What Business Leaders Must Do in Multi-Project Environments

Before continuing to write about the specifics of managing software projects, I want to double back around to explain the most valuable things that must be done in any company attempting to run multiple projects at the same time. Below are a few examples of such companies and the difficulties that may be experienced.

  • A US-based manufacturing company has over 150 product development and manufacturing improvement projects, all bottlenecked in the tooling department.
  • A global consumer goods company has a three-year backlog of IT projects needed to improve the business. Their 300+ army of IT people can only focus on the biggest projects, and even these are running late.
  • Product development teams within a large global manufacturer are frustrated by their inability to manage all the projects and deliver to the market in less than 12-24 months, without any reliable prediction of when a specific project will be done.

These situations cover a diverse set of operations and products, but they all have one thing in common. All are attempting to execute multiple projects across a finite set of people and resources. If you listened to each leader’s explanations of their issues and problems, you would think they all worked for the same company:

  • We are missing market opportunities and disappointing customers.
  • Our lead times and ability to commit to delivery dates must improve.
  • Demand is exceeding our capacity.
  • Priorities are constantly changing.
  • We are overtaxing the same highly-skilled people (and in the case of business improvements, the same key leaders and process experts).
  • We need more time, people, and money.
  • We need more technology, more sophisticated software and methods.

The Solution: Prioritize and Gate

In manufacturing, we often faced a similar set of problems. We solved them by sequencing the orders based on a priority and then gating the orders into the facility no faster than a key resource or critical process could keep up. The resulting increase in a facility’s throughput was dramatic and almost overnight. In many cases, it freed up capacity to go after more business.

This solution and its effect are similar for projects, and this is where top leadership plays a most valuable role. To get the most project work done with a finite group of people and resources, leaders must:

  1. Assign a single sequential priority to every effort.
  2. Use this sequential priority to control the flow of work.

Why Leaders Resist This

Everyone knows that if they have a clear priority of work and we do not overrun capacities, things are much easier. So why are these steps often avoided by leaders? Or worse yet, why do leaders assign broad priorities like high, critical, and super critical and then push for everything? I believe the answer lies in what it means personally to leaders who are vested in getting results.

Whenever there’s a sequential priority assigned, one project must be second to another. If a finite group of people and resources are at capacity and working in priority order, the second project must, by definition, wait. And waiting becomes very difficult in a larger organization with so many leaders required to show results.

When was the last time you witnessed the VP of sales tell her counterpart in manufacturing that the sales’ project(s) could wait behind manufacturing’s? When have you ever heard a product line manager offer their engineers to another line manager? Pressed with multiple business threats, is it easy for any leadership team to choose? Any leader advancing their division (and, by extension, their career) depends on getting their projects completed.

Unify Around a Common Cause – Profit

Breaking this personal conflict requires going back to a common goal shared by all leaders. The goal of any for-profit organization is to make more money now and in the future. Making more money in the future is typically the driver behind all the process improvement, marketing, sales, and product development projects we compel ourselves to do.

To create a level playing field for all projects, the leadership team must first understand and agree on how each project will affect profitability. Once this is agreed, other less-tangible concerns can be added to the final decision on priority.

In the example company where over 150 projects were bottlenecked in tooling, the projects bubbled up from every division and were based on good ideas. And without a formal ranking mechanism, they all received a similar priority. However, successful completion of any project depended on how well an individual leader could advocate for their project and expedite things through tooling.

Facing the need to resolve the tooling capacity problem, the leadership team analyzed the profit impact of each project. While all the projects were based on good product ideas and great local process improvements, they found only 7 projects with the potential to significantly change the bottom line. The decision among the leaders was unanimous: drop the other projects. Suddenly there were no capacity issues, and project priorities for the company were crystal clear. This process of assessing projects became a mandatory part of evaluating all opportunities and changes.

Yes, But What if Capacity Is Still an Issue

Not all companies are lucky enough resolve their capacity issues after doing a profitability assessment and setting priorities. For these companies, prioritizing is not enough. They must also start projects only as fast as a key resource or critical process can finish work.

Starting more projects than there is capacity artificially increases task queues. Piles of tasks hide where the focus should be and typically cause an overallocation of resources or expediting (a vicious form of task switching). The results are decreased throughput on all projects. All leaders must realize that postponing the start of a lower-priority project will actually increase the speed of being able to get it done. It seems counter-intuitive, but the laws of logistical processes are inescapable. You can make them work for or against you.

Tools & Resources

Determining Impact to Profit

The best method I have found for determining the impact to profit is based on Throughput Accounting, developed by Dr Eli Goldratt. His approach is based on a stricter form of the managerial accounting principles of variable costing and scarce resources.

I find Eli’s approach much easier to use and understand by everyone in the company. His approach also avoids the distortions common with cost accounting and external GAAP reporting methods. The best book I have read on this subject is an older publication Theory of Constraints and Its Implications for Management Accounting by Noreen, Smith, and MacKey.

If you really want to dive deep, another resource is The Measurement Nightmare by Debra Smith. Debra does an excellent job of explaining how throughput accounting can easily co-exist and be reconciled with required GAAP reporting.

Controlling the Flow of Work

Gating work and how teams should operate is a fundamental part of the Theory of Constraints for both manufacturing and critical chain project management. Kathy Austin and Gerry Kendall have just published a new book: Advanced Multi-Project Management. I wish I had this book 10 years ago. It is a wonderful detailed blueprint including a step-by-step for how leadership needs to drive the change. Chapter 7 is a great overview on gating.

I am sure there are other good resources. So please let me know which ones you have found to be the most helpful.
 

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