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Little’s Law in Product Development

Little's law in product development
Little’s law in product development

Little’s law states that there is a connection between the average number of occurrences in a system (P), the average throughput of the system (T), and the average time an occurrence spends in the system (L).

P=T*L

Average number of ongoing projects = average number of completed projects x average lead time for project execution

Lead times are important within product development. These can be calculated by using the formula above:

L=P/T

Average lead time = average number of ongoing projects / average number of completed projects

When we use Little’s Law in product development, we usually count the project lead times in number of years.

Little’s Law and Projects

If you currently have ten ongoing projects and completing five projects per year, the average lead time is two years.

L = P/T = 10/5 = 2 years

If you want to cut your lead times in half then you can cut the number of ongoing projects. In the above example, the number of projects would be cut to five.

L = P/T = 5/5 = 1 year

By putting a limit on the amount of projects it’s possible to have more control over the average lead times.

Limiting the amount of projects is possible in product development where the projects are investments in new products that will allow the company to grow. If the projects are delivery projects that are begun in order to adapt a client’s product then this degree of freedom might not always exist. In these cases, it is necessary to increase capacity by hiring consultants or limiting the number of ongoing projects the organization works on a weekly basis.

But maybe it’s possible to increase throughput by increasing the efficiency of the operation? In order to find if it’s possible you can make a rough estimation by calculating the theoretical throughput.

Add the currently available resources’ man hours in a year (be sure to remove time needed for other things beside projects, such as training, illness, etc.) and divide it by the average project lead time (make sure it’s effective time and not calendar or waiting time).

A large difference between the theoretical and the actual value of the throughput will show if there is room to increase efficiency. However, be careful when reaching conclusions. The allocated time for a project usually heavily diverges from the actual time it takes to complete it according to classic project planning methods.

Little’s Law in Product Development

Since a product development department does more things than work in projects, it’s necessary to find solutions so that work can be queued and begun according to Little’s Law in product development. All incoming work must be able to be to be queued and given access to the system which has enough capacity to handle it. In Parmatur Pulse, we use differentiate between projects and assignments and have queuing systems for both types.

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