Long Project Cycle Times Increase Costs

Motivated by client complaints of long project cycle times requires careful project service design considerations to reduce cost to serve. 5 min read

Project Delivery Cycle Time

Our previous blog, Economically Maximise Project Resources, identified 2-resources being able to deliver projects within 8-hours 99% of the time in a single-channel single-phase queuing system (M/M/1).

Project Cycle Time Simulation

The following simulation shows how different project service design considerations affect project cycle times. Project cycle time is measured as the time taken from when the client’s project enters and leaves the project organisation. That is, it reflects the sum of the time taken while waiting for the project to start and the time taken for the project to be delivered. Design considerations involve comparing what is better,

  • MM1 Design: Two queues with one channel.
  • MM2 Design: One queue with two channels.

For this simulation, the mean inter-arrival time for client project’s regardless of queuing service design is a 1.0-hour Poisson distribution, hence, using 2-resources results in a mean inter-arrival time of 0.5 hours.

Another way to consider this is the mean inter-arrival time of 1-hour corresponds to 40 project arrivals per week (40 hours/40 arrivals) for one resource. For two resources this doubles to 80 project arrivals per week representing a mean inter-arrival time of 0.5 hours (40 hours/80 arrivals).

The service time for each queuing service design remains the same with a 0.8-hour Exponential distribution, which represents an average resource utilisation of 80%, i.e. 20% of the time a resource is idle.

Resource Utilisation = (0.8 hour service time/1.0 hour arrival time)

Project Cycle Time, Throughput and Resource Utilisation Simulation Results

Cycle Time Results

  • MM1 Design: Average of 5.4 and Maximum of 25.1 hours.
  • MM2 Design: Average of 2.4 and Maximum of 11.2 hours.

Project Throughput

  • MM1 Design: 935 delivered projects with 13 waiting in the queue.
  • MM2 Design: 949 delivered projects with 0 waiting in the queue.

Resource Utilisation Results

  • MM1 Design: Average of 82% with an average service wait time of 4.5 hours.
  • MM2 Design: Average of 76% with an average service wait time of 1.6 hours.

Project Services Queuing Summary

The simulation results show that to improve project cycle time, resource utilisation and project throughput, an MM2 multiple-channel design outperforms a single-channel design. This is because, in a single-channel design, a resource may be sitting idle while the other channel has a long queue. Multiple channels, therefore, reduces cycle time but what is surprising is the magnitude of the effect, i.e. a 56% reduction.

This insight has important implications. While both designs deliver approximately the same number of projects far better client and staff experiences are achieved, employing a single-phase multiple-channel design. Most organisations appreciate long wait times hurt clients however fail to recognise it contributes to a growing economic concern which is a rising cost to serve, i.e. discounts and offers to placate frustrated clients and increased resource overtime to clear project backlogs.

Long project wait times exacerbate project organisation cost to serve.

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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

www.pminsight.com.au

 

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