pinto pm2 ism ch11

INSTRUCTOR’S RESOURCE MANUAL

CHAPTER ELEVENCritical Chain Project Scheduling

To Accompany

PROJECT MANAGEMENT: Achieving Competitive Advantage

ByJeffrey K. Pinto

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall

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CHAPTER 11

PROJECT PROFILE – Canada’s Oil Sands Recovery Projects

INTRODUCTION

11.1 THE THEORY OF CONSTRAINTS AND CRITICAL CHAIN PROJECT

SCHEDULING

Theory of Constraints

Common Cause and Special Cause Variation

11.2 CCPM AND THE CAUSES OF PROJECT DELAY

Method One: Overestimation of Individual Activity Durations

Method Two: Project Manager Safety Margin

Method Three: Anticipating Expected Cuts from Top Management

11.3 HOW PROJECT TEAMS WASTE THE EXTRA SAFETY THEY ACQUIRE

Method One: The “Student Syndrome”

Method Two: Failure to Pass Along Positive Variation

Method Three: Negative Consequences of Multitasking

Method Four: Delay Caused by Activity Path Merging

11.4 THE CRITICAL CHAIN SOLUTION TO PROJECT SCHEDULING

Developing the Critical Chain Activity Network

Critical Chain Solutions versus Critical Path Solutions

PROJECT PROFILE – BAE Systems and Critical Chain Project Management

11.5 CRITICAL CHAIN SOLUTIONS TO RESOURCE CONFLICTS

11.6 CRITICAL CHAIN PROJECT PORTFOLIO MANAGEMENT

PROJECT MANAGEMENT RESEARCH IN BRIEF – Advantages of Critical Chain

Scheduling

11.7 REACTIONS TO CCPM

Summary

Key Terms

Solved Problems

Discussion Questions

Problems


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Case Study 11.1: Judy’s Hunt for Authenticity

Case Study 11.2: Ramstein Products, Inc.

Internet Exercises

Bibliography


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TRANSPARENCIES

11.1 FIVE KEY STEPS IN THEORY OF CONSTRAINTS


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1. Identify thesystem constraint

2. Exploit thesystem constraint

5. Reevaluatethe system

3. Subordinateeverything else tothe system constraint

4. Elevate thesystem constraint

1. Identify thesystem constraint1. Identify thesystem constraint

2. Exploit thesystem constraint

5. Reevaluatethe system

3. Subordinateeverything else tothe system constraint

4. Elevate thesystem constraint

11.2 DISTRIBUTION BASED ON COMMON CAUSE

VARIATION


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11.3 DISTRIBUTION BASED ON MISINTERPRETATION

OF VARIATION


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11.4 GAUSSIAN (LOG NORMAL) DISTRIBUTION


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11.5 STUDENT SYNDROME MODEL


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11.6 EFFECTS OF MULTITASKING ON ACTIVITY

DURATIONS


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11.7 THE EFFECT OF MERGING MULTIPLE ACTIVITY

PATHS


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11.8 REDUCTION ON PROJECT DURATION AFTER

AGGREGATION


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11.9 CCPM NETWORK EMPLOYING FEEDER BUFFERS


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NoncriticalActivity X

NoncriticalActivity Y

CriticalActivity D

CriticalActivity C

CriticalActivity B

CriticalActivity A

FeederBuffer

ProjectBuffer

NoncriticalActivity XNoncriticalActivity X

NoncriticalActivity YNoncriticalActivity Y

CriticalActivity DCriticalActivity D

CriticalActivity CCriticalActivity C

CriticalActivity BCriticalActivity B

CriticalActivity ACriticalActivity A

FeederBuffer

ProjectBuffer


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11.10 EXAMPLE – ORIGINAL PROJECT SCHEDULE USING EARLY START


A (10) B (50)

C (20) D (10)

E (30)

Slack

90 Days

A (10) B (50)

C (20) D (10)

E (30)

A (10)A (10) B (50)B (50)

C (20)C (20) D (10)D (10)

E (30)E (30)

Slack

90 Days

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11.11 EXAMPLE (CON’D) – REDUCED SCHEDULE USING LATE START


45 Days

A (5) B (25)

E (15)

D (5)C (10)

45 Days

A (5)A (5) B (25)B (25)

E (15)E (15)

D (5)D (5)C (10)C (10)

