TOC Project Management

The Theory of Constraints
Fundamental Exam Review

Applications: Project Management Segment
James R. Holt, Ph.D., PE

Professor jholt@wsu.edu
Engineering & Technology http://www.engrmgt.wsu.edu/
Management © Washington State University-2010 1
TOCICO Segmented Fundamentals Exam
Fundamentals Certificate
Multiple Choice Exam

(Identify, Exploit, Subordinate, Elevate, Go to Step 1)
Fundamentals Fundamentals Fundamentals Fundamentals

Certificate of Certificate of Certificate of Certificate of
TOC Philosophy TOC Thinking TOC Applications TOC Finance &
Processes Measures
•Inherent Potential •Conflict •T, I, OE

•Inherent Cloud •DBR
Simplicity •PQ Type
•Inherent Win-Win •Negative •Project Problem
•Five Focusing Branch Management
Steps
•Three Questions •Ambitious •Replenishment
Target
© Washington State University-2010 2
Intro to Critical Chain Project
Management
• Projects Are:
 Unique
 Dependent on Precedence
 Activities Not Well Known
 Highly Variable
 Share Resources
 Concurrent with Other Projects
 Valued by Scope, Schedule and Cost

Undesirable Effects of Projects
• Projects Are:
 Usually Late
 Have Too Many Changes
 Often Over Budget
 Lots of Rework
 Many Priority Battles
 Resources Not Available When Needed
 Jeopardize Scope for Cost or Schedule

Projects are Balancing Acts
Quality and Timing and Budgeted
Scope Schedule Costs

Then things Combine
Precedence Statistical Human

Structure Variation Behavior

And Reality Sets In
Statist
nce ic
Variat al an
Precede ion Hum
v ior
e a
Structur Beh
Bumpy Road of Reality

Due Date Problems
S tory: W hen about to m iss a due date, w e take drastic
actions like com prom ising on content or pulling in m ore
resources. T he problem is that both these actions
jeopardize the other original com m itm ents, content and
cost
B ring the T rim the content
schedule back or take expensive
on track corrective action
M eet original
com m itm ents
N ot jeopardize
the original D o not trim the
Thanks to Rees Furbeck who com m itm ent for content or take
prepared some of these graphics content w ithin expensive
original budget corrective action
Change Problems
Story: W e m ake changes to satisfy the requirem ents of
our custom ers. The problem is that these changes
jeopardize the original com m itm ents for schedule and
budget
Satisfy our
M ake changes
com m itm ent to
during the
provide w hat our
project
custom ers need
M eet original
com m itm ents
M eet the original Do not m ake

com m itm ent for changes
schedule and during the
budget project

Rework Problems
S tory: In general, w e start w ork on a project before final
specifications are available. This usually m eans doing
rew ork w hen som e of our assum ptions are incorrect. The
problem is that doing rew ork jeopardizes the original
com m itm ents for budget and schedule.
M eet com m itm ent for

content, even though
D o rew ork
our specifications
have changed
M eet original
com m itm ents
N ot jeopardize the
original com m itm ents D o not do
for budget and rew ork
schedule
The Core Problem (Constraint)
The original The safety we are allowed is not
commitment enough to absorb the glitches
is realistic
Do whatever it takes Compensate for
to meet an early mis-
endangered original estimations /
commitment mis-calculations
Meet original
commitments
Not compensate
Not jeopardize any
for early mis-
other original
estimations /
commitment
mis-calculations

How To Understand Project
Problems
• It is hard to examine one project and find a pattern
to the problems.
 There are too many excuses.
 There is so much variability in tasks that the
solution (problem) changes with every look.
• Its better if we could examine the same project
executed over and over again to look for trends.
 Simulation can do this
 Thru-Put Critical Chain Simulator!

