=Paper=
{{Paper
|id=Vol-2915/paper20
|storemode=property
|title=System-dynamic Model for Managing Financial and Intellectual Resources of a Digital Project
|pdfUrl=https://ceur-ws.org/Vol-2915/paper20.pdf
|volume=Vol-2915
|authors=Vladimir Timokhin,Anna Kolomytseva,Alexander Medvedev,Daria Guskova,Artur Nechaev
|dblpUrl=https://dblp.org/rec/conf/ivus/TimokhinKMGN21
}}
==System-dynamic Model for Managing Financial and Intellectual Resources of a Digital Project==
https://ceur-ws.org/Vol-2915/paper20.pdf
System-dynamic Model for Managing Financial and Intellectual
Resources of a Digital Project
Vladimir Timokhina, Anna Kolomytsevaa, Alexander Medvedevb, Daria Guskovab and Artur
Nechaevb
a
Donetsk National Technical University, Artem 58, Donetsk, 283015, Ukraine
b
Ural Federal University, Mira str. 19,Yekaterinburg, 620002, Russia
Abstract
The article proposes a unified approach to the development of structures of scalable flow
diagrams of system dynamics, as well as the construction of an experimental simulation
system-dynamic model for managing financial and intellectual resources of a digital project.
Keywords 1
System dynamics, modelling, project management, financial resource, intellectual resource.
1. Introduction
It is known a variety of dynamics approach applications in the management of complex systems
[1],[2],[3],[4],[5], for instance, in economics and finance spheres [6],[7],[8],[9]. But many researchers
avoid considering the issues related to the optimal or, at least, rational distribution of financial and
intellectual resources between individual tasks and phases of digital projects. In our opinion, the reason
for this is the lack of a standardized approach to the development of scalable system-dynamic models
of project execution processes, the development of which would not lead to a cascading and avalanche
increase in the number of internal connections and, as a consequence, to a loss of understanding of the
logic of the model even by the developer himself.
The ambiguity in the development of such an approach is associated with insufficient elaboration of
the idea of transforming possible formats for structuring controls. As a rule, a tabular-tuple
representation is used for project management, which is quite logically implemented in a discrete-event
approach to simulation, and system dynamics tends to scalar flows with a constant discrete.
In this regard, the task of developing a unified approach to the description of vector project
management processes in scalable flow diagrams of system dynamics arises, which determined the
purpose of this work.
2. Method and results
Today, the range of corporate applications for the tasks of improving the development strategy of
complex interaction systems based on the methods of system dynamics is developing mainly in two
directions: the so-called "systems thinking of managers", formed with the help of casual or cause-effect
diagrams in the formation of mental models of management, and serious scenario strategic research
carried out on simulation models, detailed for the strategic tasks of managing processes in business
systems. The development of the architectural approach, as a continuation of the systemic one, in the
tasks of designing processes, including project management processes, as well as the rapid development
IVUS2021: Information Society and University Studies 2021, April 23, 2021, Kaunas, Lithuania.
EMAIL: volodya.timokhin@gmail.com (A. 1); anniris21@rambler.ru (A. 2); alnikmed52@gmail.com (A. 3); dasha.gusckowa@gmail.com
(A. 4); holdem-10@bk.ru (A. 5).
ORCID: 0000-0003-2729-7046 (A. 1); 000-0002-2797-5487 (A. 2); 0000-0002-5160-2816 (A. 3).
Copyright Β© 2021 for this paper by its authors.
Use permitted under Creative Commons License Attribution 4.0 International (CC BY 4.0).
CEUR Workshop Proceedings (CEUR-WS.org)
of data and information management technologies in companies, orients top managers to the use of
standard and effective approaches to substantiating management decisions.
The transition of companies to data-driven management has shown the need to develop digital
projects to create new digital products and services, use digital design technologies, as well as web
applications for managing analytics and customer data. The demand has increased for the development
of web-oriented digital projects for managing the transformation of production and creating a supply
network, as well as the introduction of corporate digital platforms for information interaction and
electronic document management of distributed companies, etc.
