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Faculty Insights

Managing the Project Pipeline: Part 2

By Wisconsin School of Business

November 27, 2013

Why do firms see delays in getting projects completed even when they have high-performing project managers and project management offices? Why do we see projects completed on time when there are few projects in the organization’s pipeline, but as we add more projects to the pipeline we see slowdowns? Why do those slowdowns become enormous as the pipeline fills and reaches maximum capacity? 

In part one of this article, those exact questions were examined and understood using the research performed by John Little back in the 1960s. Little’s Law and the field of queuing theory helps to explain the delays in any system that has a constrained pipeline, whether the pipeline is related to projects, the amount of work in progress in a manufacturing facility, the flow of traffic on a beltline, or the wait we experience at the grocery store checkout. Let’s explore how queue theory can help the manager with project pipeline delays.

As capacity utilization reaches 100% in a pipeline, delays become enormous. Three variables contribute greatly to capacity utilization; once we understand these variables, we can build pipeline solutions that lessen their effects. Pipeline capacity utilization (we’ll call it C) is made up of three variables: 

  • A: arrival rates of new projects that enter the pipeline
  • S: service and completion rates for projects that are in the pipeline
  • N: the number or amount of resources (mostly staff) available to work on projects in the pipeline  

C = A/(S x N)

From this equation, we can see that lowering arrival rates helps, and increasing service rates or resources can also help. Here’s a quick list of solutions the firm can implement to help manage the pipeline and reduce delays:

  • Develop a project selection process that only allows projects important to the organization into the pipeline. Choosing projects that match your organizational goals is as strategic as developing the firm’s strategic plan and objectives. 
  • Look at your list of active projects and remove those from the pipeline that are more tactical or operational. These “keeping the lights on” activities are important, but should be managed as a separate pool of projects.
  • Require toll-gate reviews of projects in the pipeline every eight weeks or less, and when a review identifies a project that is no longer valuable to the organization, remove it from the pipeline and reallocate the vital staff resources to other projects.
  • Continuously improve and standardize the project management process. The firm’s set of project tools, templates, and methods should be reviewed every time a project is completed and improved for future projects. Large projects shouldn’t use the same tools and techniques as small projects; highly uncertain or unknown projects shouldn’t use the same tools as well-understood and scoped projects.
  • Raise the tide of project management awareness in the organization. Not everyone in the firm needs to be a project manager, but because project activity is typically performed by cross-functional teams, increasing the competency of project participants (as well as the leaders choosing projects) will help increase service rates.
  • Each period, calculate the total number of person hours available for project work in the firm. Compare this to the total number of estimated hours for the projects in the pipeline. As the staff resources available gets closer to the estimate of what’s needed, consider adding staff resources or outsourcing activities to balance the need.

Just like any complex problem, there are many more variables that affect pipeline performance beyond the three listed. However, just like any complex problem, focusing on the variable that contributes the most to performance can create cascading positive effects. When your project pipeline performs well, the entire organization reaps the benefits.