Strategy in Project Management
A Formal Game Theory Course for Project Managers
At its essence, project management is the art of orchestrating diverse elements—resources, timelines, and people—toward a common goal. Yet this orchestration unfolds in environments rife with constraints, competing interests, external influences, and unpredictable events, where each decision carries ripple effects across the project.
The concept of "strategy" in project management evokes notions of competition, but this raises deeper questions: Who, exactly, is the competition against? Is it perhaps the challenges imposed by the project itself? Or is it winning against external forces? And crucially, what does "winning" look like in such a context? For project managers, success often lies not in defeating an opponent but in aligning diverse interests to achieve shared objectives.
Strategy in project management is about navigating this intricate landscape, and it encompasses daily decisions that balances the nuanced interplay of team collaborations, competing priorities, external stakeholder pressures, and the broader forces shaping the project's trajectory. It is here, in the dynamic and often unpredictable nature of project environments, that strategic thinking becomes indispensable.
Strategy for Project Management Practitioner
Game theory, a mathematical framework for analyzing strategic interactions, provides a lens to decompose and examine intricate competitions or collaborations among parties with divergent goals. It moves beyond the "what" and "how" of project execution to, putting yourself in others’ shoes, and addressing the "why" behind their choices.
Why would a contractor overbid for a project? Why might a client resist seemingly beneficial changes? Why do teams sometimes act in ways counter to their collective interest?
Unpacking the fundamental "why" reveals profound insights.
Project Complexity: Complex projects, by nature, involve myriad interconnected decisions and interactions. Here, game theory provides a structured framework to analyze these intricate patterns. It enables project managers to identify systemic issues, anticipate cascading effects, and adapt strategies in real-time. This perspective is particularly invaluable for managing risks and seizing opportunities in dynamic project environments. The true power of game theory in project management lies in preparation and creating adaptive frameworks that can flex and respond to emerging complexities with intelligence and strategic foresight.
Motivations and Mechanisms: Game theory offers a powerful lens for uncovering the underlying motivations driving stakeholder behavior. By understanding the incentives, constraints, and perspectives of each party, project managers can design strategies and mechanisms that align conflicting interests or address hidden concerns. This deeper understanding fosters transparency and trust among stakeholders, creating a collaborative foundation essential for project success.
Embracing Uncertainty: Projects unfold in environments of incomplete information and uncertainty. Game theory equips project managers with the tools to model these scenarios, anticipate potential moves, and evaluate the implications of different strategies. By transforming uncertainty into an opportunity for creative problem-solving, project managers gain a critical edge in guiding outcomes effectively. Moreover, this approach enhances their ability to interpret project outcomes and policies, even amidst inherent ambiguities.
Long-term Results: Strategic decision-making requires a nuanced approach that transcends immediate tactical considerations. Game theory encourages project managers to think beyond short-term gains, considering the broader impact of their decisions on relationships, reputations, and future collaborations. This holistic perspective recognizes that each decision—whether a significant milestone or a routine adjustment—reverberates through the complex ecosystem of organizational interactions, potentially shaping future engagement patterns.
Everyday Decisions: The importance of strategic thinking for project managers is not confined to high-stakes, pivotal moments. Instead, it lies in the continuous application of strategic principles to day-to-day decisions, which collectively define the trajectory of a project. From allocating resources to mediating minor stakeholder disagreements, these seemingly small choices accumulate, influencing long-term outcomes. By incorporating game-theoretic insights into everyday decision-making, project managers can ensure that short-term actions align with the overarching goals of the project, paving the way for sustainable success.
Strategy for Project Management Researcher
Despite its general absence in project management curricula, game theory has been extensively utilized in project management research [1]. Its application spans various domains, including project governance, risk management, bidding strategies, and resource allocation. By modeling strategic interactions among stakeholders, game theory offers a structured approach to resolving conflicts, optimizing decisions, and fostering cooperation.
Game theory has proven invaluable in addressing project governance issues, such as information asymmetry in contracts, cooperation among subcontractors, and renegotiation of project terms. It enables the design of incentive mechanisms that align stakeholder objectives and ensure project continuity. For instance, studies have shown how game-theoretic models can optimize partner selection and incentive structures in public-private partnerships, ultimately enhancing project outcomes.
Furthermore, the integration of game theory in risk management has allowed researchers to model uncertainty in project durations, costs, and resource availability. By applying probabilistic and robust models, these studies help project managers anticipate potential disruptions and devise strategies to mitigate them. This analytical approach is particularly critical in large-scale infrastructure projects, where the stakes are high, and uncertainties abound.
Finally, game theory has been instrumental in improving bidding and contracting processes. By analyzing competitive behaviors and strategic decision-making in tendering, researchers have developed models to foster fair competition and efficient allocation of resources. These contributions not only enhance the theoretical foundations of project management but also offer practical solutions to real-world challenges.
The Gap in Engineering Curricula
Formal project management education focuses on statistical tools and methodological frameworks, rarely acknowledging the reactionary forces and events that emerge in response to decisions, policies, and actions. The strategic dynamics of aligning teams and stakeholders, anticipating reactions, and navigating competing priorities frequently remain underexplored.
