14 15-Prof Saji-Gopinath

Conference 2012 PMI Kerala June 09, 2012
Critical Chain Approach to

Project Success
Dr. Saji Gopinath
IIM Kozhikode
PMI- Project Management Conference 2012

Motivation
Theme of This conference
Project Management- a Life skill
What is common in all our projects?
Time overrun
Cost overruns?

Why?
More importantly
Why such overruns happen rarely in our personal
projects
A new way of looking at projects?
PMI Study

What do we want from Project Management ?
Reliable on time in full to budget delivery performance
More revenue, more Profit, happy customers

A stable plan
More Productive use of resources

Simple, objective measures of Project progress ; project health status
Shorter meetings, better informed
stakeholders - less waste, more productivity

Clear signals for when corrective action is - and is not - necessary
Better directed recovery efforts - less waste,
more productivity

Direction for ongoing improvement efforts
The future brings more revenue, more profit, happier
customers than the present
And what we normally get!!
Reliable on time in full to budget delivery performance ?
A continuous struggle with time, cost and scope ?

A stable plan
Repeated rescheduling ?

Simple, objective measures of Project progress ?
Clarity at the start and end, thick fog in between ?

Measures of Project health status ?
Subjective assessments compounded by human factors ?

Clear signals for when corrective action is - and is not -
necessary ?
Intervening too much too early, and too little too late ?
Direction for ongoing improvement efforts ?
"We'll improve our methods when things get better"

Do our projects fail because of bad panning?
(is planning the most important PM Skill?)

Is the delays happen due to A Class items/
Activities

Why do our project finish when it is on Mission
Mode?
Revisiting the beleifs.

Classical Project Management
Performance & Increasing Complexity
Re-look at the fundamental assumptions

Technical and Behavioral Dimensions of Project
Management
Why our projects are delaying?

Re-thinking the way we manage our projects


Why do our Projects delay?
The time estimates are too tight
The changes in environment is too drastic
The interfacing agencies are inefficient
It is impossible to predict the time of completion
of a work package (activity)
Others


How do we estimate project duration?
Past Data
Top Down or Bottom up approach
Cushions for uncertainty
Activity precedence (network technique)

How much is the cushion you provide??

Project Duration
What is the effect?

Theory
Actual
The effect is that the typical cushions you provide on
each activity is around 50-100%
3 5 7
4 5 20
6
12

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%
T
50
T
90


Problems with the conventional project management techniques
Three mechanisms that inflate time estimates
The worst-case scenario
Add safety time to ensure project is on time
By inflating original time to protect against a global cut

Median = 2 days Estimated = 5 days
Safety time =
3 days
Confidence level
80-90%
0.4
0.3
0.2
0.1
1 2 3 4 5 6 7
Probability of
Completing
project within
x number of
days
Number of days to
Complete project
To keep project on schedule - variability encourages
people to pad individual activity times with safety time.
50%

Buffers on Each Activity
Why after all these cushions project get delayed?

Three Ways to Waste Safety time
passing on of previous delays
Dependencies between activities cause delays to accumulate
student syndrome
Wait until the last minute to start a task
multi-tasking
Multitasking caused by limited resources ( resource contention )

How the Safety Gets Wasted
Adding safety time to resolve the resource contention problem does
not help
we add safety everywhere and then we waste it!

Conventional SAFETY TIME inflates project completion time

But.. Adding safety time to protecting project objectives
seldom works..

