Critical Chain Project Scheduling Chapter 11

Learning Goals Understand the difference between common cause and special cause variation in organizations. Recognize the three ways in which project teams inflate the amount of safety for all project tasks. Understand the four ways in which additional project task safety can be wasted. Distinguish between critical path and critical chain project scheduling techniques. Understand how critical chain resolves project resource conflicts. Apply critical chain project management to project portfolios.

Theory of Constraints (TOC) & Critical Chain Project Scheduling A constraint limits system output. The Goal – Goldratt Critical chain method is a network analysis technique that modifies the project schedule to account for limited resources. TOC Methodology Identify the system constraint. Exploit the system constraint (schedule first). Subordinate everything else to the system constraint (schedule second). Elevate the system constraint (remove constraint\add resources). New constraint uncovered? Repeat the process.

Variation Special Cause Due to a special circumstance Common Cause Inherent in the system Managers should Understand the difference between the two Do not adjust the process if variation is common cause Do not include special cause variation in risk estimation Causes over estimation of project contingencies Risk management should be performed on discrete project risks

Distribution Based On Common Cause Variation Funnel experiment

Distribution Based On Misinterpretation of Variation Funnel experiment

CCPM and the Causes of Project Delay How safety is added to project activities Individual activities are overestimated Project manager’s added safety margin Anticipating expected cuts from management time 25% 50% 80% 90% Lognormal (Gaussion Distribution)

Methods of 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

Student Syndrome Model People tend to put off task with long deadlines in favor of working on immediate deadlines Demotivated due to knowledge of padded estimated time Resources in high demand juggle multiple activities which promote “putting off” task Parkinson’s Law states – Work expands so as to fill the time available for its completion.

Failure to Pass Along Positive Variation (extra time) Finishing early gives the chance to put work on hold to act on other projects or assignments Fear that future work time estimations may be penalized if task are finished early Can be seen as time to refine the initial work

Effects of Multitasking On Activity Durations Let’s say each task is 10 days worth of work 30 days until all three are done, each task done in 10 days 30 days until all three are done, each task done in 20 days* *This assumes zero startup time between task changes

The Effect of Merging Multiple Activity Paths Even though Path C is done 15 days early, the successor activity will start 15 days late due to the merge of work

Critical Chain Solutions Central Limit Theorem since CLT Example Activity durations estimated at 50% level Buffer reapplied at project level Goldratt rule of thumb (50%) Newbold formula Feeder buffers for non-critical paths States that any distribution of sample means from a large population approaches the normal distribution as n increases to infinity. Buffers are non-work scheduled activities to maintain focus on the planned activity durations

Reduction on Project Duration After Aggregation Original planned time based on a high probability of on-time completion Shrink planned time to the 50% likelihood level – buffer is transferred to the project level Shrink buffer acquired by 50% and reapply potential slack.

Example – Original Project Schedule Using Early Start Critical activities Non-critical activities

Example – Reduced Schedule Using Late Start with 50% reduction

Example– Critical Chain Schedule with Buffers Added at 50% .50 x (5+25+15) = 22.5 days .50 x (10+5) = 7.5 days

Critical Path Network with Resource Conflicts Feeder Buffer Bob Critical Path

The Critical Chain Solution Buffers protect constraints and prevent delays 1st -Bob’s task on the CP – redraw critical chain network 2nd -Bob’s task are prioritized and worked in order

Needed CCPM Culture Changes Due dates & milestones are eliminated The only firm commitment is at the project level Realistic likelihood estimates – 50% level not 90% Create a “No blame” culture for missing a date Subcontractor deliveries & work scheduled ES Non-critical activities are scheduled LS Factor the effects of resource contention if necessary Critical chain usually not the critical path Solve resource conflicts with minimal disruption

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 (CCB) – safety margin separating projects scheduled to use the same resource Drum buffer – extra safety margin immediately before the constraint resource

Applying CCPM to Project Portfolios Identify the resource constraint or drum Exploit the drum Prepare a critical chain schedule for each project Determine priority for the drum Create the drum schedule Subordinate the project schedules Schedule projects based on drum schedule Designate critical chain Insert capacity constraint buffers Resolve any conflicts Insert drum buffers so the constraint is not starved for work Elevate the capacity of the drum Go back to step 2

CCPM– Three Projects Stacked To Use A Drum Resource Time Resource Supply A B C Priority: 1. Project A 2. Project B 3. Project C

Applying Critical Chain Buffers’s To Drum Schedules Enough resources for two projects at once Start with A and B, schedule C when time is available

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

Discussion Questions For questions 1 and 2, refer to the BAE Systems case earlier in the chapter. What are the practical implications internally (in terms of team motivation) and externally (for the customer) of making overly optimistic project delivery promises? In considering how to make a big change in organizational operations (as in the case of switching to CCPM), why is it necessary to go through such a comprehensive set of steps; that is, why does a shift in project scheduling require so many other linked changes to occur? Explain the difference between “common cause” variation and “special cause” variation. Why are these concepts critical to understanding successful efforts to improve the quality and reliability of an organizational system? What are the three reasons Goldratt argues are used to justify adding excessive amount of safety to our project duration estimates? In your project experiences, are these arguments justified? What are the reasons we routinely waste the excessive safety we acquire for our project activities? Are some of these reasons more prevalent in your own experiences than others?

Discussion Questions How does aggregation of project safety allow the project team to reduce overall safety to a value that is less than the sum of individual task safeties? How does the insurance industry employ this same phenomenon? Distinguish between “project buffers” and “feeder buffers.” What are each of these buffer types used to do? It has been said that a key difference between CCPM safety and ordinary PERT chart activity slack is that activity slack is determined after the network has been created, whereas critical chain path safety is determined in advance. Explain the distinction between these ideas: How does the project team “find” slack in a PERT chart vs. how is activity buffer used in critical chain project management? What are the steps that CCPM employs to resolve conflicts on a project? How does the concept of activity late starts aid this approach? What are the key steps necessary to employ CCPM as a method for controlling a firm’s portfolio of projects? What is a “drum resource?” Why is the concept important to understand in order to better control resource requirements for project portfolios?