Such project activities require funding. However, traditional methods of financial control are not
always suitable for assessing the effectiveness of the use of financial resources of digital projects. The
architectural approach implies the existence of different levels of architecture for the designed control
system. In this regard, the system dynamics method forms the basis for detailing high-level definitions
and design of business architecture and information technology at various levels of management. The
question is in the application of the technology of decomposition of complex systems and in what level
should be given priority for certain solutions [2].
The article proposes a system-dynamic model for managing the resources of a digital project, which,
by simulating the contribution of such factors as the speed of completion of work on the project, the
average cost of digital projects, the average number of completed projects per year, etc. (see Figure 1:
Cause-effect diagram for a digital project resource management model), will determine the best strategy
for the distribution of financial and intellectual resources of the project according to the criterion of its
profitability. The levels, as accumulators of resources in the proposed model, are determined: labor
intensity of work, the regulator of the intensity of the intellectual load of the project personnel, the
amount of outstanding work on the project, accumulated capital, net cash flow, net discounted flow,
project implementation time, payback period, the amount of profitability.
+
Project
Project scope implementation time -
+ Average number of
projects per year
- Intellectual resources
+ +
The amount of work Average project
Intellectual load by
performed per unit of profitability
skill level
time + +
+ INCOME
- + + Accumulated capital
+ Undistributed Income tax PROFIT
Financial resources
profits
Π
- - -
+ Fixed and variable
costs
Net cash flow Threat of
Resource-
reduced project Profit growth of
balancing the company
efficiency
connection
+
NPV by project +
Figure 1: Cause-effect diagram for a digital project resource management model
Let us consider in detail the financial block of the model, which simulates the forecast indicators of
the effectiveness of the investment support of a digital project, including the possibility of regulating
the intellectual workload of the project personnel.
The general view of the Β«NPV calculationΒ» block is shown in Figure 2: General view of the "NPV
calculation" block of the system-dynamic model of resource management of a digital project.
Description of model parameters is presented in Table 1.
Indexes used in the model:
π‘ β {π‘0 , π‘0 + βπ‘, β¦ , π‘π } β the simulation period, the planning horizon is taken as 1491 days,
where π‘0 β the initial moment of time adopted in the model;
π‘π β the final moment of time adopted in the model;
βπ‘ β modeling step (1 day).
Initially, all works (tasks) of a digital project set by the πππ2π·π level are initialized by the labor
input in ππππ΄πππ‘ hours and executed in accordance with the labor input of πππ. It has been
determined that the execution of project works is possible only for unblocked works that have the
πππ΅ππππππππ or ππ΅π sign:
0|πΊπ,π = 1βππ β 0 (1)
πππ΅ππππππππ: ππ,π = { ,
1
ππ΅π: ππ = βπ ππ,π .
Signs of blocking work, that is, unavailability of its execution at the current time, are: the presence
of previous work (hereinafter, prerequisites); non-zero backlog for at least one prerequisite.
Figure 2: General view of the "NPV calculation" block of the system-dynamic model of resource
management of a digital project
Table 1
Description of model parameters
Parameter Description
Model levels
Wrk2Do Backlog of the project phase
AccumCap Accumulated capital
CFPrj Cash flow
NPVprj Project net discounted flow
Model tempo
Income Income of project
Costs Consumption
CF Cash flow
NPVtempo Net discounted flow
Model variables
NPVcalculus Calculation of net discounted
flows
AvrNmbrOrders Average number of orders for
projects
Profit Profit
Labor costs πππ are determined by the πΈππ variable, which determines the ratio of the volume of
work on the project to the actual duration of the working day, and is also regulated by the multiplier for
the volume of work πππππ, which for each experiment sets the intensity of the intellectual workload of
the project staff, taking into account their qualifications. Let us formalize the main levels and variables
of the model (formulas 1-13) to determine the dynamics of the main indicators of the model
(endogenous variables) at time π‘.
