Original Post Date: Wednesday, September 3, 2008

Productivity refers to measures of output from production processes, per unit of input. The labor and materials that go into a project are the input, and the final delivered product represents the output.

Your estimated project budget determines the planned productivity, and decomposes to a planned productivity for each individual and each unit of material.  The dynamics of the Project Management Triangle tell us that for a fixed cost (input) and schedule, if I underestimate the scope (output), then I have planned for a lower than optimal productivity.  And Parkinson's Law law tells us that "work expands so as to fill the time available for its completion", so you will achieve that lower productivity.  If I overestimate the scope, then people will take shortcuts that induce errors and reduce quality resulting in rework - utimately increasing the cost and schedule (input) for a given scope (output) and achieving a lower than optimal productivity.  The best way to improve productivity is to improve estimating accuracy.  Estimating just the right amount of material and processing time to produce a product achieves the lowest input for the output.  Estimating exactly how much your people can do within a given schedule achieves the optimal output for a given input. 

To improve estimating accuracy people must become better estimators.  PRICE Systems is dedicated to providing project managers and estimators with models, benchmarks, and training so that they become more accurate estimators and improve organizational productivity.