This limitation is particularly pronounced among practitioners from engineering backgrounds, whose educational trajectory typically emphasizes technical proficiency. Engineering project managers, often seasoned engineers who have ascended to navigating major projects akin to massive ships through turbulent and unpredictable waters. They are largely left to develop innovative strategies and methodologies to handle the intricate dynamics of strategic situations through experience.
Despite game theory's immense potential and extensive use in project management research, it has yet to find its rightful place in the standard project management toolkit. Here lies the challenge: how can we close this gap and provide project managers with the strategic acumen they need to thrive?
My Gateway
My fascination with game theory began as I delved into the complexities of modeling projects using Bayesian networks and simulations during the early stages of my Ph.D. Here is a tweet I sent out almost eight years ago (as of the day I’m writing this article).
At the time, I was drawn by the idea that projects, much like intricate systems, are shaped by the dynamic interplay of decisions, stakeholders, and uncertain events. My initial explorations into simulation highlighted a critical gap: while tools like Bayesian networks offered a probabilistic view of risks, they often lacked a strategic lens to account for the motives and interactions of the players involved. This realization led me to game theory—a framework that not only models’ strategic behavior but also provides clarity on how decisions ripple across interconnected systems.
Over the years, as I grappled with risk modeling challenges in various project management scenarios, my conviction in game theory's relevance deepened. Whether it was resolving conflicts over resource allocation, or designing incentives for collaboration, game theory appears to be one of the most useful frameworks for interpretation of projects. It provided the structure needed to unravel complex interactions and offered strategies for navigating uncertainty.
Outline: A Formal Game Theory Course for Project Managers
At the Civil Engineering Department of the University of Calgary, we are proud to introduce “Strategy in Project Management: Game Theoretic Approach”—a pioneering course designed to integrate game theory into the fabric of project management research and education. This initiative represents a leap forward, equipping students and professionals with an innovative blend of modeling expertise and strategic acumen. The course follows a structured progression, guiding participants from foundational principles to advanced strategic insights, ensuring both conceptual depth and practical relevance.
Part One: Foundation
The first segment lays the groundwork by immersing students in the core principles of game theory. Through a systematic exploration of key concepts—such as dominant strategies, equilibrium states, and strategic interactions—participants build a robust conceptual framework. This phase transcends abstract mathematical theory, transforming it into a practical lens for analyzing complex stakeholder dynamics. The result is a strong foundation for decision-making, preparing students to address the intricate challenges inherent in project management. Part one includes the following three lectures:
Introduction to Game Theory
Dominant Strategies, Best Response, and Equilibriums
Strategic Interactions among Stakeholders
Part Two: Application
The second part bridges theory and practice, focusing on the tangible applications of game theory in real-world project environments. Participants delve into designing collaborative contracts, optimizing resource allocation, and creating mechanisms that align incentives across diverse stakeholders. This segment emphasizes the transition from understanding strategic dynamics to actively crafting solutions that enhance project performance. By embedding game-theoretic insights into organizational strategies, students learn to drive engagement, improve collaboration, and elevate project outcomes. Part two includes the following four lectures:
Strategizing Against Project Complexity
Collaboration and Collaborative Contracts
Mechanism Design and Incentives
Resource Allocation
Part Three: Advanced Strategies
The final module propels students into the realm of advanced strategic thinking. Here, the focus shifts to navigating complex scenarios involving incomplete information, sophisticated negotiation techniques, and strategic reasoning under uncertainty. Drawing upon advanced game-theoretic models, including Bayesian games and auction theory, participants acquire the analytical tools needed to manage conflicts, foster cooperation, and make informed decisions in high-stakes, multi-stakeholder environments. Part three includes the following five lectures:
Risk and Opportunities Management
Bayesian Games and Incomplete Information
Auctions and Bargaining
Conflict and Negotiation
Bonus: Board Game Theory
Join Our Class
If you are a graduate student or practitioner interested in this course, there might be a possibility for you to join our class. Please fill out this form to join the waitlist and we will be in touch.
Question then Becomes
This course aims to be a comprehensive journey into the strategic core of project management. The use of the term strategy in project management naturally poses the question: who are we competing against? Is the competition external—against market forces, rival organizations, or regulatory constraints? Or is it internal—against misaligned priorities, resource limitations, or even the unpredictable nature of the project itself?
Perhaps the most thought-provoking perspective is that the competition is against our own capacity to anticipate, adapt, and align interests. Who do you believe we are truly competing against, and how does this perspective shape your approach to managing projects?
Have you had the opportunity to take a game theory course during your post-secondary education? If so, do you see its connection to project management, particularly in navigating the complexities of stakeholder dynamics, risk management, and decision-making under uncertainty?
For those of us engineers who most likely haven’t studied game theory, would you advise young engineers to explore an elective on strategy and game theory?
References
Narbaev, T., Hazır, Ö., & Agi, M. (2022). A review of the use of game theory in project management. Journal of management in engineering, 38(6), 03122002.