3 - dannny walsh_23 tocpa_usa 21-22 march 2016

8/18/2019 3 - Dannny Walsh_23 TOCPA_USA 21-22 March 2016

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23rd International Conference of the

TOC Practitioners Alliance - TOCPA

www.tocpractice.com 21-22 March, 201, Tennessee, !"A

Critical Chain Project Management:

Assessing the Efficacy & Feasibility

Daniel P. Walsh, Exepron, USA

March, 2016


2/27

After a successful career in leading large organizations including Director of Operations for a five billion

dollar enterprise and CEO for a $750 million company, in !!" Daniel #als founded %ector &trategies, a

'eory of Constraints, ('OC) focused company* +e is te cofounder of E-epron. a /st Century proect

management, &aa& cloud based, real time collaborative, critical cain soft1are solution*

+e is a recognized e-pert in developing and implementing po1erful strategies tat 2uic3ly and

dramatically improve mar3et presence and profitability* +e as 1or3ed 1it companies in te

sipbuilding, parmaceutical, construction, engineering4 soft1are, manufacturing, aerospace defense

industries* 6umerous ortune 00 companies are among is clients, including 'e-tron, 89:, 9oeing,

;oc3eed and te


3/27

700 Developers on E-epron

&tate of


4/27

'raditional ?: :etods

Only >@ percent of proects finis on time and 1itin

budget, according to ne1 researc by ?roect

:anagement 8nstitute (?:8)*

Organizations continue 1asting $0! million for

every $ billion invested in proects and programs,B

according to :ar3 A* ;angley, president and CEO of

te ?roect :anagement 8nstitute*

#itin te last year, onl# half of pro$ects finished on

time and 55 percent finised 1itin teir initialbudgets, according to te /,@00 proect management

leaders surveyed*

?:8 =eport /0Annual &urvey of ,00 accredited member respondents


5/27

'raditional ?: ?erformance

0,"! proects

/00 Companies

>0 Countries

50 failure =ate

Price %aterho&se Coopers "&r'e#

?rice1aterouseCoopers, 1ic revie1ed 0,"0 proects from /00 companies in >0 countries

5


6/27

:onumental 9udget 9usters

% Over Budget

Years Late

Over Budget US$

ttpsFFpodio*comFsiteFbudgetbustersGm3tHto3I>=3::J##f!1s=ols2vKLKMon+pfsM"7ugtfOvr?


7/27

CC?: A1areness is +ig

?:8 =eport /0

,00 member respondents to te annual survey*

7


8/27

Cost %ersus 'rougput

Cloud

ocus on ig localefficiencies, e*g* manage

variances

ocus on

meeting customer

scedules

Control

Costs

:a-imize

'rougput

&uccessfully

run ourbusiness Conflict

In order to …

In order to …

In order to …

… we must …

… we must …

… we must …

… we must …

… because :

… because :

It is NOT possible to maximize throughputperformance by achieving high localperformance everywhere

The best way to lower globalcost is to lower local cost

@Source: Eliyahu Goldratt


9/27

Evaluate according to te

local impact

6ot evaluate according to

local impact

Control

Costs

?rotect

'rougput

:anage#ell Conflict

In order to …

In order to …

In order to …

… we must …

… we must …

… we must …

… we must …

… because :

… because :

;ocal 8mpact is 6O' e2ual to te

impact on te organization

;ocal 8mpact 8& e2ual to te

impact on te organization


Cloud

!Source: Eliyahu Goldratt


10/27

'o #at to Cange G

Control

Costs

?rotect

'rougput

:anage#ell

In order to …

In order to …

In order to …

… we must …

… we must …

… because :

… because :

+ave one set of

metrics to ma3e

global and local

decisions

#e are using 'rougput measurements to

ma3e operational and financial decisions


Cloud

0

#e are using 'rougput measurements to



11/27

'e ?roblem

The 3 Pillars of Project Management Solution

• &cedule Q 'rougput #orld metrics• &cope Q 'rougput #orld metrics

• Cost Q 'rougput #orld metrics

ost creates a !ilemma for PM


12/27

'e ?roblem

• CC?: 1ill (conceptually) positively impact cost by

significantly improving management of &cedule and&cope R :aybeS

• CC?: metodology is a 'rougput focused solution

and 1as not intended to manage Cost #orld :etrics• Attempts at applying 'rougput tecni2ues to

reconcile Cost #orld metodology 1it 'rougput

metodology in CC?: ave failed

/

"#Y


13/27

'e ?roblem

onventional &&roach

'e Cost Duration allocated at te tas3 level consists of

• 'e 'ouc 'ime 1or3 ours to complete te tas3

• Embedded ?rotection against %ariability

• An industry recognized efficiency factor

• 'otal 'ime 'as3 Duration 'otal Cost

>

PM &&roach

'e Cost Duration allocated at te tas3 level consists of

• 'e 'ouc 'ime Duration to complete te 'as3

• E-tract &afety from tas3s

O'(L)T


14/27

CC?: ?arado-

• :any professional organizations, companies andindividuals believe CC?: is a alf ba3ed solution