Understanding Variability
Before we go to the
Simulator…
What is 8 times 8? 64? Are you sure?
What is 8? 8? Or 8±1?
So, what is
8±1 times 8±1? Somewhere between
49 and 81!
With 64 being the
most likely. 13
© Washington State University-2010
Good Statistics
Variability Adds as the Square Root of the Sum of the
Squares
(Central Limit Theorem Variability reduces when combined)
+ =
+ Watch Simulation
01

Bad Statistics
Assembly: If one
is late, they are
all late.
+ =
+
Watch Simulation
02
Resource Conflict
Watch Simulation
04
Look at a Real Project
Sim 5
Commitment
70 Days
Watch Simulation 05

One Simulation Run
Commitment
70 Days
Actual
72 Days

Results of 1000 Runs
Commitme
nt 70 Days

Sim 05 Treats Tasks as Normal
Distributions
Task Duration
Distribution for
Activity A1
Theoretical and
Actual
Simulation Data

But, Are Project Tasks Normal
Activities?
How long did it take you to drive to work this morning?
What is the least time it has ever taken?
What is the most time it has ever taken?
What is the average time to drive to work?
Is the average closer to the shortest?
Is the average closer to the longest?
50% Estimate
Probability
85% Estimate
Time ->
Skewed Distribution for Sim 6a
Task Duration
Distribution for
Activity A1
Theoretical and
Actual
Simulation Data

Results of 1000 Simulations 6a (skewed)
Scheduled @50% Probability
Commitme
nt 70 Days

Try Adding Safety time to each Task
Scheduling 11 Days per Task
Scheduled @60% Probability
Commitme
nt 77 Days

Maybe 13 Days per Task would do it?
Scheduled at
75% Probability
Commitment
91 Days

Try Giving 16 days per Task as a
Big Safety Cushion
Scheduled @
85% Probability
Commitment
112 Days

Getting Better at Hitting our
Projections, But...
Statistical Summary for PmSim Project Management Simulation
Single Project Results
Normal Task Duration Distribution, 50% Task Estimate Confidence

5
Skewed Task Duration Distribution, 50% Task Estimate Confidence

6a
Simulation
Skewed Task Duration Distribution, 60% Task Estimate Confidence

6b
75% Task Estimate Confidence

6c
85% Task Estimate Confidence

6d
0 50 100 150 200 250 300 350 400 450

Project Duration
(Days) Rees Furbeck’s
clever graphic 27
Engineering Optimism
Question: If you have 16 days to to a 10 day
project, when do you start?
Immediately! Or,
After 6 days. Or,
After 10 days (since you know you are faster
than average and can probably do it in 6 days).
Student
Level of
Syndrome
Effort
Normal level of effort

Assigned Due Date
I hate Student Syndrome!
It wears People out!

And, they think its
Self Imposed Overtime their own fault!
Level of
Effort
Normal level of effort
Assigned Due Date

There is another Problem
Question: You fought tooth and nail to get the
16 days you wanted to do the 10 day project.
If you finish in 14 days, will you go around
advertising early completion?
What if you finish in 10 days?
How about 8 days?
Wonder of wonders 6 days?
This is called Erroneous Reporting of Completion time!
A second similar rule: Parkinson’s Law--Work expands
to fill the time available

With 75% Erroneous Reporting
Sim 06, Tasks Scheduled @ 16 days, only

25% report early completion
Appearance:
Boy are
We Good!
We made our
Due Dates!
Now Add Student Syndrome
Sim 06, Tasks Scheduled @ 18 days (85% confidence), only
25% report early completion, and late starting (Student
Syndrome and Parkinson’s Law)
Expected Completion:
7*18 day=126 Days
Student Syndrome and 75%
Erroneous Reporting
Distribution used
to simulate individual
task duration. Only
25% of the time were
true times reported.

Commitment
126 Days (Scheduled 18 days
for each Task)
85% Probability

Increasing Safety to 19
days
Commitment
133 Days (Scheduled 19 days
for each Task)

Huge Safety -- 22 Days
Commitment
(Scheduled 22 days
154 Days for each Task)

A 90% Estimate of this 70 Day Project
is: 154 + Days
Statistical Sum m ary for Pm Sim Project M anagem ent Sim ulation
Single Project Results
Norm al Task D uration D istribution, 50% Task Estim ate Confidence

5
Skew ed Task D uration Distribution, 50% Task Estim ate C onfidence

6a
Skew ed Task D uration Distribution, 60% Task Estim ate C onfidence

6b
Simulation
75% Task Estim ate Confidence

6c

6d
Add 75% Erroneous Reporting of Task Com pletions (Parkinson's Law )

6e
Add Student Syndrom e

8a

8b
0 50 100 150 200 250 300 350 400 450

Project Duration
(Days)

Consider Three Individual 70 Day
Projects in Parallel!
Simulation 9a
Multi-Project
Student Syndrome
75% Erroneous
Reporting,
90% Estimate
Resources Shift
and stay until
complete (one
task delays another).