Net Present Value is the sum of the discounted simultaneous differences between the benefits and
costs of the project.
1. Net present Value is determined by:
πΆπΉπ (2)
ππππ‘ = βπ‘π=1 (1+π·ππ πππ’ππ‘π
ππ‘π )π
,
π‘
where πΆπΉπ β net cash flow at time π; π·ππ πππ’ππ‘π
ππ‘ππ‘ β discount rate
2. Net cash flow:
ππππππ‘π‘ β πΌππππππππ₯π‘ β πΌπΆπ‘ , π‘ < 2 (3)
πΆπΉπ‘ = { ,
ππππππ‘π‘ β πΌππππππππ₯π‘ , π‘ > 1
where ππππππ‘π‘ β profit; πΌππππππππ₯π‘ β sum of profit tax; πΌπΆπ‘ β initial investment.
3. Profit:
ππππππ‘π‘ = πΌππππππ‘ β πΆππ π‘π π‘ , (4)
where πΌππππππ‘ β income; πΆππ π‘π π‘ β costs.
4. Sum of profit tax:
πΌππππππππ₯π‘ = ππππππ‘π‘ β 0,2, (5)
5. Initial investment amount:
πΌπΆπ‘ = πΏπππππΆππ π‘π π‘ + πππππππ‘πΆππ π‘π π‘ , (6)
where πΏπππππΆππ π‘π π‘ β labor costs of the project;
πππππππ‘πΆππ π‘π π‘ β other costs for launching the project.
6. Project labor costs:
πΏπππππΆππ π‘π π‘ = πΏπππππΆππ π‘π π‘β1 + βπΏπππππΆππ π‘π , (7)
The size of the project's labor costs depends on the qualifications of the workers.
Payback period - the expected period of recovery of the initial investment from net cash receipts.
7. Payback period:
ππ΅π‘ = ππ΅π‘β1 + βππ΅, (8)
Profitability index - the discounted value of cash receipts from the project per unit of investment.
Shows the relative profitability of the project.
8. Profitability index:
ππππ‘ (9)
ππΌπ‘ = ,
πΌπΆπ‘
9. Average profitability:
πΌππππππ
βπ‘π=1
ππππππ‘π
(10)
π΄π£πππππ‘ = ,
π‘
Indicators of the financial efficiency of a digital project make it possible to determine the conditions
for the distribution of financial resources for the work and tasks of the project, taking into account the
regulation of the intellectual workload of the project personnel.
For simulation experiments, we will introduce the assumption that with an increase in the intensity
of the intellectual load of the project personnel, taking into account the certain qualifications of the
participants, the financial efficiency of the project will increase. At the same time, the marginal growth
of financial efficiency will be stopped at the point where an increase in the intellectual load of the
project personnel will no longer guarantee the growth of its financial indicators.
A common limitation for a digital project, as a relatively closed system for management, is the fixed
amount of the initial investment allocated to the project. In this case, the finding of an optimal variant
of using the intellectual resources of the involved personnel allows reducing the timing of the project
and the cost of its development.
The qualification of workers is determined by the time during which a certain amount of work will
be completed. Thus, the basic qualification level of the conventionally standard project participants is
taken as 1, then the qualifications of workers who perform the same amount of work in less time will
be determined by the ratio:
ππππππππ (11)
πππππ = ,
ππππππππ0
where ππππππππ β the time during which the project participants completed a certain amount of
work. ππππππππ0 β time during which conventionally standard project participants perform a certain
amount of work.
When calculating the wage rate of a project participant, we introduce the function of regulating the
intensity of the intellectual load from the level of basic qualifications, in the form of a multiplier, which
is determined by the formula:
π΅ππ‘ = π΅ππ‘0 β π, (12)
where π΅ππ‘ β the bet of remuneration of the project participant.
π΅ππ‘0 β the bet of a conditionally standard project participant according to the base value of
competencies.
π β personnel load growth multiplier.
