integration of digital technologies and impacts beyond the projects. In this research, the system dynamics (SD) approach was proposed to investigate digitalization as a strategic decision considering the inherent relationships between project company and business levels. The SD model was conceptualized, formulated, and tested by conducting a demonstrative case study within a modular construction company. Conforming to the strategic priorities of the case company, business process engineering principles were adopted to model the existing practices and assess the impacts of implementing digital technologies such as building information modeling (BIM), enterprise resource planning (ERP), and radio frequency identification (RFID) at different maturity levels. The simulation tests revealed that the impacts of technologies are influenced by the internal dynamics of projects and company competencies as well as external uncertainties. The SD model has the potential to improve strategic decision-making by anticipating the causalities and feedback between the decisions and consequences of technology integration. The findings and model development steps proposed in this paper can be used by other companies that aim to make process improvements with digital technologies as well as researchers exploring the implications of digitalization in construction considering competencies and uncertainties.