One Project Delays Another
90% Probability
Commitment 154
Days
Project 1 as first
Priority:
Scheduled 154
Task Duration
22 Days

Rather than Delaying, try Alternating
My Assignments
Task 1 Task 2 Task 3
10 days 10 days 10 days
Task 1 Task 2 Task 3 Task 1 Task 2 Task 3
5 days 5 days 5 days 5 days 5 days 5 days

Everything
Takes Twice as
Long!!!!!!!!!!

I Hate Multi-Tasking Even More!

Painful Results!
Norm al Distribution, 50% Task Estim ate Confidence

5
Skew ed Distribution, 50% Task Estim ate Confidence

6a

6b

6c

6d
Add 75% Erroneous Reporting of Task Com pletions (Parkinson's Law )

6e

8a

8b
Add M ulti-Project, Shared R esource (Q ueues)
3 Projects
9a
3 Projects Add M ulti-Tasking

9b
0 50 100 150 200 250 300 350 400 450

Project Management
Scheduling
• The last session was pretty depressing
 Project Structure is a problem.
 Task Variability is a worst problem.
 Human Behavior (as a result of attempting to
deal with structure and variability)-Ahhh!
• Result, a single project planned for 70 days
stretches to 160 days!
• Three 70 day concurrent projects exceed 350
days!

Painful Situation!
Norm al Distribution, 50% Task Estim ate Confidence

5

6a

6b

6c

6d
Add 75% Erroneous Reporting of Task Com pletions (Parkinson's Law)

6e

8a

8b
Add M ulti-Project, Shared Resource (Q ueues)
3 Projects
9a
3 Projects Add M ulti-Tasking

9b
0 50 100 150 200 250 300 350 400 450

We have Maxed Out!
• “We are caught in a vicious cycle which leads
us to inflate our estimates and press for more
people, just to see the completion dates of our
projects slipping more and more into the
future ...
• “... until the time to do the project becomes so
long or the compromises on the content
become so large that the clients tell us, “If
that’s the case we’ll go elsewhere !”
Eli Goldratt

We must improve or lose business and
people
• “At that Stage, a very unsatisfactory
equilibrium is reached:
• “Lead times are long
• “Visibility is lost
• “The work environment is chaotic
• “There is a loss of ability to make decisions
• “Everything is done by pressure.”
Eli Goldratt

Remember this Image?
The Solution must
address all three causes!
Statist
nce ic
Variat al an
Precede ion Hum
vior
e a
Structur Beh
Bumpy Road of Reality

Is A Solution Possible?
• Many people have done it (See AGI Web)
• Example: Israeli Aircraft Industries
Israeli Aircraft Industries - Wide Body

From a letter to Dr. Goldratt, February 23, 1997,
“In the wide body aircraft directorate, average turn around time per aircraft
reduced from THREE MONTHS to TWO WEEKS. Backlog (Customer orders)
has increased from two months to one year.”

What are the elements of the Solution?
• It makes no sense to intentionally

schedule conflicts.
• Prioritize the work, Work the priorities.
• Stagger the release of work
(Remember the Job Shop Game)(Video)
• Communicate what is important to those
who can make a difference
• How?
Multi-Project Simulation 9c
Red is the Tightest

Scheduled Resource

1. Prioritize - Stagger Projects
Stagger based on
de-conflicting
Red Resources
(others may conflict
between projects)

Staggering helps a bit
but there is still Multi-Tasking
First Project Median 169
Second Project Median 219

(total time 323)
Third Project Median 235

(total time 367)
Let’s Do This by Fixing Each Project –
One Project at a Time!
Let’s look at the single

Project CCPM Solution for
a few minutes before we
return to the Multi-Project

Our Empirical results on projects are not
good. We need protection!
Empirical Completion Distribution
1 2 3 4 5 6 7 8 9 10 Buffer
Due Date
If we buffer our existing schedule,

we just add more time!
This is counter productive!
We are worse off.
Even worse than before!
Let’s take advantage of good statistics. If we
finish early, we can move on to the next task.
Don’t waste Safety Allocated.
Before: 85% Estimate Completion Distribution
1 2 3 4 5 6 7 8 9 10 Buffer
Buffer
Eliminate waste
After: 50% Estimate Due Date

