Economically Maximise Project Resource

Motivated by client complaints to reduce project congestion requires careful economic consideration to balance increased staffing costs. 5 min read.

Project Services Throughput

Our previous blog, Minimising Project Congestion and Delays, identified that project congestion occurs when project resources are utilised more than 70% in a single-channel single phase queuing system (M/M/1). Recognising client projects have a 1-hour Poisson arrival rate and a 0.8-hour Exponential delivery time results in an average project wait time of 2.6 hours and a maximum of 14.9 hours for a single resource. Since this project organisation offers a 99% guarantee of delivery within 8-hours, it needs to simulate the effect of increasing project resource capacity to reduce the maximum wait time of 14.9 hours.

Project Services Throughput Simulation

The following simulation shows how increasing project resource capacity from 1-to-10 affects project congestion. In the interests of running time, this video is truncated to cover the simulation period of 480 hours, which allows the project organisation to overcome warm-up bias and achieve steady-state.

Project Services Throughput Results

As project resource capacity is increased, both project queuing length and wait exhibit exponential decreasing outcomes with average outcomes bottoming out when more than 3-resources are added to the system. For the given simulation if the manager were trying to offer a 100% guarantee of delivery within 8-hours, then 3-project resources would be needed to ensure a maximum project wait time of 6.1 hours.

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Project Services Queuing Summary

The simulation results show that to reduce project congestion and exceed the 99% guarantee of delivery within 8-hours, then 3-project resources are needed. Adding more support beyond this provides no client benefit and comes at a significant economic expense.

Further analysis and simulation show that if 2-resources were used instead of 3, then only 1.4% of clients would have a project delivery experience greater than 8 hours!

Probability that a Customer Spends Mor Than t unit of Time in the System

This insight has important implications for the management of projects. Even though clients might demand 100% of projects being delivered within 8-hours, the reality is most clients will not be prepared to pay the increased costs associated with higher staffing. Consequently, most clients will tolerate occasional small degradations in service provided their experience on the whole, is positive. As such, by having 2-resources instead of 3, management can significantly reduce their staffing costs and still satisfy their 99% guarantee of delivery within 8-hours.

In summary, our intuitive understanding of queuing systems is not adequate to understand the size and affect of increasing resource capacity, and by modelling project organisations using queuing models, better client and economic outcomes can be achieved.

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Learn More

If you would like to know more about leveraging data-driven actionable insights for your project portfolio, then feel free to contact me on itierney@pminsight.com.au.

 

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