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Critical Chain in Engineering Projects IPMA, Eindhoven, Feb 16, 2012
Christoph Lenhartz COO, VISTEM GmbH & Co. KG Member of the Board, TOCICO
Christoph Lenhartz
• Co-Founder & COO VISTEM GmbH & Co. KG • Diplom-Kaufmann, MBA (USA) • TOCICO certified, Certified Consultant (bdvb) • Constultant, author and speaker on
– Strategy – Organisational development and growth – Theory of Constraints – Critical Chain Project Management
• Experience – Project manager of development and (post merger) integration projects
in IT, logistics, automotive, manufacturing – Head of logistics and planning automotive – Management positions in consulting
• Member of the Board, TOCICO and Eliyahu M. Goldratt Fundation
2 Projektcontrolling in der Praxis
Tonight’s Topics
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1 A Look at Engineering Projects and their Problems
2 Basic Solution Elements
3 How Von Ardenne Achieved Lasting and Significant Results
Some Characteristics of Engineering Projects
• Engineer-to-order (ETO) projects • New, customized, often large, and highly complex “products” • Usually the customer is not located next door • Often requiring constant interaction with the customer
• Extremely high uncertainty • Development, projects and service compete for specialized
resources
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Why Are Engineering Projects Special?
• Due dates are never met • There are too many changes • Resources are not available when needed • Specifications are missing • Priorities change (again and again) • Suppliers don’t deliver on time • Tasks overrun their budgets • There is a lot of rework
Although the projects are different… …the problems are the same everywhere!
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Multi-Project Management
• Resources work in different projects at a time • The company is a matrix organization:
– Resource managers (line managers) – Project managers
• Employees report to their resource manager, – not to the project manager
• The project manager is responsible for delivering a project, – but he has nearly no real authority/power
• The resource manager “serves” several projects, which compete for resources. – Prioritization is not transparent.
A Vicious Cycle
Resources are scarce
WiP (Work in Process) is high
There is always the possibility to do more projects
Projects compete for resources.
Projects fight for resources.
The usual result is: • Resources are spread
across projects • Bad multitasking
Tasks und Projects take
much longer than necessary
Task for Project A SE
TUP Task for
Project B SETU
P Task for Project C SE
TUP
Task for Project A SE
TUP Task
for Project B SE
TUP Task
for Project C SE
TUP Task
for Project A SE
TUP Task
for Project B SE
TUP Task
for Project C SE
TUP Task
for Project A SE
TUP Task
for Project B SE
TUP Task
for Project C SE
TUP
7 Critical Chain
A Vicious Cycle
Resources are scarce
WiP (Work in Process) is high
There is always the possibility to do more projects
The usual result is: • Resources are spread
over projects • Bad multitasking
Other effects: • De-synchronisation • Bad multitasking with
management and support functions
Projects take much longer than necessary
8 Critical Chain
A Vicious Cycle
Resources are scarce
WiP (Work in Process) is high
There is always the possibility to do more projects
Long lead times
Delays
Uncertainty and Murphy
Start ASAP
WiP (Work in Process)
INCREASES
Lead time INCREASES
Delays INCREASE
Start ASAP
9 Critical Chain
Effects of Bad Multitasking
Bad multitasking
Lead times
De-Synchronization
Capacity
Touch time Quality
Basic Solution Elements
• Reduce WIP • Prioritize projects • Build CCPM project plans (aggressive but possible timelines with
strategically located buffers) • Stagger projects by Virtual Drum (effective system capacity) • Daily Task Management, Execution Control • Buffer management to set stable and consistent operative priorities • Only work according to the priorities • As lead times get shorter and reliability increases, increase Virtual
Drum capacity • Focused ongoing improvement • Actively market reliability and speed to capitalize on the operational
improvements and utilize the growth potential
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Case Study: Von Ardenne Anlagentechnik
• A leading manufacturer of equipment for industrial vacuum processes of plasma and electron beam technologies
• Key competences: – thin-film technologies for photovoltaics and architectural glass – electron beam technology – research and development
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Projects at Von Ardenne
The need for projects… • develop new products and technologies to ensure competitiveness
in strategic markets • develop new applications to meet market requirements • fulfill up to 40 parallel customer orders for different products and
markets
Projects need to be… • executed fast:
Time to market and short delivery time for products and projects is key success factor
• delivered on time: Milestones for customer’s investment and business plan must be met
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A Complex Project Landscape
• Many projects of different size and kind at a time • 40 projects from 500k€ to 17Mio€ and 8-24 months lead time • Different departments and specialists have to cooperate • Highly skilled specialists are needed to support different phases of
the projects • Assembly and commissioning require resources for long time on site • Long lead time parts impact project schedules, suppliers sell “slots”
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• Fast growing markets leading to more business and many parallel projects
• Resource priorities based on fire fighting • High delay risks, causing customer complaints and penalties • Capacity build up limited • Risk of losing market share in a fast growing market
And a Double Vicious Cycle
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Fight for resources
CT/ late-ness grow
Start asap
High WIP
Fight for resources
CT/ late-ness grow
Start asap
High WIP Long turnaround on problems and
questions
More problems and questions
Layout & Design
Assembly & Commissioning
What Did the Change?
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Pip
elni
ng
Exc
.
1. Allow only 3 „Field Assemblies“ at a time, freeze all other projects 2. Restart a frozen project only if another project has finished assembly 3. Implement 2 Full-Kit-Points 1. Build templates – tasks are „real work“ 2. Create project plan for every project 3. Shift safety from every task to project and feeding buffers 4. Don’t use dates and deadlines to manage tasks 1. Task management (remaining duration and controlled start) 2. Execution review
Buf
ferin
g
Success Factors
• Sense of urgency on most levels • Commitment and active involvement of senior management • Sales actively involved in implementation • Clean-state approach – ready to fully embrace 3 rules • Consulting as implementation support:
– Getting buy-in – Good solution design – Post go live coaching and handholding – Trouble shooting
• Adopt CCPM/TOC as a guiding strategic framework for the
company to become an ever flourishing company • Culture, processes, paradigms
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Lessons Learned – Implementation Mistakes to Avoid
Before • Delegating method
selection • Not analyzing “predicted effects”
• Delegating implementation to external consultants
• Underestimating bad effects of multitasking
• Ignoring corporate influence and policies: • Controlling, reporting, KPI • Objectives • Corporate initiatives
• Overlooking negative effects of success
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We learned some of these the hard way –
so you can avoid them!
At Start • Weak introduction by CEO • Freezing < 25% load • Not terminating 80% of
internal projects • Using a “negative list”
During • Starting a step before the
preceding one is complete: • success = “predicted effects“ achieved
• or: learning from a deviation
• Looking for complex solutions to complex problems/situations
• Resolving conflicts by compromises
• Assuming people resist change
• Thinking “I know”
Two Tools to Take Home
• Reducing work in process and bad multitasking is key and can even be implemented without full CCPM – Do tasks in sequence – Relay runner approach – Optimale resourcing
• Full Kit is another universal principle
– Never start without complete preparation – Applicable anywhere:
• Clear order • Engineering • Operating theatre • Kitchen
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Visit www.vistem.eu for more information!
THANK YOU! www.vistem.eu [email protected] +49 6252 795 307-0