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11.12 EXAMPLE (CON’D) – CRITICAL CHAIN SCHEDULE WITH BUFFERS ADDED


67.5 Days

A (5) B (25)

E (15)

D (5)C (10)FeederBuffer (7.5)

Project Buffer (22.5)

67.5 Days

A (5)A (5) B (25)B (25)

E (15)E (15)

D (5)D (5)C (10)C (10)FeederBuffer (7.5)FeederBuffer (7.5)

Project Buffer (22.5)Project Buffer (22.5)

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11.13 CRITICAL PATH NETWORK WITH RESOURCE CONFLICTS


FeederBuffer

FeederBufferBob

Bob

Bob

Critical Path

FeederBufferFeederBuffer

FeederBufferFeederBufferBob

Bob

Bob

Critical Path

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11.14 THE CRITICAL CHAIN SOLUTION


Bob FeederBuffer

ProjectBuffer

FeederBuffer Bob

FeederBuffer Bob

The Critical Chain is shown as a dotted line

Bob FeederBuffer

ProjectBuffer

FeederBuffer Bob

FeederBuffer Bob

BobBob FeederBufferFeederBuffer

ProjectBufferProjectBuffer

FeederBuffer BobFeederBufferFeederBuffer BobBob

FeederBuffer BobFeederBufferFeederBuffer BobBob

The Critical Chain is shown as a dotted line

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11.15 CRITICAL CHAIN PORTFOLIO MANAGEMENT – THREE PROJECTS STACKED TO USE A DRUM RESOURCE


Time

Resource Supply

Priority: 1. Project A2. Project B3. Project C

A A A

B B B

C C

Time

Resource Supply

Priority: 1. Project A2. Project B3. Project C

A A A

B B B

C C

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11.16 APPLYING CCB’S TO DRUM SCHEDULES


Time

Resource Supply

A & B startimmediately

A A A

B B BC

C

Project Cstart date

CCB

Time

Resource Supply

Resource Supply

A & B startimmediately

AA AA AA

BB BB BBCC

CC

Project Cstart date

CCB

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DISCUSSION QUESTIONS

1. For questions 1 and 2, refer to the BAE Systems case at the beginning of the chapter.

What are the practical implications internally (in terms of team motivation) and

externally (for the customer) of making overly optimistic project delivery promises?

Setting high goals challenges the team to become more efficient, to work faster and set

high standards for member performance. As for the customer, optimistic delivery dates

makes BAE Systems initially more appealing to potential clients.

2. In considering how to make a big change in organizational operations (as in the case

of switching to CCPM), why is it necessary to go through such a comprehensive set of

steps; that is, why does a shift in project scheduling require so many other linked changes

to occur?

A number of problems confront us when we consider any significant organizational

change; particularly a change that can affect the culture and/or basic operations of an

organization. A systematic approach that applies a change methodology in a series of

programmatic steps offers the best probability of creating change that is lasting and leads

to significant improvement in operations.

3. Explain the difference between “common cause” variation and “special cause”

variation. Why are these concepts critical to understanding successful efforts to improve

the quality and reliability of an organizational system?

Common cause variation results from problems built into a system or process. This

means the problem will exist regardless of outside variables (i.e. workers, machinery,


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etc.) Special cause variation is the result of a variable external to the system. These

problems stem from a specific or unique condition (i.e. workers, machinery, etc.).

It is important to understand the difference between the two because they require

distinctly different methods of correction. Addressing the problem correctly can improve

quality and reliability of output. However, misinterpreting a common cause variation as

a special cause variation is a common and costly mistake. Managers begin to analyze and

adjust the system assuming that the variation stems from a condition unique to their

project when in reality it is an overarching organizational flaw. As a result, variation in

quality and reliability may actual increase when managers attempt to compensate for

what they mistakenly believe to be special cause variation.

4. What are the three reasons Goldratt argues are used to justify adding excessive amount

of safety to our project duration estimates? In your project experiences, are these

arguments justified?

One way project teams add safety to duration estimates is to overestimate the time to

complete individual activities. Team members may pad the activity time to ensure that

they will be able to meet the promised deadline. This padding is augmented by the next

justification – project manager safety. Project managers use the previously padded team

estimates to make an overall project estimate. The PM may add additional time to the

already overestimated duration to be confident that the project will hit on schedule.