The multiplier of the growth of the workload on personnel is a power function that characterizes the
change in the value of the qualification level of the project participant in the model:
π = πππππ π , (13)
where π β is a number from 1 to 2.
If the number π is equal to one, then in this case project participants with higher qualifications will
receive the same remuneration, performing a certain amount of work faster. If the number n is greater
than one, then workers with higher qualifications will receive higher remuneration for completing a
certain amount of work.
Based on a series of simulation experiments, we will find out the limiting value of the degree π, at
which the distribution of the intellectual load of the project participants and the financial return of the
digital project reach the limiting value of their effectiveness. The experimental results are summarized
in Table 2.
Table 2
Data from simulation experiments of a model for managing intellectual and financial resources of a
digital project
Financial Experiment 1 Experiment 2 Experiment 3 Experiment 4 Experiment 5
indicators of
the project
n=1 n=1.1 n=1.2 n=1.3 n=1.4
PB 3,62 3,76 3,92 4,09 4,27
AvProf 0,36 0,36 0,36 0,36 0,36
PI 2,48 2,07 1,68 1,3 0,93
NPV, (RUB) 16878723,21 16398495.36 158833801.97 15332166.17 14740937.56
IC, ( RUB) 12002750.00 12703474.31 13454492.04 14259412.91 15122105.73
PrjTime 468,93 468,93 468,93 468,93 468,93
Skill=1.2 Skill=1.4 Skill=1.6 Skill=1.8 Skill=2
PB 4.48 4.34 4.25 4.17 4.09
AvProf 0.42 0.45 0.45 0.45 0.45
PI 1.08 1.16 1.21 1.25 1.3
NPV 14085293.20 14534783.62 14820247.85 15065811.89 15332166.17
IC 12551625.55 13039698.88 13481121.08 13885435.05 14259412.91
PrjTime 795.27 689.43 610.05 539.49 468.93
As experiments have shown, with an increase in the intellectual load on the project participants,
considering the level of their qualifications, the financial performance indicators of the project
implementation improve. At the same time, the level of initial costs also increases. Experimentally, we
find that the best strategy for managing the intellectual and financial resources of a digital project
corresponds to: the project implementation period is 468.93 days; the maximum increase in the
complexity of tasks in accordance with the value of the multiplier of the increase in the load on the
project personnel in the degree nβ€1.3. Due to the fact that the regulation of the intensity of the
intellectual load of the project personnel is directly related to the determination of labor costs and is
taken into account when calculating the salary rates for the project personnel, it is proposed, for the
conditions of this example, to establish the maximum replacement rates for labor costs and financial
resources of the project at level 1.3, since an increase in this value leads in Experiment 5 to an
unacceptable decrease in the profitability index by 0.93.
3. Conclusion
The presented model is easily extensible without changing the core logic. The most promising areas
of development for the application of the model are: the use of standard optimization tools to improve
the performance of the project, increase the productivity of individual employees and labour
productivity in general, ensure optimal use of resources and assign employees to certain jobs;
distribution of performers for work within qualifications by changing priorities; time management of
individual employees; planning the number of personnel and determining a rational system of
remuneration for individual specialists, taking into account their involvement in the implementation of
the project; personnel planning and outsourcing; planning personnel development programs aimed at
acquiring new competencies that provide access to participation in solving specific project tasks, as
well as aimed at increasing marginal productivity; setting tasks in the complex of the project economics;
modelling the activities of the company as a whole by building a super-project.
4. References
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summer/fall, 2007 www.systemdynamics-russia.org.
[2] John Sterman, Business Dynamics β Systems Thinking and Modeling for a Complex World,
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English, ed. D.M. Gvishiani, Progress, Moscow, 1971.
[4] Kim Warren, Strategic Management Dynamics, London Business School, John Wiley&Sons Ltd.
2008.
[5] John Morecroft, Strategic Modelling and Business Dynamics A Feedback Systems Approach, John
Wiley&Sons Ltd. 2007.
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