Using Monte Carlo simulations to predict your project delivery date is the ultimate game changer.

But what if the projected dates fall short of expectations?

What if meeting deadlines becomes a concern?

How can you influence these timelines without overwhelming your teams?

Today, I have some valuable advice to share with you that can address these challenges.

Without further ado, let’s dive right in.

How to Forecast Your Project Delivery Dates

Let’s start from the basics.

How does the whole thing work?

When determining the delivery date of your project, we use Monte Carlo simulations to come up with a range of commitments and the probabilities that come with each of them.

The simulation relies on a large number of random trials based on your historical performance data to predict your throughput for a future time frame.

Throughput is the number of items completed in a certain time period. It represents your historical data, and it accounts for all the variability in your system, including the effort time plus the waiting time in your workflow.

Monte Carlo Simulation by Nave | Example 1

Monte Carlo simulations use your historical throughput. In the Monte Carlo simulation, you define the start date and the number of items in the scope of your project, and the simulation will provide a range of possible outcomes and the probability that comes with each of them.

It will use the throughput of a random day in the past to simulate how many work items are likely to get done on any day in the future.

In this simulation above, on Mar 1st, this team had a throughput of 2 tasks. The simulation takes this number and assumes that this is how many work items will be completed on Jun 1st. Then, to project the probable throughput of Jun 2nd, it takes the throughput of another random day in the past, and so on.

The simulation is repeated tens of thousands of times before the results are presented in the form of a probability distribution with percentiles increasing from left to right.

Monte Carlo Simulation by Nave | Example 2

In this simulation, we set the scope to 44 tasks and stated that we want to start working on it on Jun 1st. The simulation tells us that there is an 85% probability of finishing this scope before Feb 7th. The further you go in time, the greater the certainty of completing the projected outcome.

Here’s How to Influence Your Project Delivery Dates

Now, what if you are not completely delighted by the delivery dates you’re seeing?

What if finishing the project in 10 months (with a reasonable level of confidence!) is kind of unacceptable?

What can you do to influence those dates?

We said that Monte Carlo uses your throughput to run the simulation, so what would the prediction look like if you’ve managed to improve that throughput?

This is where the scale factor in Monte Carlo comes into play.

Monte Carlo Simulation by Nave | Scale

A 0.5 scale will mean that you anticipate your daily throughput to be twice lower, 2.0 means twice as much as the typical throughput rate.

Monte Carlo Simulation by Nave | Example 3

In the example above, we want to see what would have happened if we improved our throughput by 20%, so we set the scale factor to 1.2. The simulation now tells us that if we have a scope of 44 tasks and we initiate our project on Jun 1st, there is an 85% chance of delivering before the end of December.

This looks way better, doesn’t it?

What if we actually managed to improve our throughput by 50%? We move the scale factor to 1.5 to see how our project delivery date changes.

Monte Carlo Simulation by Nave | Example 4

We now see that there is an 85% probability of finishing our project by Nov 20th.

Using the scale factor on the Monte Carlo charts will enable you to see how taking action to increase your delivery rate will result in a significant shift in the delivery date of your projects.

With that information in your hands, you can now decide on the next steps to move the needle in that direction.

3 Tips on How to Improve Your Team Performance

Let’s say that delivering your project by Nov 20th with 85% confidence is the goal you’d like to achieve. What this means is that you have to increase your throughput by 50% to make this work.

What are the most effective strategies to get there? Here is a handful of them:

Apply WIP Limits

There is no doubt about it, applying WIP limits is the ultimate game-changer.

In one fell swoop, this practice relieves overburden, eliminates multitasking, and prevents context switching.

Throughput goes up, and delivery times rapidly go down, which is one of the strongest motivational boosters.

What’s more, now that there is less of it at a time to handle, you’ll find that work is being done with more precision and delivered at a higher level of quality.

Introduce a Pull System

Introducing a Kanban pull system is a straightforward yet impactful way to manage workflow.

Teams simply pull in new tasks as they complete their current ones, staying focused on top priorities.

This method enhances productivity and communication, reducing waste and improving overall performance.

Elevate the Constraint

Elevating the constraint is one of the five focusing steps in the Theory of Constraints.

It states that you may need to invest extra capital if the low-effort improvements have been attempted but unsuccessful.

This could be spending on more staff or additional training, for example.

Whatever you choose, remember, that the ultimate goal is to increase your throughput.

Therefore, ensure you regularly review the trends over time to evaluate whether your improvement efforts are actually paying off.

Executive Dashboard by Nave | Image

Agile teams across the globe use the Executive Dashboard to track how their trends develop over time.

Here is your action item: When you forecast your project delivery date, make sure to use the scale factor to understand how improving your delivery rate will affect the end date of your project and the probability that comes with it.

Monte Carlo is there at your disposal to give you that real-time feedback. Go ahead and try it out, it’s free for 14 days, no CC required

Alright, my friend, I hope this has been helpful. Do me a favor and share this article with your colleagues. I strongly believe in these concepts, and it would mean the world to me if you spread the word.

I wish you a productive day ahead, and I’ll see you again next week, same time and place, for more managerial insights. Bye for now.

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