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Hannah Taylor

Project Lead Time: How to Optimize for Better Outcomes

If you manage projects, then you know that project lead time is a factor that you always have to consider. Let's dive into how you can optimize lead times to get the best outcomes.

To establish yourself as a leader in your business, you need to consistently deliver great outcomes. And great outcomes can encompass all sorts - from managing highly-profitable projects and keeping clients happy, to consistently meeting KPIs and working to improve processes.

Whatever "great" looks like to you and your team, there is one factor that will always impact your projects’ outcomes: project lead time.

But how do you define lead time in the context of project management, and how can you optimize it to deliver better outcomes? We’ll explore what lead time means and more in this article.

What is lead time in project management?

Whether you’re a project manager, team leader, or designer, you’ll have dealt with lead time in your work — even if you didn’t know that’s what it was called.

In project management, lead time is the time between a project’s beginning, when a need is identified, and end, when the product or service is delivered. Lead time is also used to measure how long individual tasks take to complete. In this article, we’ll refer to the former as project lead time and the latter as task lead time. We never said that project management was straightforward!

There are many different ways to measure timings in project management, and the similarities between some measurements can cause confusion. We’ve put together a quick glossary to help you make sense of terms you’re likely to come across:

Project lead time refers to the time between when your team becomes aware of a need and the delivery date. In practice, this could be the time between a client sharing a brief and the final product landing in their hands — or their inbox. Project lead time covers all processes, tasks, delays, and wait times that make up the project.

Task lead time is similar to project lead time but refers to the time spent on an individual task. Likewise, it covers all active work and waiting time associated with the task.

Cumulative lead time is the longest possible time a project will take to complete.

Lag time is the downtime between tasks. Sometimes, lag is factored into project planning, but it is more often caused by an unexpected delay.

Cycle time measures the time a single step or particular task takes to complete from the moment you begin working on it. Unlike task lead time, cycle time only counts the active time spent working on a task and excludes downtime caused by delays, approval processes, or a lack of resources.

Does lead time impact costs and project profitability?

While lead time itself is neither a negative nor a positive, it can have a significant impact on project profitability and costs.

Project profitability is determined by the revenue that’s generated after the cost of completing the project is deducted from the budget. When project costs are lower than the budget, the project is profitable; comparatively, unprofitable projects use more resources than has been costed for, often due to longer-than-expected lead times.

Delays, scope creep, mistakes caused by human errors, and low productivity can all increase a project’s lead time, with long, unplanned for lead times leading projects to burn. 

Understanding project and task lead time can help team leaders plan projects more accurately, allowing for improved project cost management and better managed client expectations, timelines, and team resourcing.

Let’s look at some of the other ways average lead time can impact profitability:

  • Underutilization: A task can be delayed for many reasons, from missing briefs to the task prior requiring extra time to complete. When a worker is waiting to begin a task they have been resourced for, this counts towards the task and project total lead time. This unplanned downtime is a hidden cost to the business, as the worker is underutilized.
  • Client satisfaction: Frequent delays to project completion can impact business-customer relationships. Having a good understanding of your read times can help you manage client expectations in the event of a delay, supporting client satisfaction.
  • Cash flow: When client payments are tied to project milestones, longer lead times triggered by delays can significantly slow down cash flow.

What are examples of lead time in project management?

Project management isn’t limited to one industry, so to truly understand how lead time is used in project management, we need to look at examples across several sectors.

  • IT & software development: Lets look at developing new product features as an example of lead time in IT and software development. The average lead time can range from a day to several months, beginning when the need for a new feature is identified and ending when it has been deployed to end-users, including designing, developing, processing time, and testing.
  • Consulting: Consulting covers a wide range of project types, but using the example of strategy implementation, the entire lead time would encompass everything between the initial client meeting and implementation.
  • Agencies: Creative agencies cover a wide range of disciplines, including PR, design, marketing, and more. Agency lead times vary greatly, but typically begin with a client briefing and end when the deliverables are handed over to the client. Let’s look at one example in more detail:

Imagine a project manager at a digital marketing agency receives a brief to plan and execute a new PPC campaign. As soon as they accept the brief, the lead time clock starts ticking, and won’t stop until the project is complete. They estimate it will take 21 days based on similar projects they’ve completed. Remember, each step has its own lead time.

The project set-up and planning stages, which include briefing, creating cost estimates, and completing research that will inform the campaign creation process, go off without a hitch. In fact, they take one day less than anticipated, reducing the lead time by a day. Great news!

However, the team runs into trouble during the campaign creation stage. The project manager estimated the client would need two days to provide feedback on the campaign plan, but they have taken five days to complete this step. This delay pushes the project back by three days, and impacts resourcing as the agency scrambles to adjust its resourcing.

Next comes technical setup, where they realize they underestimated the time needed to test the campaign. Unexpected errors and technical issues add five days to the project’s lead time. This impacts resource allocation, the client’s timeline for launch, and the agency’s bottom line, with the five extra days costing the business an additional $5,000 in resourcing, which was not planned for in the initial lead time calculation.

