Critical Chain Project Management: Motivation & Overview Robert Richards, Ph.D. Project Manager Stottler Henke Associates, Inc. Hilbert Robinson President Afinitus Group LLC (Intro ) How many people have heard of Critical Chain? tried Critical Chain? Before I continue I would like to mention something I found very illuminating that I read in the The Tipping Point by Malcolm Gladwell. “We all want to believe that the key to making an impact on someone lies with the inherent quality of the ideas we present” He also found that ideas that got through happened by “tinkering, on the margin, with the PRESENTATION of the ideas” So I ask you to not only listen to the message, but if you think of ways that the delivery can be improved please jot them down and share them with me. Therefore, if you don’t appreciate Critical Chain more by the end of the this talk Don’t blame the message BLAME THE MESSANGER Either way, I suggest getting a few intros to Critical Chain before making any conclusions or moving forward.

Are You A Responsible Person? Scenario: You live in New England and it’s late Winter Time to airport varies from 45 minutes to 3 hours depending… Most times it takes a little over 65 minutes You are joining the President at 9:00 AM at the airport Questions: How early should you leave? __________ Why?_____________________________ Ask audience to write the answer down. Draw a chart with

Presentation Outline Background Problem [What to Change] Triple Constraints Murphy’s Law Complexity Problem [What to Change] Localized Risk Management Task Level Insurance Policy Student Syndrome Parkinson’s Law Multi-tasking Solution [What to Change to] Governing Principle - Global Risk Management Project Level Protection Systems Perspective Execution Control This presentation outline reminds me of a Critical Chain talk I just attended 2 weeks ago. The PMI Sacramento Valley Chapter has a scheduling forum. I had been trying to go for over a year, but do to other obligations and the distance from San Mateo to Sacramento (about 100 miles) I had never made it. Finally, I had the opportunity, jumped on the Capitol Corridor Amtrak train and went. I confirmed that there was a meeting but did not know the topic. When I arrived, I learned that the presentation was an Introduction to Critical Chain talk. So I thought, this could go either way … boring or interesting. It was many times frustrating because I would think your not hitting the main points! However, after I had watched the entire presentation and spoke with the presenter I learned why he had taken the approach he had. I took some lessons from that presentation and hope it betters this presentation.

Background Triple Constraints [Binding Commitments] Time [Minimize] Capacity / Resource Budget [Minimize] Content / Scope / Quality [Maximize]

Background Murphy’s Law [Disruption Event] Number of unknowns Range of possibilities Frequency of repetition Complexity [Amplification factor] Degree of integration required Number of dimensions to be integrated Speed of execution

Presentation Outline Background Problem [What to Change] Governing Principle or Paradigm Shift Triple Constraints Complexity Murphy’s Law Problem [What to Change] Localized Risk Management Task Level Insurance Policy Student Syndrome Parkinson’s Law Multi-tasking Solution [What to Change to] Governing Principle - Global Risk Management Project Level Protection Systems Perspective Execution Control

Problem: Localized Risk Management Strategy Task level insurance policy See opening scenario – answers? And if it was a task in a project?? ** How safe is safe enough?** Student Syndrome The dog ate my homework Parkinson's Law Self-fulfilling prophecy [good estimating?] Multi-tasking [absence of priorities] Hero or villain? Student Syndrome – Start as late as possible Parkinson’s Law – task expands to fill the time available High reliability requires safety on the task.

Problem: Localized Risk Management One Resource, Four Tasks, from Four Different Projects Task switching has overhead: Much of the benefit of for example the “Getting Things Done” book is teaching how to reduce task switching, and setting up a process for reducing the overhead when task switching. Multi-tasking causes delays to spread across all projects, adding as much as 20% to all projects

Presentation Outline Background Problem [What to Change] Governing Principle or Paradigm Shift Triple Constraints Complexity Murphy’s Law Problem [What to Change] Localized Risk Management Task Level Insurance Policy Student Syndrome Parkinson’s Law Solution [What to Change to] Global Risk Management Project Level Protection Systems Perspective Execution Control How did I get here today … Stottler Henke has been developing scheduling tools for NASA since about 1990. For example our resource constrained scheduling tool “Aurora” Is used to schedule the refurbishment of the Space Shuttle. I was reminded here that this occurs in the 3rd largest building by volume. Because of Aurora’s scheduling capabilities it was chosen by Boeing to schedule the final assembly of the B787 and various other projects. Aurora beat out all commercial critical path and critical chain software packages per scheduling resource loaded schedules. Because of this, Boeing asked us to implement Critical Chain (with many non-traditional extensions) on top of Aurora This Aurora-CCPM product is not used in the largest building by volume.

Solution Governing Principle Behind CCPM is: Benefits: Aggregation of risk… Benefits: Lower overall protection needed Higher degree of “coverage” achieved Leading to lower incidence of “failure”

Solution: Global Approach to Risk Management Planning Project Level vs. Task Level Protection Systems Perspective for Multiple Projects Should load for multiple projects be considered? Why? How? Execution Control Promote and encourage team culture Controlled work queues No multi-tasking work rules No batch processing work rules Task assignment prioritization Management by Exception

Critical Chain Planning Process From Task to Project Protection 1. Traditional Plan 144 hours 2. Safety Excluded Each color represents a different skill category. 72 hours 3. Resource Leveled 4. Critical Chain Marked 84 hours 12

Critical Chain Planning Process From Task to Project Protection 144 Hours 1. Traditional Plan 72 Hours 2. Safety Excluded Each color represents a different skill category. 3. Resource Leveled 84 Hours 4. Critical Chain Marked in Yellow

