Critical Chain Basics

Critical Chain Project Management Brief Idea Overview

Does this remind you of something? Project 1 Project 2 Project 3 Project 4 Project 5 Project 6

Is it true that…. … projects take too long to finish? … projects are finished late and over budget ? … there are too many changes and rework ? … project resources are not available when needed? … managers feel constant need to increase staff to handle peek project loads? … conflicts regarding project priorities and resource commitments are frequent? … problems in one project quickly affect other projects? Common denominator of all projects: UNCERTAINTY

Uncertainty examined Probability Probability distribution of a simple task driving from Prague to Brno Project uncertainty stems from two types of uncertainty: Task uncertainty (how long a task will really take) Iteration uncertainty (how many times do we have to repeat the task) 30 min 90 min 180 min 240 min

How do people deal with uncertainty? 50% 80% People add time (safety) to their plans to increase probability of meeting their individual commitments. In reality, people pad task estimates to have 80 – 90% chance of delivering on time… … and every aggregation level adds some more safety! Safety

We have all this safety in the plan. How come we never finish projects on time? Student’s syndrome Parkinson’s law Dependencies Multitasking Because of

Student’s syndrome – valid not just for students Milestone - task planned due date Time Effort Murphy People plan to start as soon as possible, but then waste all safety!

Parkinson’s Law – reality bites “ Work expands so as to fill the time available for its completion.” People prefer to use remaining time to do a “better job” rather then report early completion

Task dependencies – project delay accumulation Task integration points 15 d (delay) A (10 d) B (10 d) C (10 d) D (5 d) Plan 15 d “ D” can start only when “A”, “B” & “C” are finished. How long will the project really take? 5 d (early finish) Early finishes are not propagated through project at all, but delays are propagated always!

Resource dependencies – multi-project delay accumulation Resource integration points A C B D Project 1 Project 2 Resource α Resource α Tasks “A” & “C” have 50% chance of delay. What is the probability of task “D” starting on time? Delays propagate across projects through resource dependencies!

Multitasking – real project plan killer Task for project A finished It is not only the waste in multiple set-up times, but the significant increase in task total durations! Task for project C finished PLAN REALITY Task for project B finished Project A setup A setup B setup B setup C setup B setup C setup C setup DELAY DELAY Project B setup Project C setup NO MULTITASKING Project A Project B Project C setup setup setup One Resource DELAY

Multitasking game Two tasks A : write numbers from 20 to 1, one number in each row B: write letters of English alphabet from A to T, one letter in each row Round 1 Multi-task: work on both tasks in parallel, write one number and one letter. Record time of finishing task A and B Round 2 Focus: work first on task A (write all numbers) and record duration. Then work on task B (write all letters) and record duration . ~ 50 sec ~ 50 sec ~ 15 sec ~ 30 sec Duration A Duration B Round 1 Round 2

HOW ARE WE DEALING WITH THESE FACTS NOW? DOES IT HELP? CAN WE DO SOMETHING TO CHANGE IT?

Solution overview Critical Chain Project Management Ground-breaking project management methodology developed by Dr. Eliyahu Goldratt, management guru and author of “Theory Of Constraints” CCPM offers radical improvement in project management by implementing 3 BASIC PRINCIPLES

3 principles of CCPM Plan safety (buffer) where it can do most good (protect the longest project path) Release projects into execution based on the constraint availability Drive execution priorities based on relative buffer consumption

# 1 – Put safety (buffer) where it can do most good (protect the longest project path) Start safety safety safety safety safety safety safety safety s afety safety 1/2 of task durations 1/2 1/2 Project buffer protects the due date safety 20–50% P=95% Finish Finish P=80% P=80% P=80% P=80% P=80% P=80% P=80% P=80% P=80% P=80% P=80% P=8,6%

Constraint in a multi-project environment is the Capacity Constrained Resource (CCR) Most heavily loaded resource across all projects Must be near project integration point # 2 - Release projects into execution based on the constraint availability

