critical chain project management. outline overview of theory of constraints revisit conventional...

Critical Chain Project Management

Outline

• Overview of Theory of Constraints• Revisit conventional project

management (Critical Path Management)

• Overview of Critical Chain Project Management

Theory of Constraints

• Founder, Eliyahu M. Goldratt, ca. 1975

• Popular writings– The Goal– It’s Not Luck– The Haystack Syndrome– Critical Chain


• A system improvement philosophy (as opposed to a process improvement philosophy)

• Organizations live or die as systems, not as processes

• Success or failure a function of how well different component processes interact with one another


• Systems are analogous to chains, or networks of chains

• Like a chain, a system’s performance is limited by the performance of its weakest link

• The weakest link is the system’s constraint


StepA

StepB

StepC

StepD

StepEINPUT OUTPUT

Market Demand:

1510

units/d20

units/d8

units/d

6 units/d

9 units/d

How many units can be produced per day?What is the constraint?


StepA

StepB

StepC

StepD

StepEINPUT OUTPUT

Market Demand:

1519

units/d20

units/d23

units/d

18 units/d

17 units/d

Now how many units can be produced per day?What is the constraint?


• Another basic principle of TOC– A large number of undesirable effects

will be caused by a relatively small number of core drivers

– Eliminating a very few core problems can result in a huge improvement


Five Focusing Steps1. Identify the system constraint2. Decide how to exploit the constraint3. Subordinate everything else4. Elevate the constraint5. Go back to Step 1, but beware of

“inertia”


• Drum-Buffer-Rope application on the factory floor– Drum – the capacity constraint

• Drumbeat sets the pace– Buffer – placed at constraint

• ensures that “drum” never runs dry– Rope – connection between constraint and

release of material to the line• synchronizes release of material with pace of the

constraint

TOC Drum-Buffer-Rope

A B C D E

RM FG

11 Partsper Day

9 Partsper Day

5 Partsper Day

8 Partsper Day

15 Partsper Day

DrumBufferRope

TOC and Projects

– How does all this relate to projects?

• Repeating a basic principle of TOC– A large number of undesirable effects

will be caused by a relatively small number of core drivers

– Eliminating a very few core problems can result in a huge improvement

Undesirable Effects in Projects

• US DOE– From 1980 - 1996, DOE conducted 80 major

system acquisition projects– DOE has completed 15; most finished behind

schedule and over budget– 31 other projects terminated after

expenditures over $10 billion– Cost overruns and schedule slippages

continue to occur.GAO Report GAO/RCED-97-17, November 26, 1996


• US DOD– "Despite DOD's past and current

efforts to reform the acquisition system, wasteful practices still add billions of dollars to defense acquisition costs. Many new weapons systems cost more and do less than anticipated, and schedules are often delayed."

GAO Report GAO/HR-97-6, February 1997


• Projects funded by the World Bank– "Time overruns have gone down, but

forecasts are still optimistic. On average, operations evaluated in 1994 to 37 percent longer to implement than originally scheduled, down from 48 percent in 1993, and 54 percent in the 1974-94 cohorts."

"Evaluation Results for 1994," Operations Evaluation Department, World Bank, 1995

Conventional Project Management

• Emphasis on– On time

• Achieving task estimates• Making intermediate milestones• Making promised due date

– Within budget– Prescribed performance


• Critical Path Management• Critical path – path with zero slack

– If all tasks on schedule, project on schedule

– If one or more tasks off schedule, project off schedule

Critical Path Project Management

A B

CD

EF

Start Stop

1

1

2

2

3

3

Activity-on-Node

Critical Path: That sequence of tasks which represent the longest time required to complete the project.