Aggregation Principle The Concept of Risk Pooling: Can someone explain why this works? Health Care Example: Larger pool = Lower cost . 14

Aggregation Principle Insurance is designed to work by spreading costs across a large number of people. Premiums are based on the average costs for the people in an insured group.  This risk-spreading function helps make insurance reasonably affordable for most people. http://www.insurance.wa.gov/legislative/factsheets/PoolingRiskReducingCost.asp

Critical Chain Planning Compared to 144 days traditional 132 hours PB = Project Buffer FB = Feeding Buffer Application of Aggregation Principle means that the amount of protection required in a schedule decreases as the number of tasks being protected increases. A series of tasks protected at one location requires less protection than if each task was to be individually protected. Locating all the protection in a project at the end of the project provides maximum protection for all the tasks in that project. Aggregation Principle [where did some of the safety go?]: Pooled protection provides more coverage Location is just as important as amount Sizing Rule of Thumb  2/3rds to 1/3rd Buffer is half of preceding chain 16

Critical Chain Planning Schedule shown in Aurora 132 hours compared to 144 hours in traditional schedule Let’s pause and review who has implemented and benefited from Critical Chain Alstom First Solar Siemens Cliffs Natural Resources Michigan Operations (CNRMO) mining and mineral processing plants Elbit Systems Pulte Homes Boeing – Commercial and Defense Japanese Ministry for Land,Infrastructure, & Transportation US Air Force Robins Air Force Base in Robins, Georgia US Marines - Marine Corps Logistics Command, Helicopter repair US Navy, submarine and ship refurbishment Proj_Buf = Project Buffer FB = Feeding Buffer 17

Critical Chain in Execution Schedule Before Execution Starts 132 hours “AS OF DATE” 132 hours T8 experienced a 5 day increase in scope or delay Results in a 2.5 day impact to the project buffer The rest was absorbed by the Critical Chain gap 35-32.5=2.5 7% Complete and 14% Buffer Consumed

Perspective on Buffers Not “rear view mirror watching” Predictive/Preventative/Leading Indicator Mechanism to Promote and encourage Team Work Collaboration / Communication Incentive Mechanism Measuring device – Neutral, Normalized Metrics Real-time Risk Meter Encourages an holistic/goal oriented perspective Application of Aggregation Principle means that the amount of protection required in a schedule decreases as the number of tasks being protected increases. A series of tasks protected at one location requires less protection than if each task was to be individually protected. Locating all the protection in a project at the end of the project provides maximum protection for all the tasks in that project. (after going through slide) * Tipping point also reminded me about what we were taught in psychology and sociology classes. * Human Behavior is greatly affected by their CONTEXT / environment. This is not obvious because people are actually very good at controlling their context. There have been many presentations at this and virtually every other project management related conference, about how team members should perform and how project managers should deal with human relationships to make projects successful. HOWEVER, most of the time we are trying to change human behavior withOUT changing the context. * Critical PATH project management creates a CONTEXT for people to perform in * Critical CHAIN project management creates a very different CONTEXT for people to perform in * Critical Chain is a context that promotes the type of behaviors that needed for effective teams E.g., “Avoid Blaming & Complaining” * Critical Chain  When things go bad, not meeting commitments  team rushes to help NOT blame So incentive to hide problems, & look for scapegoats is greatly reduced. 19

NOTES * Tipping point also reminded me about what we were taught in psychology and sociology classes. * Human Behavior is greatly affected by their CONTEXT / environment. This is not obvious because people are actually very good at controlling their context. There have been many presentations at this and virtually every other project management related conference, about how team members should perform and how project managers should deal with human relationships to make projects successful. HOWEVER, most of the time we are trying to change human behavior withOUT changing the context. * Critical PATH project management creates a CONTEXT for people to perform in * Critical CHAIN project management creates a very different CONTEXT for people to perform in * Critical Chain is a context that promotes the type of behaviors that needed for effective teams E.g., “Avoid Blaming & Complaining” * Critical Chain  When things go bad, not meeting commitments  team rushes to help NOT blame So incentive to hide problems, & look for scapegoats is greatly reduced.

Critical Chain Priority Metric Project Status Trend Chart or “Fever” Chart 21

Critical Chain Priority Metric Project Status Trend Chart or “Fever” Chart 22

Multi-Project System Systems Perspective for Multiple Projects Should load for multiple projects be considered jointly? Obviously Why? Prevent System Overload/Multi-tasking How? By taking a Systems Perspective

Creating a Multi-Project Schedule Finite Capacity Pipeline Due Dates Are Derived Ingredients: CC Plans [shorter] Strategic Pacing Mechanism Strict Priority Scheme Rate Limit Policy/Guidelines

Multi-Project Execution Control Pipeline Status Snap Shot 0 % Buffer Consumed 100 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | % Critical Chain Completed 100 1003 1002 1001 1007 1006 1004 1009 In Execution, Buffer Status Drives Priority Decisions, not Project Importance 1005 1008 1010 By Portfolio of Projects

The Upshot… Benefits Challenges: Operational Coherence – Stability 20% Shorter Cycle-Times – Speed On-time Performance – Reliability More throughput – Growth Challenges: 1. Simple but not easy to grasp – too simple? Requires a change in mindset Takes 120 days for typical 100 person team We don’t need that much improvement

Questions ??? Robert Richards Ph.D., Stottler Henke Associates, Inc. Richards@StottlerHenke.com Hilbert Robinson President Afinitus Group LLC