© R. Barnes, 1998

Critical Chain• A fresh look at project management by Eliyahu

Goldratt• Claimed to do for Project Management what

“The Goal” did for Process Mgmt• Reported Successes include

– Israeli Aircraft - Turnaround from 3 months to 2 weeks

– http://www.goldratt.com/tocsuc.htm

– BOS (Midrange Software) - 5 mths cut from critical software project

– http://www.goldratt.com/bos.htm

© R. Barnes, 1998

Critical Chain - the potential

• To replace this project plan, which we probably won’t meet

• with one that is– Shorter– More likely to be met– easier to monitor

through intelligent use of explicit buffersProject, with NO margin

Project, with safety margins hidden

Explicit Buffer

Should complete somewhere within

this

© R. Barnes, 1998

“The Goal” - Review

• 1/ Identify the Goal• 2/ Identify the Constraint (“Herbie”)• 3/ Elevate the Constraint• 4/ Go back to 2.• 5/ “Improvements” elsewhere are

– at best, useless– probably counterproductive

• building inventory

© R. Barnes, 1998

Session[s] Objectives

• Review ideas in “Critical Chain”• Discuss

– Do we agree with Goldratt?– Which of the ideas can we adopt here?

• Action Plan– How?

© R. Barnes, 1998

Critical Chain, Session Outline

• Part 1 - Current Reality– Look at cause-effect relationships in

project management• Part 2 - Critical Chain Scheduling

– Key ideas - achieving “Miracle 1”• Part 3 - Global Viewpoint

– Dealing with Multiple Projects - keeping focus on The Goal

• Part 4 Implementation Issues– Overcoming resistance, making it all

happen

© R. Barnes, 1998

Assumptions

• General Familiarity with Project Management Concepts– Scope, organization– GANTT Charts, PERT, Critical Path, – Resources, Resource levelling– Slack, Early/late finish– Work-in-Progress

• Earned Value (BCWP etc)

• This topic builds on knowledge of these concepts.

© R. Barnes, 1998

Critical Chain• Key concept - A different way of -

– Using project buffers, and – handling uncertainty

• Definition of “Critical Chain”– The set of tasks which determines the overall duration of the

project

© R. Barnes, 1998

Critical Path

A

B

D

C

Critical Path - longest dependent path

A -> B -> D

Assumes flexible resource

Available Manpower

© R. Barnes, 1998

What determines whichorder is best?

Critical Chain - a levelled CP

A

B

D

C

Critical Chain - takes into account resource limits Either A -> B -> C-> Dor A -> C -> B -> D

Available Manpower

© R. Barnes, 1998

Joe’s Story - Reading 1.

• Take the “Reasonable Estimate” and multiply by fudge factor– necessary in order to meet promised delivery

• Work on several things at once– how else to keep busy?

• Both of these are the COMMON PRACTICE

• According to “Critical Chain” they’re BOTH WRONG

© R. Barnes, 1998

Issue 1 - estimates

• “Task will take 5 days”• What does this mean?

– Will take on average 5 days?– 50% probability that it will complete in 5

days?– Almost certainly (80%? 90%?) will complete

in 5 days?

© R. Barnes, 1998

Probability Curve

Where are you going to put

this line?

• Almost certainly estimates contain substantial buffers• Most workers are unaware of this, and can’t tell you “How much

buffer is allowed?”• Even if they could, they’d be too suspicious of your motives to

tell you

© R. Barnes, 1998

Combining Estimates - Parallel Tasks

Job 1(Wkr A)

Job 2(Wkr B)

Job 3(Wkr C)

Job 4(Wkr B)

• Delay in any one gets passed on

• Early finish of others doesn’t help

(No surprises here)

© R. Barnes, 1998

• Each job estimated as 5 days

How long will the project take?

Combining Estimates -Serial Tasks

Job 1(Wkr A)

Job 2(Wkr B)

Job 3(Wkr C)

Job 4(Wkr B)

© R. Barnes, 1998

Job 1(Wkr A)

Job 2(Wkr B)

Job 3(Wkr C)

Job 4(Wkr B)

• The “simple maths” answer (20) is invariably optimistic.

• Experienced Project leaders add their own fudge factors– “5 + 5 = 13”

• Yet we have already seen that each estimate has substantial safety

• Why do we have to add more?

© R. Barnes, 1998

Job 1(Wkr A)

Job 2(Wkr B)

Job 3(Wkr C)

Job 4(Wkr B)

Another Job(Wkr B)

Another Job2(Wkr B)

• If Job 1 finishes early, can Wkr B start on Job 2?• Perhaps - has he finished “Another Job”?• If not, does he know that “AJ” is not critical, and

should be set aside? What if this makes AJ2 critical?

• Result:-– Delays are passed on in full– Advances are usually wasted.

Non-critical Jobs

© R. Barnes, 1998

When should non-critical tasks start?