2+3+1+2=8 > 1+3+1+2=7, or 2+3+2=7


Task Time Estimating• Take best guess at how long a task

will take• Consider the effect of unknowns or

unplanned interruptions• Add sufficient safety to be able to

deliver with 90% probability

0.2

0.6

0.8

0.4

1.0

0

Time

25% 50%

90%

T50 T90

The Conflict


• Uncertainty is an important factor in project scheduling

• Workers must meet task completion requirements

• Workers feel task timings need to be long enough to allow for uncertainty

Critical Path Project Management

• If critical path tasks finish late, the project is late

• If critical path tasks (or others) finish early, workers often feel compelled to stay busy

• Parkinson’s Law– Work expands to fill the time allotted

• Student syndrome


• The TOC philosophy applied to project management attempts to remove the undesirable effects (late, over-budget, and under-performance projects) by attacking individual measurements and uncertainty.


• How to protect the project due date from Murphy and Parkinson– Build the schedule with target durations too

tight to allow/encourage diversion of attention

– Get rid of task due dates– Charge management with the responsibility

to protect project resources from interruptions

– Limit multiple project assignments


• Uncertainty always present – it doesn’t go away• Take the safety out of each of the critical path

tasks and lump them into a safety net at the end of the project

• Identify constraints along the path and set up buffers in front of tasks that can suffer from the constraint (constraints = time and resources)

• Allow tasks to start when predecessors are completed and resources are available


• Critical Chain - set of tasks which determines overall project duration, taking into account both precedence and resource dependencies; improvement along Critical Chain will likely result in improvements to the project as a whole; improvements elsewhere will not

• Project buffer - protects project commitment dates from fluctuations on the Critical Chain

• Feeding buffer - protects Critical Chain from fluctuations on feeding tasks; provides the possibility for Critical Chain tasks to start early

• Resource buffer - protects the Critical Chain from lack of availability of required resources; also provides the possibility for Critical Chain tasks to start early


2 3 4

1 2 3 4 Project Buffer

Task 1

Original Critical Path

Original Critical Path with Buffer

(Safety removed from individual tasks)


• About Buffers– Identify the points at which to place project,

feeding, and resource buffers– Buffer sizes determined approximately, based

either on average task duration estimates, or a combination of average and worst-case duration estimates

– Individual buffer sizes can be adjusted based on intuitive assessment of risk

– Buffer insertion may cause the Critical Chain, and hence the project completion date, to be pushed later


• The Critical Chain approach to scheduling helps minimize project duration and WIP, delay investment as far as possible, and maximize the chance of on-time completion


The success stories …..


• Lucent Technologies – On-time performance through use of

CCPM has increased to 90%+ • Harris Semiconductor

– Applied CCPM to building a fabrication plant that generates millions $ in revenue PER DAY. The plant was completed 34 MONTHS AHEAD OF SCHEDULE.


• ESCO Corporation – Is completing a conversion project traditionally

scheduled at 12 months, but on-track for completion in 9 months

• Lord Corporation/Mechanical Products Division, Information Services Group – Traditionally, projects were 55% longer than

estimated. After CCPM implementation, they achieved:

• 90%+ on-time performance • 60% capacity increase • 50% reduction in project durations


• Saturn Development Corporation- Construction of new car dealerships– History

• 20% overspent • Project length 6-9 months • Debate over whether it was on time

– After implementing TOC/Critical Chain• Within budget • Project length 4 months • On time per original plan/promise


• Better Online Systems - Connectivity solutions for IBM midrange systems– Situation

• A project that was shooting for a due date 9 months out that no one believed

– Replanned with a Critical Chain Schedule• New target due date 3 months earlier than

original – Managed with Buffer Management

• Beat the new target by a month (4 months sooner than the original questionable target)


• References– Goldratt, E.M., Critical Chain, North River

Press, 1997– Newbold, R. C., Project Management in the

Fast Lane: Applying the Theory of Constraints, St. Lucie Press/APICS, 1998

– Leach, L. P., Critical Chain Project Management, Artech House, 2000

The End

critical chain project management. outline overview of theory of constraints revisit conventional...

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