This research investigated engineering PM challenges of large-scale oil and gas industry projects and applied System Dynamic Modelling (SDM) in mitigating these project challenges. In-depth interviews with experienced and qualified project managers and senior project engineers in oil and gas industry were conducted to gather information on PM challenges and mitigation plans. Based on the outcomes, the causes and effects of the PM challenges were identified, and mitigation plans were prepared as input to SDM to address the most common engineering challenges. Causal Loop Diagrams (CLDs) were prepared using Vensim to capture the mitigation plans for these most common engineering challenges, which include engineering project team selection and mobilization, and engineering scope changes. The results show that SDM can be a complementary PM tool to the existing traditional PM techniques and tools to mitigate the dynamic nature of PM challenges, especially for complex and large-scale projects in the industry. It captures a holistic view of PM challenges as well as the proactive mitigation plans by focusing on the interrelation and feedback processes within the project environment and boundary. However, SDM has yet to be adopted to mitigate PM challenges and its application is still relatively new for engineering PM, particularly in the oil and gas industry.