Finally, the campaign is launched. The project's lead time increased by seven working days, negatively impacting the project's profitability due to unexpected costs.

How to calculate lead time

Before the thought of having to do math makes your brain switch off, we’re here to help you. Luckily, lead time can be calculated using very simple lead time formulas. 

This is most simple lead time formula that service businesses such as agencies and consultancies can use:

Yes, it’s that simple! By calculating the lead time for previous projects and individual tasks, you can plan and cost your projects more accurately. 

So, how can you use these metrics to inform your project planning and deliver better outcomes? Let’s break it down.

  • Step 1: Getting from A to B. Before you can figure out how long it’ll take you to complete a project, you must determine what steps you need to complete throughout the project.
  • Step 2: Calculate lead time per task. Once you have your list of steps, consider how much time will be needed to complete each task. You can look at previous project data collected by your resource management software to accurately calculate the average lead time for individual tasks.
  • Step 3: Factor in time for feedback and approvals. Sharing plans and documents with clients for feedback, awaiting approvals, and making amends all take time, and need to be factored into lead time. Accurately planning time for feedback, approvals, and amends will allow you to schedule your team more effectively.
  • Step 4: Consider third parties and external factors. If you need approval or support from a third party, such as a media owner like Meta, an outsourced contractor, or a production company, you must factor in their internal lead times. Forgetting to do so may come back to bite you if their lead times are longer than anticipated! Any agreed upon lead times should be outlined in your contract.
  • Step 5: Add everything together. Use a project planner to lay out your tasks, their dependencies, and all required approvals, beginning with your project start date. Once everything is laid out, you can determine the project end date. To calculate the project’s total lead time, count the number of days between the start date and the requested delivery date.

How resource management can help optimize lead time

Did you know intelligent resource management can help you create a strong resourcing strategy and optimize your lead time? Let’s look at how.

Create project plans with accurate lead times

To streamline the project delivery process and decrease lead time, you must understand how long individual tasks and processes take. We suggest using a resource management tool to track how long your team takes to complete tasks. This valuable data can be used to inform project planning, helping you create timelines with more accurate lead times.

Plan dependencies more accurately

By mapping out your entire project using a project planner, you can understand how each task impacts the rest of the project. For example, end-start dependent tasks can’t begin until those preceding them are completed. However, other tasks can be completed in parallel.

It’s important to understand these dependencies to minimize idle time between tasks and ensure resources are available when they’re needed, reducing bottlenecks and lead time.

Identify and remove efficiencies with real-time data

Real-time data monitoring and reporting can help you identify potential delays and their impact on dependent tasks — before they snowball into larger issues. This insight will allow you to proactively adjust resource allocation, reschedule tasks, manage clients’ expectations, or even realign your project strategy to avoid extended lead times.

Plus, you can identify potential bottlenecks and anticipate project burn ahead of time. This will help you plan better for the future, identify where processes can be improved, and make better use of underutilized resources, all helping to reduce production lead times.

3 tips for optimizing project lead time

Optimizing lead time shouldn’t be difficult. Here are three simple improvements you can make today to optimize your project lead times.

  1. Intelligently match resources to projects 

You know what they say: fail to prepare, prepare to fail. Planning is the most important part of, well, everything when it comes to project management, and by gathering your intel on average task lead in advance, you can make more informed resourcing decisions.

To improve your lead times and, therefore, improve your cost efficiency, you need to match your resources to your projects intelligently. That means understanding which team members are best suited to specific tasks and ensuring the employees you need are available to work on your project. Remember, if a delay occurs and work falls out of their dairies, they may be resourced to other projects.

  1. Streamline processes (and eliminate unnecessary ones)

The best way to shorten lead time is to cut down on the steps that get you from A to B. Trimming the fat can include streamlining internal approval processes, automating processes wherever possible, and investing in new technologies.

Yet, streamlining your processes is only part of the lead time reduction puzzle. Faster computers and clever technology mean nothing if the people using them aren’t up to speed. Upskilling your team can help them work more efficiently and become more proactive when identifying and rectifying issues that could cause delays.

  1. Manage client expectations around lead times

If you want to improve your client management skills, you'll want to get better at managing client expectations around lead times.

This means explaining the importance of quick feedback loops ahead of project commencement and keeping clients up-to-date with progress.

It’s also important to ensure your clients are available to provide feedback in a timely manner. By sharing deadlines for when you’ll need their feedback or approval, you can mitigate the risk of delays. There’s nothing worse than sending a file for urgent approval only to discover your contact is OOO!

Optimizing lead time: wrap-up

By better understanding how long your team spends on tasks, optimizing your project planning process, and anticipating issues before they occur, you can maintain more accurate project timelines, create more accurate lead time calculations, and deliver better client outcomes.

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