How to Improve Operational Efficiency in Project-Based Organizations

What Is Operational Efficiency and Why Improve It?

Operational efficiency is an indicator of the effectiveness and efficiency of a company’s activity expressed as the ratio of the input required for it (e.g., human and material resources) and the output produced as a result of this activity. Improving operational efficiency means delivering more output with the same or less input. In particular, this involves more reasonable utilization of a company’s resources, eliminating inefficiencies and redundant processes, increasing employees’ productivity, leveraging technology and automation, etc.  

As a result of improving operational efficiency, business organizations can gain the following benefits:

• Cost optimization. 

More intelligent use of human and material resources; preventing, timely detecting, and solving problems as well as automating processes make it possible to reduce spending while maximizing business value.   

• Increasing profitability and ensuring business growth. 

Organizations with a high level of operational efficiency can complete more orders with the same or fewer/less resources. Combined with cost optimization, this can increase companies’ profitability and ensure their business growth.

• Ensuring customer satisfaction.

Automation and optimization of processes contribute to increasing employees’ productivity and the chances for delivering high-quality output that customers will appreciate. 

• Increasing competitiveness.

Finally, all of the previously mentioned benefits help companies increase their competitiveness in the market. 

Now, let’s review the recommendations that will make it possible to improve operational efficiency in project-based organizations.

Tips on Improving Operational Efficiency in Project-Based Organizations

Most often, project-based organizations run multiple projects in parallel with a limited number of resources. Therefore, they need to streamline the work on these projects as much as possible as well as utilize these shared resources most intelligently. You can reach these objectives by implementing the following measures. 

Automate processes where possible 

Any routine and repeatable actions should be automated in companies that strive to increase their operational efficiency. This not only refers to manufacturing but also to project-related activities like compiling reports, gathering information, inputting repetitive data, etc. – everything that can be automated should be. Automatic data analysis should be mentioned separately – it’s critically important for making data-driven decisions, which in turn is an important prerequisite for a seamless workflow. 

Here are the other benefits of automating processes: 

• It increases the quality of output thanks to reducing the number of human errors;
• It facilitates faster work delivery;
• It contributes to more intelligent use of employees’ time;
• It allows team members to fulfill their potential by completing more sophisticated tasks, which in turn will keep them engaged. 

Timely eliminate bottlenecks and fix issues   

Bottlenecks are the team members who cannot cope with their work and, as a result, hamper the whole workflow. In a multi-project environment, timely detection and elimination of bottlenecks as well as fixing issues gain particular importance. As a rule, the projects in such an environment have dependencies on each other, so an unaddressed bottleneck or issue in one project will inevitably affect other projects leading to reduced productivity, delays, and/or cost overrun.    

Promote collaboration between the team members/teams 

Effective collaboration between team members or teams is essential for productivity and efficiency; it reduces silos, conflicting priorities, misunderstandings, rework, and so on. In addition to the above-mentioned benefits, effective collaboration contributes to team members’ creativity and more effective problem-solving, helps employees find ways to improve processes, etc. Therefore, organizations that facilitate collaboration and encourage employees to work towards achieving common goals can significantly increase their operational efficiency and productivity.

Project-based companies that have globally distributed teams and resources should take particular efforts to ensure effective collaboration between people.