ELC 347 project management Day 21

Agenda Integrative Project Assignment 7 Posted Part 4 corrected, feedback sent, both teams need revision and clarification Part 5 Due Nov 24 (page 342) Any of the first five sections can be resubmitted for rescoring prior to finals week. The recorded score will the average of the original score and the score on the resubmitted section. Assignment 7 Posted Due Nov. 24 Today will discuss Critical Chain Project Scheduling

Schedule for rest of semester Nov 17 Chap 11 Nov 20 Group work Nov 24 Quiz 3 Through Chap 11 IP part 5 Due Assignment 7 due Dec 1 Project ‘s 5 & 6 Dec 4 Group Work Assignment 8 due Dec 8 Chap 12 IP Part 6 due Dec 11 Chap 13 & 14 Dec 18 @ 10 AM Quiz 4 Through chap 14 IP Project’s due © 2007 Prentice-Hall, Inc

Critical Chain Project Scheduling Chapter 11 © 2007 Pearson Education

BAE Systems http://www.baesystems.com/

Theory of Constraints & Critical Chain Project Scheduling A constraint limits system output. The Goal – Goldratt TOC Methodology Identify the constraint Exploit the constraint Subordinate the system Elevate the constraint Repeat the process

Dropping a marble Top left Top right Bottom left Center

Dr J Edwards Deming

Variation Common Cause Inherent in the system Special Cause Due to a special circumstance Managers should Understand the difference between the two Not adjust the process if variation is common cause Not include special cause variation in risk simulation Not aggregate discrete project risks

CCPM and the Causes of Project Delay How safety is added to project activities Individual activities overestimated Project manager safety margin Anticipating expected cuts from management time 25% 50% 80% 90% Gaussian Distribution

Wasting Extra Safety Margin The Student Syndrome Immediate deadlines Padded estimates High demand Failure to pass along positive variation Other tasks Overestimation penalty Perfectionism Multitasking Path Merging

Critical Chain Solutions Central Limit Theorem V∑ = n * V , SD2 = V, Standard deviation of the sum is less than the sum of the standard deviations! Aggregating risk leads to reduced risk

Activity durations estimated at 50% level Buffer reapplied at project level Goldratt rule of thumb (50%) Newbold formula (2σ) Feeder buffers for non-critical paths

CCPM Original 50% Probability Activity Duration A 10 5 B 6 2 C 14 7 D E 8 3 F 12 Total 52 24 New estimate = 23 + (52-24)/2 = 37

CCPM Changes Due dates & milestones eliminated Realistic estimates – 50% level not 90% “No blame” culture Subcontractor deliveries & work scheduled ES Non critical activities scheduled LS Factor the effects of resource contention Critical chain usually not the critical path Solve resource conflicts with minimal disruption

Critical Chain Solutions Bob Feeder Buffer ProjectBuffer Buffers protect constraints and prevent delays

Critical Chain Project Portfolios Drum – system-wide constraint that sets the beat for the firm’s throughput Drum – person, department, policy, resource Capacity constraint buffer – safety margin between projects Drum buffer – extra safety before the constraint

Applying CCPM to Project Portfolios Identify the drum Exploit the drum Prepare a schedule for each project Determine priority for the drum Create the drum schedule Subordinate the project schedules (next slide) Elevate the capacity of the drum Go back to step 2

Subordinating Project Schedules Schedule projects based on drum Designate critical chain Insert capacity constraint buffers Resolve any conflicts Insert drum buffers so the constraint is not starved

CCPM Critiques No milestones used Not significantly different from PERT Unproven at the portfolio level Anecdotal support only Incomplete solution Overestimation of activity duration padding Cultural changes unattainable