Lastly, project teams may add an additional percentage of time to the initial estimate in

anticipation of top management cuts. To keep from having the project cut to an

unattainable level by management, teams will increase estimates to protect themselves

from upper-level mandates.

The second portion of this question is intended primarily for students with project

management experience. They are asked to consider the charges that Goldratt levels at

activity duration estimation approaches and comment of the validity of his assumptions

regarding padding safety into estimates.


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5. What are the reasons we routinely waste the excessive safety we acquire for our

project activities? Are some of these reasons more prevalent in your own experiences

than others?

The first reason is procrastination. People tend to delay working on a project until the

deadline is in clear view. Team members may also have other demands on their time and

so, may choose to deal with closer deadline items first putting off work associated with

long-term project dates. The second reason is that positive variation (i.e. time saved

when work is completed ahead of schedule) is not passed downstream. When one

activity is completed before its deadline, the next activity may be delayed (until its

schedule start time) to allow team members to catch up on past due or backlogged

assignments. Additionally, workers may fear that if they finish a task early, they will be

expected to complete future work in a lesser amount of time. Problems with time

management and multitasking are the third reason for wasting safety. When team

members are pulled in multiple directions, they are unable to concentrate on one project

at a time. This reduces their efficiency and increases downtime as they switch between

projects. The last reason is lost slack time due to merge points. Activities that are

interdependent run the risk of losing slack time when one activity falls behind schedule.

In this scenario, delays in one activity are passed downstream creating delays in

dependent tasks.

As above, the second portion of this question is intended primarily for students with

project management experience. They are asked to consider the charges that Goldratt

levels at activity duration estimation approaches and comment of the validity of his

assumptions regarding wasting safety.

6. How does aggregation of project safety allow the project team to reduce overall safety

to a value that is less than the sum of individual task safeties? How does the insurance

industry employ this same phenomenon?


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Aggregation of safety is based on reducing the overall amount of slack by applying a

buffer at the project, not individual task, level. To do this, aggregation first calculates the

total amount of slack added to duration estimates. This is done by adding the durations

for all the activities and arriving at the project overall duration estimate. This number is

then cut in half. There are now two project duration estimates, the original and the

reduced estimate. The midpoint of these two numbers is the desirable duration estimate

(under the aggregation technique). As a result, the project safety is 50% less than the

sum of individual task safeties. The insurance industry uses the Central Limits Theorem

to arrive at a realistic estimate of potential risk.

7. Distinguish between “project buffers” and “feeder buffers.” What are each of these

buffer types used to do?

Project buffers are used to create slack in the critical chain, thereby lengthening the entire

duration estimate of the project. On the other hand, feeder buffers are used where non-

critical and critical paths intersect. The feeder buffer is the amount of time between when

non-critical activities will be completed and when they need to join with activities in the

critical path. These buffers are used to eliminate delays in the critical path.

8. It has been said that a key difference between CCPM safety and ordinary PERT chart

activity slack is that activity slack is determined after the network has been created,

whereas critical chain path safety is determined in advance. Explain the distinction

between these ideas: How does the project team “find” slack in a PERT chart vs. how is

activity buffer used in critical chain project management?

In PERT, team members establish buffer time for each individual activity. PERT relies

on task dependencies meaning that slack in one task can be affected by events upstream


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that reduce or inflate safety. Because resource leveling is done prior to scheduling,

CCPM does not rely on task dependencies for establishing slack.

CCPM adds buffer at the project level using aggregation, which reduces the overall

amount of slack in the project.

9. What are the steps that CCPM employs to resolve conflicts on a project? How does

the concept of activity late starts aid this approach?

CCPM begins by establishing the availability of critical resources. The critical chain is

then created based on these availabilities so that delays on not created by lack of a

resource. Feeder buffers (instead of activity buffers in the critical chain) are used to

adjust for resource availability. However, conflicts may still arise that require a resource

to be available for two activities at one time. To resolve this, CCPM uses late starts. The

method applies “start-as-late-as-possible” times to preceding tasks to the later-starting

activity in the conflict. Working backwards from this activity, each predecessor is given

a late-start time until the activities in conflict no longer overlap.

10. What are the key steps necessary to employ CCPM as a method for controlling a

firm’s portfolio of projects?

First, all current portfolio projects are compiled. Next, the chief resource constraint must

be identified. Then, the constraint is exploited. After that, sequencing of portfolio

projects is determined around the constraint. Buffering between projects, called capacity

constraint and drum buffers, may be used to create safety between projects to ensure

proper flow and use of the constrained resource. The next step is to evaluate the

constraint and increase the drum capacity if possible. Lastly, the steps are repeated to

improve flow and resource levels.


