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 wont meet
Project, with safety margins hidden

with one that is

Shorter More likely to be met easier to monitor

Should complete somewhere within this

Project, with NO margin Explicit Buffer

through intelligent use of explicit buffers

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The Goal - Review

1/ 2/ 3/ 4/ 5/ Identify the Goal Identify the Constraint (Herbie) Elevate the Constraint Go back to 2. Improvements elsewhere are
building inventory
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at best, useless probably counterproductive

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?

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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

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Critical Path
B A D

Critical Path - longest dependent path

A -> B -> D Assumes flexible resource

Available Manpower

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Critical Chain - a levelled CP

B A D Critical Chain - takes into account resource limits Either A -> B -> C-> D or A -> C -> B -> D
What determines which order is best?

Available Manpower

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Joes 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 theyre 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?

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Probability Curve
Where are you going to put this line?

Almost certainly estimates contain substantial buffers Most workers are unaware of this, and cant tell you How much buffer is allowed? Even if they could, theyd be too suspicious of your motives to tell you
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Combining Estimates Parallel Tasks

Job 1 (Wkr A)

Job 2 (Wkr B)

Job 4 (Wkr B)

Delay in any one gets passed on Early finish of others doesnt help (No surprises here)

Job 3 (Wkr C)

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Combining Estimates Serial Tasks

Each job estimated as 5 days
Job 1 (Wkr A) Job 2 (Wkr B) Job 3 (Wkr C) Job 4 (Wkr B)

How long will the project take?

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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

Non-critical Jobs

Another Job (Wkr B) Job 1 (Wkr A) Job 2 (Wkr B)

Another Job2 (Wkr B) Job 3 (Wkr C) Job 4 (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. R. Barnes, 1998

When should non-critical tasks start? 5 -2 = 3

days slack

Late Early
2 days Another Job (Wkr B) Job 1 (Wkr A) 5 days
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Unnecessary Risk Now Another Job is also on the Critical Path!

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

Job 2 (Wkr B)

Parkinsons Law
Predicted effect? Reading 2 Worker must slow down or make work to look busy

Worker is undercommitted

Worker must keep busy

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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!

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Critical Chain, Session II 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

The Miracle
1. Use an approach to scheduling and logistics that protects us from Murphys 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 do

Make projects on time Try to make tasks on time Produce more projects Try to make people more efficient Shrink Project Times Try to shrink task times Projects within Budget Detailed risk analysis Customer satisfaction Make more detailed specifications

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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 theyre not late

3/ Subordinate to the key tasks

dont waste time worrying about the other tasks.
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Critical Chain Example

Reading 4
How does this differ from conventional Critical Path project scheduling?

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Buffers & Managing Uncertainty

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

Reading 5 - Managing Janets Buffers Risk Placement Buffer Types

How to treat resource buffers
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Resolving the WIP Conflict

B (Requirement)
Quote Short Lead Times

D (Prerequisite)
Dont pad task times

A (Objective)
Maximize Profits

Attack this link

Conflict!
D (Prerequisite)
Pad task times

C (Requirement)
Give Reliable commitment dates

Arrow A<-B B<-D A<-C A<-C C<-D C<-D D<-D

Assumption Short quoted lead times are important for customers Safety increases lead times significantly Customers care about commitment dates Profitability depends on customer satisfaction There are statistical fluctuations and unanticipated problems We must deal with uncertainty by padding task times R. Barnes, 1998 All tasks needsafety time

Resolving the WIP Conflict - 2

B (Requirement)
Quote Short Lead Times

D (Prerequisite)
Dont pad individual task times

A (Objective)
Maximize Profits

C (Requirement)
Give Reliable commitment dates

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
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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

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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

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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 - DONT LET MANAGEMENT FORCE YOU TO HIDE YOUR BUFFERS, AS YOU USED TO!
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

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)

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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!

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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
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Possible Levers
Earlier delivery/Response time Higher quality Due-date performance Image Features and Options All of these may be preferable to Lowest cost What does the customer value?
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Global Improvements the 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 - dont let inertia become a constraint
This is simply The Goal. Remember Herbie?
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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 focus Concentrate on best-payoff leverage points
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TOC Accounting
Throughput pricing
Standard pricing may lead to wrong results Use a pricing model that focuses on the constraint

Reading 9

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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.

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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 nonstrategic resource R. Barnes, 1998

Conclusion
It aint 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
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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)
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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? Im not sure that I do)

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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

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Project Manager Information Needs

Project Buffer Status Feeding Buffer Status Critical Chain tasks and resource buffer status Some rules Dont reschedule frequently Dont worry about late task unless its 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 Elses Problem) Boundless Optimism Milestones Good Enough

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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?

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