Project Productivity: Gains Are Lost and Losses Accumulate

By Gregory Howell, P.E., & John Draper, P.E.

There is a law regarding variability in production management that is valid for all production systems in which subsequent tasks are dependent upon preceding ones. This law states that increasing the variability in workflow (arrivals and task cycle times) always degrades the performance of a production system1. That is to say, system performance is reduced by the combined effect of dependence and variation. This rule is ignored in current approaches to project management; understanding its implications in projects and creating predictable workflow is the way to start improving project performance.

Today, the focus of our measures and attention is productivity, which is commonly thought of as labor utilization. Pressure to increase local productivity reduces project performance. Here is why. Think of going into a bank to be served by a teller. You get instant service if a teller is idle. You get great service when there is idle capacity. Of course, with idle tellers, their productivity, in terms of customers served per shift, will be low. By contrast the teller will be very productive if there is always a line at the window. High teller utilization usually means long lines for customers because they arrive at random times and the time required to serve each customer varies. So from a customer’s perspective, high teller productivity reduces system performance.

But what if the arrival time of the customer and the processing time by the teller were more predictable? For example, what if we knew that a customer would arrive every 5 minutes and that every transaction would take 5 minutes? The performance of the banking system as experienced by both the teller and the customer would improve because the time required for each customer to be served would drop and the productivity of the teller would increase (another customer would arrive just as the transaction was being completed). By contrast, the performance of the banking system is reduced by the combined effect of variation and dependence. The impact, from the customer’s perspective, is worse when resources, tellers, carpenters or cranes are fully utilized.

So what does this phenomenon have to do with projects? In projects we push for high utilization in each activity. From a subcontractor’s perspective, this sounds great because their labor utilization will be high. So they organize their work to maximize their productivity rather than to release work to the next crew in batches sized and sequenced to maximize total project performance – or to meet the level of quality required. This unpredictable release of work causes a “knock on” effect. That is to say that if the work is released early, the downstream trade is already busy doing something else, so nothing is gained in terms of time. But if the work is late, then the downstream worker stands idle (or worse, goes to another job) and the project is delayed. The gains are lost and the losses accumulate.

Lean is about reducing waste and adding value. The waste of mis-coordination and of unpredictable flow in projects is not an explicit concern of traditional project management. Labor utilization, productivity in each task, is the primary
concern. The reality is that pushing to increase local utilization almost always makes workflow less predictable. By contrast, improving predictability of workflow both improves productivity and reduces project duration. Ask yourself, what does productivity mean on your job? Does it mean high labor utilization in each activity or total system performance? Maximizing project performance requires shifting attention from local productivity to workflow predictability. Measure that and invest in to improve it. You will see local performance and project performance improve.

Gregory A. Howell, P.E., M.S.C.E.
Gregory A. Howell is both a co-founder and managing director of the Lean Construction Institute (LCI), a non-profit organization devoted to production management research in project settings, and a principal of Lean Project Consulting (LPC).  Howell brings 40 years of construction industry project management, consulting and university-level teaching experience to both organizations. Prior to his appointment as the Associated General Contractors’ Visiting Professor in  Construction Management at the University of New Mexico in 1987, Howell worked as a project engineer on heavy construction and general building projects and headed his own construction-consulting firm for ten years.  At UNM, Howell was honored with the College of Engineering Teaching Excellence Award. In 1994 the Associated General Contractors of America recognized him as its Outstanding Educator.  He served as Eminent Scholar at the Del E. Webb School of Construction in 1996, and in 1997, Howell left UNM to co-found LCI. His consulting company, LPC, was established in 1999.

John Draper, P.E., M.S.C.E., Senior Coach
John has coached project teams throughout the US on their lean transformations. He is proficient in guiding and coaching project teams in their implementation of the Last Planner System® as well as with general process improvements and overall lean transformations. He also leads study-action teams, helps clients formulate and implement improvement strategies, and facilitates kaizen workshops and value-stream mapping exercises. John’s experience with Lean Project Consulting, Inc. has included a multi-year engagement with a nationwide specialty contractor assisting them in the start of their lean transformation. As a registered professional civil engineer, John has a strong technical background coupled with leadership, managerial, planning and coaching skills developed and honed during a 22-year career in the US Navy’s Civil Engineer Corps. With his 30 years of hands-on experience in facility engineering, management and construction, John is at home both in the construction trailer and the corporate office.
1 WJ Hopp and ML Spearman, Factory Physics, 2nd ed., Irwin McGraw-Hill, 2001
Special Report # 15
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