Due Date
Start Date Finish Date Due Date
Effect of Fluctuation

Behavioral Dimension of Project Environment
Additive Rule
Commitments of duration and total cost of a project are
based upon adding up the duration and cost of individual
tasks
Parkinsons Law
Work expands to fill its time
3-Minute EGG Rule
Its not quality if it is finished before time is up
Hockey Stick Syndrome (student syndrome)
Waiting to start a task due to more important work at hand

The Conflict
Manage
Projects
Successfully
Avoid
Parkisnons
Law
Minimise
Project
Leadtime
Schedule
Without
safety
Meet Project
Promise
Provide
For
Murphy
Schedule
With
SAFETY
Con
flict
Way Out?
Plan A - invest our energy in reducing the extent
of the variability:
- Allowing longer in Project planning stage for preparing estimates
- Training staff in estimating
- Use of formal estimating methods
- Measuring progress and feeding results back into estimating practice
- More detailed specifications
- Less flexibility over changes to specifications
- Training the staff better in their job content
- Using individual performance measures to identify poor performers
- Keeping projects short (< 6 months), breaking larger
undertakings into several short Projects

Doing this can help, but doesn't solve the problem

Plan B - Coping behaviours
Project Managers fight to be assigned the most viable Projects
Project Managers fight for the best staff
Project Managers fight to keep the Project scope down
Project Managers exploit changes in scope to unduly extend
timelines and budgets
Project Managers quit long Projects well before the delivery date
Project Managers disregard targets they know to be impossible
Staff work double shifts in the final weeks / months
Dumping the blame elsewhere

Doing these may help the individual, but not the organisation


We can reduce variability, but we cannot eliminate it,
because it is inherent to the nature of a Project

Plan C: Approach the problem in a different way

We must manage the variability that remains

What is the way out?

Critical Chain Project Management
Adaptation of Principles of Theory of constraints
Applying TOC concepts to project management
Critical Chain is a project management application of
the Theory of Constraints (TOC)
According to TOC, the main constraint in any project
is the time taken for completion of the Critical Chain

Conventional approach focuses on successful on-
time completion of each individual activity in a project
TOC approach focuses on successful on-time
completion of the entire project


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.
What is TOC Philosophy?

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 is a function of how well
different component processes interact with
one another

Systems are analogous to chains, or
networks of chains
Like a chain, a systems performance is
limited by the performance of its weakest link

The weakest link is the systems constraint

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

How we handle variability in Critical Chain
We do not build in any contingency at the Task level
We move all the contingency to the Project level - call this the
Completion Buffer
Individual Tasks can now be late without affecting the
completion date of the Project
The Project due date is protected as long as
the accumulated lateness along any one
chain is less than the completion buffer

How does all this relate to projects?

What difference does this make to our probability of being late ?
Under 'normal' practice, if any task is later than its contingency
allowance, we have a problem

Under Critical Chain, we only have a problem if the total lateness
exceeds the total contingency

This second condition is much less likely than the first [ Law of averages
/ Central limit theorem] and increasingly so as the number of tasks
increases

Uncertainty always present it doesnt 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

Revisiting activities

Power of Aggregation

Remove safety time from individual activities
Job 4
Job 2
Job 3
Job 1
Conventional Project Schedule
Task buffers(safety time) are hidden
within individual activities
Critical Chain Schedule
Buffers are pooled,
and made explicit
Project Buffer,
Safety buffers

Pooled buffers
Project buffer is safety time added to the end of the critical chain
to protect the completion date of the project.

Feeding buffer on the non-critical path
Feeding Buffer
Project Buffer
If Slack remains,
then schedule as
late as possible
Critical Chain
Feeding
path
Feeding buffers are designed to protect the critical chain from
delays on non-critical paths

Resource buffers
a wakeup call to alert resources to be ready to work on
critical tasks
Scheduled idle time can provide better info about resources
availability (capacity)

Resource
Buffers
Critical Chain
Project
Buffer
Feeding
Buffer
Alert Wkr A
Alert Wkr B
Alert Wkr C

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

2 3 4
1 2 3 4 Project Buffer
Task 1
Original Critical Path
Original Critical Path with
Buffer
(Safety removed from individual tasks)



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

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

Last word
The development of new project management
techniques have not reduced uncertainty

Hence we need ways to manage and not avoid
uncertainty

Critical Chain Management is a way to achieve
this

Thank You

saji@iimk.ac.in / saji.gopinath@yahoo.in
9400050850

14 15-Prof Saji-Gopinath

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Conference 2012 PMI Kerala June 09, 2012

Critical Chain Approach to

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