Maximizing Throughput or Controlling Costs

In the previous section, the dichotomy of managing today's deliveries as well as setting up for the future was discussed. Another pair of necessities for organizational effectiveness is found in the need to maximize throughput of the system and, at the same time, control costs. Many managers look upon these as conflicting requirements, as pressures to keep expenses down have the potential to threaten the ability to deliver more completed projects quickly and with quality.

This sense of conflict comes from confusing organizational effectiveness with efficiency, and even worse, with resource utilization.2 Assuring that everyone is fully utilized all the time may seem like a reasonable strategy for getting the most out of the individual resources, and, by extrapolation, out of the organization. On the surface, this feels like it makes sense. However, if a system wants to maximize its throughput, keeping resources fully loaded across the board actually hamper that objective for several reasons.

The first reason to avoid striving for full resource utilization is that if everyone is fully loaded, there is no slack to deal with the inevitable run-ins with Murphy's Law. Given the uncertain nature of projects as unique endeavors, any negative deviation from planned expectations will require capacity to recover. If that protective capacity is not available, problems in a project will result in either cascading problems that will threaten the promises of other projects, or burnout of resources, or both. In either case, future throughput is threatened.

Similarly, without protective capacity set aside, there is no ability to capitalize on new opportunities that arise. Potential throughput is lost.

Project Management Made Easy

Project Management Made Easy

What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.

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