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11. What is a “Drum resource”? Why is the concept important to understand in order to

better control resource requirements for project portfolios?

A drum resource is a system-wide resource constraint. The drum resource limits the

production capacity of the entire firm. Therefore, the concept must be understood

because it affects how all projects in the portfolio need to be scheduled. It also affects the

number of projects the firm can support at one time.


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CASE STUDIES

Case Study 11.1: Judy’s Hunt for Authenticity

This case illustrates a common problem with activity duration estimation and the desire

that each of us have to protect ourselves by providing “padded” estimates. Sid has been

caught offering an artificially high estimate for some work in his department and the

reasons for his decision to do so come out through his conversation with his supervisor,

Judy.

Questions:

1. Identify some of the symptoms in the case that point toward cultural problems in the

department.

The most obvious is the general sense of “inauthenticity” with regard to developing task

duration estimates for projects. Sid is afraid to give an estimate that is too low, since,

should he miss it, he knows he will get into trouble with his immediate supervisor,

Randy. Thus, no one is willing to provide authentic estimates to anyone else because of

fear that they will be held against them if the employee cannot complete the work on

time.

2. What steps would you take to begin changing the culture in the department? In your

answer, consider what changes you would recommend making to the reward systems,

methods for estimating activity durations, and task assignments for project personnel.

This question requires students to first recognize that any cultural change is a long-term

undertaking and must consider multiple issues, all of which work together to create either

an atmosphere of trust or self-preservation. Personnel need to be rewarded for making

accurate and honest estimates and demonstrating genuine willingness to work toward

them in completing assignments. That way, even if they miss their deadlines, they can


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demonstrate a good faith effort that should be rewarded. Likewise, as the chapter

mentions, most activity duration estimates are padded with extra time to protect all team

members, including the project manager. Therefore, another change needed is to move

away from 95% likelihood estimates to 50/50 estimates, with no sanctions should the

deadline be missed. Essentially, the key to cultural change here has to be to recreate a

department with a risk-free attitude. As long as good faith efforts are made, probabilities

suggest we will miss deadlines as often as we make them, but at least when people lose

the fear of punishment, they will begin generating more accurate estimates.

A final point that can be mentioned regarding task assignments has to do with the

problems of multi-tasking, as Sid mentions when talking with Judy. The fact is that

unless we account for resource availability in our project task estimates, we are creating

schedules that cannot be met, due to conflicts with resources who are assigned to multiple

projects and are forced to juggle several simultaneous commitments.

3. Why do you suppose Randy took Sid’s 24 hour estimate and increased it to 32 hours

when he presented it to Judy?

This was an example of the supervisor adding his own margin of safety to an estimate in

order to protect himself. Thus, every step of the activity estimation chain involves self-

protection and inauthenticity.


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Case Study 11.2: Ramstein Products, Inc.

The Ramstein case is an example of the problems that often occur once we have padded

our activity estimates, through wasting project safety in a variety of ways. The case

mentions that Jack is eager to fix project overruns, which are becoming more prevalent,

but does not have the option of simply adding resources to his department. Any solutions

must come from dealing with existing issues and fixing them.

Questions:

1. Applying Goldratt’s idea of critical resources, what is the system constraint within the

Special Projects Division that is causing bottlenecks and delaying projects?

The primary system constraint is the seven system integration engineers who must

support a large portfolio of projects. All project activities should be scheduled around the

availability of this critical resource, but there is no indication that the organization is

clearly recognizing this critical resource constraint, much less that they are attempting to

reorder projects to most efficiently use the resources.

2. How is multitasking contributing to systemic delays in project development at

Ramstein?

The chapter discusses the impact that multitasking has on resources’ ability to effectively

manage time across multiple projects. As the chapter demonstrates, multitasking serves

to waste project safety by not permitting resources to apply themselves completely to one

task before moving on to another.

3. Using concepts from Critical Chain Portfolio management, how could buffer-drum

concepts be applied to this problem?


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When we recognize that the seven system integration engineers are the “drum” in this

example, we can set up a sample chart to schedule projects for access to the drum

resource. Instructors could ask students to create a simplified chart that identifies the

manner in which the drum resource constrains the system and the manner in which Jack

must schedule all projects in order not to overload the critical resource (using the capacity

constraint buffer process).