Job 1(Wkr A)

Job 2(Wkr B)

Another Job(Wkr B)

5 days

2 daysEarly

Late

5 -2 = 3 days slack

Safest - BUT• Loss of Focus (thinking about unimportant task)• Parkinsons Law will apply to AnotherJob (WkrB not busy)

Unnecessary Risk - NowAnother Job is also on theCritical Path!

© R. Barnes, 1998

Parkinson’s Law

Worker must slow downor make work to look busy

Worker is undercommitted Worker must keep busy

Predicted effect?

Reading 2

© R. Barnes, 1998

Current Reality- Reading 3

• Does this describe our situation?

• Is there any way out?– Improvements in one place cause

problems elsewhere.

• We need a miracle!

© R. Barnes, 1998

Critical Chain, Session IISession Outline

• Part 1 - Current Reality– Look at cause-effect relationships in

project management• Part 2 - Critical Chain Scheduling

– Key ideas - achieving “Miracle 1”• Part 3 - Global Viewpoint

– Dealing with Multiple Projects - keeping focus on The Goal

• Part 4 Implementation Issues– Overcoming resistance, making it all

happen

© R. Barnes, 1998

The Miracle• 1. Use an approach to scheduling and logistics that

protects us from Murphy’s Law.

• 2. Have people focus on Global improvements rather than Local ones.

• 3. Have everyone understands and accepts the policies, procedures, and measurements that apply to them.

• 4. Believe that we can make dramatic improvements.

© R. Barnes, 1998

An approach to scheduling and Logistics that protects against

Murphy

What we want What we doMake projects on time Try to make tasks on timeProduce more projects Try to make people more efficientShrink Project Times Try to shrink task timesProjects within Budget Detailed risk analysisCustomer satisfaction Make more detailed specifications

© R. Barnes, 1998

Critical Chain Scheduling

• 1/ Identify the key tasks– (Critical Chain)

• 2/ Exploit performance on the key tasks– focus on them, do everything you can to

make sure they’re not late• 3/ Subordinate to the key tasks

– don’t waste time worrying about the other tasks.

© R. Barnes, 1998

Critical Chain Example

• Reading 4

• How does this differ from conventional Critical Path project scheduling?

© R. Barnes, 1998

Buffers & Managing Uncertainty

• Buffers are – more than a planning tool. – an EXTREMELY VALUABLE monitoring

tool• Reading 5 - “Managing Janet’s Buffers”• Risk Placement• Buffer Types

– How to treat resource buffers

© R. Barnes, 1998

Resolving the WIP Conflict

A (Objective)Maximize Profits

B (Requirement)Quote Short Lead Times

C (Requirement)Give Reliable commitment

dates

D (Prerequisite)Don’t pad task times

D’ (Prerequisite)Pad task times

Conflict!

Arrow AssumptionA<-B Short quoted lead times are important for customersB<-D Safety increases lead times significantlyA<-C Customers care about commitment datesA<-C Profitability depends on customer satisfactionC<-D’ There are statistical fluctuations and unanticipated

problemsC<-D’ We must deal with uncertainty by padding task timesD<-D’ All tasks need safety time

Attackthis link

© R. Barnes, 1998

Resolving the WIP Conflict - 2

A (Objective)Maximize Profits

B (Requirement)Quote Short Lead Times

C (Requirement)Give Reliable commitment

dates

D (Prerequisite)Don’t pad individual

task times

D’ (Prerequisite)Put in aggregate buffers

• Key Concepts– Any conflict can be diagrammed explicitly– There are hidden assumptions behind any conflict that can

be challenged– Conflict between more and less WIP can be resolved

through buffers– Buffers are not optional

© R. Barnes, 1998

Identifying the Critical Chain

• Reading 6• Create initial plan

– Average durations, late as possible• Level Load• Identify tasks with no slack

– this is the critical chain

© R. Barnes, 1998

Add Buffers

• Identify buffer points

• Decide on buffer sizes. Perhaps– Project Buffer - 1/2 project (= 1/2 padding saved)

– Feeding Buffers - 1/2 feed path (= 1/2 padding saved)

– Resource Buffers (Wake-up calls) - say 2 weeks

© R. Barnes, 1998

Buffers and Schedule Pressure

• Should project due-date be pushed to make room for buffers?

• YES!!!!!• BUFFERS ARE NOT OPTIONAL!!!!!• YOU HAVE ALREADY CHOPPED 25% OUT

OF THE SCHEDULE - DON’T LET MANAGEMENT FORCE YOU TO HIDE YOUR BUFFERS, AS YOU USED TO!