# 2 - Release projects into execution based on the constraint availability Project 1 Project 2 Project 3 C C C C C C C C C C C C

We must reduce multitasking of constraint, therefore we must stagger project starts based on constraint availability Project 1 Project 2 Project 3 # 2 - Release projects into execution based on the constraint availability 30-70% C C C C C C

Project execution “ You will start working on this task in 5 months, Tuesday 2 nd (at 3:00 PM) ” GOOD PLANNING or WISHFUL THINKING? Probability of starting on this date is max 20,9% We cannot capitalize on early-finishes What if the resource is on 2 nd needed in other project ? Instead of detailed planning, drive task execution by PROJECT PRIORITIES 80% 80% 80% 80% 80% 80% 80% 5 months

# 3 - Drive execution priorities based on relative buffer consumption Project priority is determined by the status of the project buffer - the less buffer remaining, the higher the priority

The secret of Critical Chain Project Management success lies in ideas that make common sense, but counter common practice Buffers make project finish EARLIER (Assign time buffers where they can do most good) Early start does NOT lead to early finish (Release projects into execution based on the constraint availability) Resources and tasks CANNOT BE PRECISELY scheduled at planning time (Drive execution priorities based on relative buffer consumption)

Who will be affected and how? PROJECTS Project team member Project manager Project office Line manager Top managers / sponsors

We have consistent and instant information about projects that require our attention. We have objective data about status of each project % of project completed % of buffer consumed Top managers / sponsors

Project manager I have instant information about project status and estimated due date. I also have information, on what project tasks to focus on to restore buffer penetration

We can prepare precise impact scenarios of new projects to running projects based on constraining resources and let top managers decide. Resource overload Project office

I have detailed overview of task priorities my department is working on. I have information about planned resource requirements from projects to my department Priority task Not urgent Priority task coming in 3 weeks Utilization overview In 4 weeks we will have issue Line manager

I have clear priorities of my project tasks, both current and future. Task progress reporting is so simple! Priority task My current tasks “ hot potato” coming How many days until finished? 2 Project team member

What are the benefits of CCPM? Reduced time to market (typically by 20 – 50 % ) Major increase of due-date delivery (OTOBIF) close to 95 % Up to 50% more projects done with same resources Unambiguous information about project status Ability to resolve project issues before they impact due date Effective resource planning / balancing Alignment of project priorities across whole company Less negative dependencies between projects Less changes in projects Objective data for further project execution improvements

Has anyone else implemented CCPM? SKODA POWER Delta Air Lines, Inc. T-Systems eI rcom Alcatel-Lucent Medtronic Alna Software Proctor & Gamble Pharmaceuticals ThyssenKrupp (Johann A. Krause, Inc.) Rapid Solutions Group Oklahoma City Air Logistics Center U.S. Naval Shipyards LSI Logic Medtronic Europe LeTourneau Technologies Northern Digital Inc. Oregon Freeze Dry Erickson Air-Crane Skye Group Marketing Architects AHOLD Central Europe SKOFin HP Digital Camera Group AMDOCS Software Boeing Space & Intelligence Systems Bosch Security Systems BHP Billiton Central Nuclear Almaraz Trillo U.S. Marine Corps AFOTEC U.S. Air Force Hamilton Beach/Proctor-Silex Airgo Networks Action Park Multiforma Grupo Celsa Group USAF Ogden Air Logistics Center Duke Energy Edwards Airforce Base TATA Steel Danisco (Genencor International)

Key lessons learned Focus on results, not cultural change Culture and behavior can become a smokescreen to hide real implementation issues Change management rules and related policies and measurements, and the culture will also change. Success is achieved through intimate involvement of top executives Official sponsorship is not enough. To implement successfully, senior management should Set aggressive goals Remove policy obstacles Create habit of managing buffers CCPM is not about better planning and tracking, but effective execution Capacity is wasted because of poor synchronization Reflect only key variables in project plans Prioritize based on buffer consumption across whole organization Do not accept compromises on 3 CCPM principles

Critical Chain Basics

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