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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
Theory of Constraints
• 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
Theory of Constraints
• 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
Theory of Constraints
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?
Theory of Constraints
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?
Theory of Constraints
• 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
Theory of Constraints
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”
Theory of Constraints
• 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
Undesirable Effects in Projects
• 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
Undesirable Effects in Projects
• 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
Conventional Project Management
• 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
Conventional Project Management
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
Conventional Project Management
• 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
Critical Chain Project Management
• 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.
Critical Chain Project Management
• 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
Critical Chain Project Management
• 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 Project Management
• 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
Critical Chain Project Management
2 3 4
1 2 3 4 Project Buffer
Task 1
Original Critical Path
Original Critical Path with Buffer
(Safety removed from individual tasks)
Critical Chain Project Management
• 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
Critical Chain Project Management
• 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
Critical Chain Project Management
The success stories …..
Critical Chain Project Management
• 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.
Critical Chain Project Management
• 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
Critical Chain Project Management
• 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
Critical Chain Project Management
• 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)
Critical Chain Project Management
• 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