© R. Barnes, 1998

Critical ChainSession Outline

• Part 1 - Current Reality– Look at cause-effect relationships in

project management• Part 2 - Critical Chain Scheduling

– Key ideas - achieving “Miracle 1”• Part 3 - Global Viewpoint

– Dealing with Multiple Projects - keeping focus on The Goal

• Part 4 Implementation Issues– Overcoming resistance, making it all

happen

© R. Barnes, 1998

Global Viewpoint,Global Leverage

• We often think locally when a wider perspective gives better results

• Example - software company“We have 20% excess capacity. Market is

saturated, we could only sell more by selling below cost. Obvious answer - improve productivity by cutting costs”

See spreadsheets 1 and 2

(Reading 7, pages 1 and 2)

© R. Barnes, 1998

Cost vs Throughput

• What if we used excess capacity to sell below cost?– See Page 3

• Example illustrates– Local solutions can be sub-optimal– Throughput is Number 1(Ichiban)

• Not lowest cost, but best value!

© R. Barnes, 1998

The Throughput World

• Leverage Points– a constraint that we can improve– 80/20 - 20% of the possible

improvements will produce 80% of the gain– but because of linkages (improvements not

independent - one improvement causes another), more like

– 1% of possible improvements -> 95% of gain

© R. Barnes, 1998

Possible Levers

• Earlier delivery/Response time• Higher quality• Due-date performance• Image• Features and OptionsAll of these may be preferable to • Lowest costWhat does the customer value?

© R. Barnes, 1998

Global Improvementsthe 5 Focussing Steps

(Reading 8)• Identify the leverage point(s)• Exploit the leverage point(s)• Subordinate everything else to the above

decisions• Elevate the leverage points• Go back to step 1 - don’t let inertia become

a constraintThis is simply “The Goal”. Remember Herbie?

© R. Barnes, 1998

Variation

Select the leverage point(s)• Exploit the leverage point(s)• Subordinate everything else to the

above decisions• Elevate the leverage points• Evaluate whether the leverage point

should change

Avoid excessive chop&change of focusConcentrate on best-payoff leverage points

© R. Barnes, 1998

TOC Accounting

• Throughput pricing– Standard pricing may lead to wrong results– Use a pricing model that focuses on the

constraint• Reading 9

© R. Barnes, 1998

Multiple Projects• Single-project scheduling works well, even in

multiple-project environments, if– Individual projects practically independent

• eg, contractors used

• But, if resources shared, then– Each project needs significant buffers

• By planning projects together, we can – estimate/evaluate impact of decisions– better coordinate

• Result, need less buffers.

© R. Barnes, 1998

How?• Approach 1. Plan projects together.

– very tricky in a complicated environment• Critical chain keeps changing• Lots of detail

• Approach 2. Successive Projects(Add new project at end)– Better, but still tricky

• can still get swamped with detail

• Approach 3: manage the strategic resource– simplest, but can get contention for non-strategic

resource

© R. Barnes, 1998

Conclusion

• It ain’t easy!!

• No clear answer!!

• My opinion - Suggest we concentrate on Miracle 1 (Critical Chain), get familiar with this before going the next step to Global View

© R. Barnes, 1998

Critical Chain, Session Outline

• Part 1 - Current Reality– Look at cause-effect relationships in

project management• Part 2 - Critical Chain Scheduling

– Key ideas - achieving “Miracle 1”• Part 3 - Global Viewpoint

– Dealing with Multiple Projects - keeping focus on The Goal

• Part 4 Implementation Issues– Overcoming resistance, making it all

happen

© R. Barnes, 1998

What is a schedule?

(Reading 10)• What is the schedule designed to

accomplish?Maximise throughput– get as many projects completed as

possible• Minimise inventory (work in progress)

– gives shortest lead times

© R. Barnes, 1998

The worker needs -

• Start times for jobs with no predecessors (“gating” tasks)

• Relative priority if alternatives• Who gets the work next• ? Approximately when next job is

coming, and what it is• How urgent• (also task description/requirements)

© R. Barnes, 1998

The worker does NOT need

• Start times for non-gating tasks• Finish times

– Start, finish times inhibit early starts• Task durations

– becomes self-fulfilling

(do we agree with this? I’m not sure that I do)

© R. Barnes, 1998

Resource Manager needs -

• When tasks are late or early, and by how much

• How important is this– impact on the buffer

• Currently-expected start/finish times• Status of resource buffers

© R. Barnes, 1998

Project Manager Information Needs

• Project Buffer Status• Feeding Buffer Status• Critical Chain tasks and resource buffer statusSome rules • Don’t reschedule frequently• Don’t worry about late task unless it’s important• Evaluate decisions not just on costs, but also

on performance of the project• Keep it simple

© R. Barnes, 1998

Weak Links

• NIH (Not Invented Here)• SEP (Someone Else’s Problem)• Boundless Optimism• Milestones• Good Enough

© R. Barnes, 1998

Now what?

• Implementation Checklist– Reading 11

• Discussion– How much do we agree with?

• (Is it all a load of rubbish - new terminology for old ideas?)

– How to proceed?