Completion Distribution
1 2 3 4 5 6 7 8 9 10 Buffer

Let’s take advantage of good statistics. If we
finish early, we can move on to the next task.
Don’t waste Safety we Allocated.
Before: 85% Estimate Completion Distribution
1 2 3 4 5 6 7 8 9 10 Buffer
Due Date
After: 50% Estimate Notice, we are
only changing the
1 2 3 4 5 6 7 8 9 10 Buffer schedule.
Actual work
distributions are the
Due Date same. If we finish
early, we can capture
the advantage.
We can buffer the variability of activities along
the Critical Chain, but where else?
After: 50% Estimate

1 2 3 4 5 6 Buffer
Due
7 8 9 10
Date
Make sure non-critical,

side chains are de-coupled
from the Critical Chain
Add Feeder Buffers
After: 50% Estimate

1 2 3 4 5 6 Buffer
Due Date
7 8 9
10

Add Assembly (Feeder) Buffers
After: 50% Estimate

1 2 3 4 5 6 Buffer
Due Date
7 8 9
10

After: 50% Estimate

1 2 3 4 5 6 Buffer
Due Date
7 8 9
10

After: 50% Estimate

1 2 3 4 5 6 Buffer
Due Date
7 8 9
10

After: 50% Estimate

1 2 3 4 5 6 Buffer
Due Date
7 8 9
10

Next Step, Add
Resource Buffers
After: 50% Estimate

1 2 3 4 5 6 Buffer
Due Date
7 8 9
10
This is a ‘Notification’ step (communication buffer) to

make sure resources soon to be used on Critical
Chain Activities will be Ready and Available.
Single Project Buffered
Commitment 95
Simulation 08
Days
Project Buffer
Critical Chain
Feeder Buffers
Resource Buffers

CCPM Simulation 08 Results
End of Buffer 95
50% Completion
No Multi-Tasking
Buffer Management
Previous
Median

Now, Let’s look at Multi Project
• We Schedule Each Project individually
according to Critical Chain Project
Management.
• We stagger the projects according to a selected
strategic drum (resources)
• We include a buffer between projects (on the
drum)
• All Estimates are at 50%. Use Buffer
Management to prioritize resource allocation.

Stagger Projects w/Buffer
Buffer Between Projects Too

Result with 50% schedule and Buffers
First Project Median 96

90%@110
Expected
Second Project Median 180

90%@210
Expected
Third Project
Median 216
90%@245
Expected

Notice: All Three

N orm al D istribution, 50% T ask E stim ate C onfidence
5
S kew ed D istribution, 50% T ask E stim ate C onfidence

6a
S kew ed D istribution, 60% T ask E stim ate C onfidence

70 day projects
6b
75% T ask E stim ate C onfidence

were completed
within 240 days.
6c

6d
A dd 75% E rroneous R eporting of T ask C om pletions (P arkinson's Law )

6e
A dd S tudent S yndrom e
8a

8b
A dd M ulti-P roject, S hared R esource (Q ueues)

3 P rojects
9a
3 P rojects A dd M ulti-T asking

9b
P rioritize P rojects,
9c S chedule D rum
E lim inate B ad M ulti-T asking

9d
U se C ritical C hain S chedules and B uffer M anagem ent,
9e R educe E rroneous R eporting of T ask C om pletions to 50%
0 50 100 150 200 250 300 350 400 450

R . Furbeck 5/11/00
69
Bottom Line
• There is lots to gain
• Particularly in Multi Project
Environments
• Single Projects 20% reduction
• Multi Projects 50% reduction

Student Exercise - Small CCPM
The following tasks are estimated at 50% probability of completion already.
Schedule this project. Resource Project
Buffer Buffer
Feeder Project
A 20 C 10 Buffer F5 Buffer
B 15 D 10
B 15 E 10
-80 -70 -60 -50 -40 -30 -20 -10 0

Critical Steps
• Prioritize work
• Avoid scheduling conflicts
• Schedule Aggressively (remove wasted safety)
• Insert adequate safety in the right places (less
than that taken out)
• Communicate Time Remaining
• Manage Resources according to Buffer Status
• Sequence multiple project on strategic resource
with large buffer.