• :any companies 1ill not even consider CC?:

• Conflict 1it Cost :etrics during 8mplementation

• 9loc3s support from many sta3eolders

• Jeopardizes &ustainability &ource of :any failedimplementations

)nertia * Since PM is Through&ut focused then

all metrics must +e Through&ut metrics

"#Y


15/27

'e &corecard

• CEO, 9oard, CO, Comptroller, 'reasurer, Auditors4

Contract Administrators, inancial Analysts andCustomers using te TOfficialU metrics to evaluate

proect performance

• Even if &cedule &cope is on trac3, may be inconflict 1it inancial Oversigt and Compliance

re2uirements

• CC?: not providing Critical Cost 8nformation neededby Decision :a3ers

5


16/27

Earned %alue :anagement

"

Delay

'imeTime

C o s t

(&d)et at Completion

Toda#s*ate

+arned

al&e

Planned

al&e

Act&al

Cost

Cost

%ariance

&cedule

%arianceost "orld

?ast uture


17/27

=ole of :etrics

Different 6eeds Q 6eed Different :etrics7

Through&ut "orld

Source, ---./0e&ron.com


18/27

=ole of :etrics

+ave one set of

metrics to ma3eglobal and local

decisions

• Assumption &ince CC?: is a 'rougput &olution

ten all metrics must be 'rougput metrics

• Assumption must be callenged

@


19/27

Einstein on &implicityEveryting sould be made assimple as possible, but not simpler*B

Oc3amVs =azor

#illiam of Oc3am (c* /@7Q>7), an Englis ranciscan friar,

scolastic pilosoper and teologian*

Among competing ypoteses tat predict e2ually 1ell, te

one 1it te fe1est assumptions sould be selected*B

&8:?;8C8'

!


20/27

'e &olution

• :ust +ave 'rougput :etrics• :ust ave Cost :etrics

• :ust be 8ntegrated into te &olution

• or te first time, CC?: solution 1ill ave

interactive Operational and ?erformance metrics

providing +olistic vie1 of ?ortfolio of ?roects

/0


21/27

:obius Effect

/

A

AA

ost "orld and Through&ut "orld

inside the the same PM solution


22/27

'o #at to Cange G

Control

Costs

?rotect

'rougput

:anage

#ell

In order to …

In order to …

In order to …

… we must …

… we must …

… because :

… because :

+ave one set of

metrics to ma3e

global and local

decisions

#e are using 'rougput and Cost measurements to



Cloud

//

#e are using 'rougput and Cost measurements to



23/27

&olution

/>

• =ender unto Caesar te tings tat are Caesar R , instead of

perpetuating and callenging te universally accepted precepts ofcost accounting, rater embrace tem and incorporate into CC?:

tin3ing*

• 'e CC?: tools must develop tis capability, reconciling and

mapping all of te costs and earned value directly to a specific tas3

in te proectUs CC?: scedule* 'is becomes an integral part of

tePlanning phase – Scheduling phase – Execution phase.

Source: CCP: !ssessing the E""icacy and #easibility$ %aniel P. &alsh' www.exepron.com


24/27

Collaborative 9usiness

&olution

/

• CC?: must not be limited to ust ?lanning, &ceduling

and E-ecution of te 1or3 content

• :ust e-pand and embrace te inancials Q Cost and=evenue

• Offer value to all of te &ta3eolders

• CC?: must become a ()(!* 9usiness &olution• CC?: as te uni2ue potential to permeate

trougout te entire Enterprise


25/27

:etcalfUs la1

6 e t 1 o r 3 < s e f u l n e s s

6et1or3 6odes

The value of a network is proportional to the

square of the number of users of the system (n2)

/5

+eal (ime In"ormation

!cross the Enterprise


26/27

&olution

/"

The cost and earned value are calculated in the ost -orld and

ma&s to the schedule that is calculated in the Through&ut -orld

• #e no1 can no1 mange te tree pillars* 'e cost data can bedirectly mapped bac3 to te CC?: tas3* 8t migt be elpfulvisualizing t1o parallel re2uirements tat 1ill ave to beupdated in e-ecution*

• #e 1ill update te cost, earned value, (revenue) and update te

time remaining in te tas3* 'e additional effort is very minimal

and te benefits enormous*

So1 -hat shall -e call this addition to the PM

a&&roach Let2s call it PM Pro.


27/27

&olution

Thro&)hp&t

Metrics

Thro&)hp&t

Metrics

CostMetrics

PMPO4

/7

3 - dannny walsh_23 tocpa_usa 21-22 march 2016

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