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PROBLEMS

1. Assume the following network diagram. Megan is responsible for activities A and C.

Use the Critical Chain methodology to resource level the network. What are two options

for redrawing the network? Which is the most efficient in terms of time to completion

for the project? Show your work.

Microsoft product screen shot(s) reprinted with permission from Microsoft Corporation.

Solution:

One solution is to order Megan’s work so that she performs Activity A first and then Activity C. The MSProject output is shown below and the expected duration for these five activities is now 31 days.



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An alternative is to reconfigure the order to that Megan first performs Activity C and then

completes Activity A (see alternative solution below). Because of precedence in the

activities, this solution will lead to a longer total duration for the five activities of 34

days; thus, the first solution is better as it saves 3 days.



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2. Consider the following activities and their durations. The original project schedule,

using early activity starts, is shown below. Reconfigure the network using critical chain

project scheduling.

Activity Duration

A 5 days

B 30 days

C 10 days

D 10 days

E 15 days

What is the critical path? How much slack is currently available in the non-critical path?

Reconfigure the network as a critical chain network. What is the new duration of the

project? How long are the project and feeder buffers?


A (5) B (30)

C (10) D (10)

E (15)

Slack

50 Days

A (5)A (5) B (30)B (30)

C (10)C (10) D (10)D (10)

E (15)E (15)

Slack

50 Days

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Solution:

In the current network configuration, the feeder path (Activities C and D) has 15 days of

slack. Total project length is 50 days. When we reconfigure the network as shown

below, the new project length is 37.5 days, the feeder buffer is 5 days and the project

buffer is 12.5 days (half of the total project time savings reapplied as project buffer).


E (7.5)

C (5) D (5)

A (2.5)

37.5 Days

FB (5)

B (15)

PB (12.5)

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3. Reconfigure the following network using the critical chain approach.

Remember to reconfigure the activities to late-start where appropriate. What is the

original critical path? What is the original project duration? How much feeder buffer

should be applied to the noncritical paths? What is the length of the project buffer?


E (10) H (15)

B (10)

G (15)

D (8)

A (12) C (15)

F (18)

E (10)E (10) H (15)H (15)

B (10)B (10)

G (15)G (15)

D (8)D (8)

A (12)A (12) C (15)C (15)

F (18)F (18)

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F (9)

Solution:

The noncritical paths are Activities D and E, with 19 days of slack and Activities F and

G, with 4 days of slack. The original project duration is 52 days. Reconfiguring this

network as a critical chain approach would yield the following:


D (4) H (7.5)

B (5)A (6) C (7.5)

E (5)

G (7.5) FB (2)

PB (13) FB (4.5)

39 Days

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4. Assume the following network with resource conflicts. How would you redraw the network using a critical chain in order to eliminate the resource conflicts? Where should feeder buffers be applied? Why?


Joe

FeederBuffer

FeederBuffer

Joe

Joe

CRITICAL PATH

JoeJoe



JoeJoe

JoeJoe

CRITICAL PATH

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Solution:

Applying critical chain methodology in order to account for resource conflicts, we would create a different path through the network

to get most efficient use of the “system constraint,” in this case, Joe. The reconfigured network, showing a replacing of feeder buffers

and reordering of Joe’s activities, would be the following:


The Critical Chain is shown as a dotted line.

Joe

Joe

Joe

Feeder Buffer

Feeder Buffer

Feeder Buffer

Project Buffer

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5. Consider the following project portfolio problem. You are required to manage

resources to accommodate the company’s current project portfolio. One resource area,

comprising Carol, Kathy and Tom, are responsible for all program debugging, as new

projects are completed. There are currently four projects that have activities that need to

be completed. How would you schedule Carol, Kathy, and Tom’s time most efficiently?

Using Buffer-Drum scheduling, reconfigure the schedule below to allow for optimal use

of the resource time. Where would you place capacity constraint buffers? Why?


Time

Resource Su

pply

X X X

Y Y Y

Z Z

Q Q

Time

Resource Su

pply

XX XX XX

YY YY YY

ZZ ZZ

QQ QQ

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Resou

rce Su

pp

ly

Time

CCB

Solution:


Q

Q

Z Z

Y Y Y

XXX

Project Q start date

X & Y start immediately

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