Project Type Processes
The Goal: Successful Project Delivery (single or multiple)

The Measure: Deliver on Time, In Budget, Desired Content.
The Constraint: The Critical Chain of Events w/ Resources
~
Applies to processes where Touch time=Flow time.

Project Type Processes
The Conflict Cloud:
The Paradigm Shift: Don’t
Waste Safety, Schedule
Aggressively, Aggregate
Buffers, Communicate “Time
Remaining”, Negotiate
Capability B. Meet
D. Do whatever
Threatened
it takes
Commitments
A. Successful
Project
C. Don’t
Jeopardize other D’. Don’t take
Commitments aggressive actions

The Behavior/Results
The Aggressive Schedule Exploits
the Constraint.
Reducing Conflict, Staggering and
Buffers Subordinate (de-couple) the
System Processes.
Buffer Management measures Buffer Penetration
Red-> Immediate Action What do we learn
Yellow-> Learn about what to fix next here to apply to
Green-> Allow the system to run Daily Lives?
Constraint Focus typically results in 25 to 60% reduction.
Relay Race mentality and Buffer Management assigns
resources. Continual Improvement changes the culture and
creates really effective teams.
Project Management
Lessons Learned
• Variability/Variety Happens - Expect Accidents, Hardships,
Mistakes, Disasters, etc.
• Plan Aggressively (Not too Aggressive, Not too Safe,
Just Right-50%)
• Buffer for the Worst (have 95% confidence of survival)
• Say, “No!” to Bad Multi-Tasking (Sequence-Don’t Overload)
• Work on What is Important When its Important
• Use Buffer Management to flow
from Priority to Priority Covey
Urgent Not Urgent
• Communicate ‘Time
Remaining’ Not Important
FB OE
• Don’t Forget important Quadrants
Important
CC PB
Strategy and Tactic Tree
• Project Strategy and Tactic Tree

• http://www.wsu.edu/~engrmgmt/holt/em534/SandT-Projects.pdf

TOC Project Management

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The Theory of Constraints

Fundamental Exam Review

James R. Holt, Ph.D., PE

Multiple Choice Exam

Fundamentals Fundamentals Fundamentals Fundamentals

•Inherent Potential •Conflict •T, I, OE

© Washington State University-2010 3

© Washington State University-2010 4

© Washington State University-2010 5

Precedence Statistical Human

© Washington State University-2010 6

Bumpy Road of Reality

M eet the original Do not m ake

© Washington State University-2010 9

M eet com m itm ent for

© Washington State University-2010 11

© Washington State University-2010 12

© Washington State University-2010 14

© Washington State University-2010 17

© Washington State University-2010 18

© Washington State University-2010 19

© Washington State University-2010 20

© Washington State University-2010 22

Scheduled @50% Probability

© Washington State University-2010 23

© Washington State University-2010 24

© Washington State University-2010 25

© Washington State University-2010 26

Normal Task Duration Distribution, 50% Task Estimate Confidence

Skewed Task Duration Distribution, 50% Task Estimate Confidence

Skewed Task Duration Distribution, 60% Task Estimate Confidence

75% Task Estimate Confidence

85% Task Estimate Confidence

0 50 100 150 200 250 300 350 400 450

Normal level of effort

It wears People out!

Normal level of effort

Assigned Due Date

© Washington State University-2010 29

© Washington State University-2010 30

Sim 06, Tasks Scheduled @ 16 days, only

© Washington State University-2010 33

© Washington State University-2010 34

© Washington State University-2010 35

© Washington State University-2010 36

Norm al Task D uration D istribution, 50% Task Estim ate Confidence

Skew ed Task D uration Distribution, 50% Task Estim ate C onfidence

Skew ed Task D uration Distribution, 60% Task Estim ate C onfidence

75% Task Estim ate Confidence

85% Task Estim ate Confidence

Add 75% Erroneous Reporting of Task Com pletions (Parkinson's Law )

Add Student Syndrom e

90% Task Estim ate Confidence

0 50 100 150 200 250 300 350 400 450

© Washington State University-2010 37

© Washington State University-2010 38

© Washington State University-2010 39

Task 1 Task 2 Task 3

10 days 10 days 10 days

Task 1 Task 2 Task 3 Task 1 Task 2 Task 3

5 days 5 days 5 days 5 days 5 days 5 days

© Washington State University-2010 40