Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall Day 21

Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall Ch 1 -2 Agenda Questions? IP Part 4 Graded, feedback provided Lack of correlation between project schedules and budget statements. Any of the first five sections can be resubmitted for rescoring prior to December 13. The recorded score will the average of the original score and the score on the resubmitted section. Please notify me via which sections you will be resubmitting. IP Part 5 Due Today Developing a Project Schedule Early submission falls (dreadfully) short of requirements IP part 6 Due Dec 9 Assignment 7 Corrected All A’s Assignment 8 posted Due Dec 5 Critical Chain Project Scheduling

Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall Finals Rescheduling IP Project presentation on Dec 12 Part 1-5 resubmits due Exam 3 done asynchronously via Blackboard on Dec 16 Final IP Project Due Dec 18 3

Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 11-4 Chapter 11 © 2007 Pearson Education

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Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall Chapter 11 Learning Objectives After completing this chapter, students will be able to: Understand the differences 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

Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall Chapter 11 Learning Objectives After completing this chapter, students will be able to: Distinguish between critical path and critical chain project scheduling techniques. Understand how critical chain methodology resolves project resource conflicts. Apply critical chain project management to project priorities

Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall Theory of Constraints & Critical Chain Project Scheduling A constraint limits any system’s output. The Goal – Goldratt TOC Methodology 1. Identify the constraint 2. Exploit the constraint 3. Subordinate the system 4. Elevate the constraint 5. Repeat the process 11-08

FIGURE 11.2 Five Key Steps in Theory of Constraint Methodology Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall

Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall Theory of Constraints as a System Problem Systems have sources (infinite supply) and sinks (infinite waste) Systems processes have inputs and outputs System processes have throughputs which defines the rate at which input is converted to outputs When system processes of different throughputs are “chained together” by matching outputs to inputs we often have to add temporary storage buffers The throughput of a system is a function of individual system processes’s throughputs 10

Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall A system example of TOC 11

Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 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

Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall Dropping a marble Top leftTop right Bottom left Center 11-13

Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall Dr J Edwards Deming

Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall CCPM and the Causes of Project Delay How safety is added to project activities 1. Individual activities overestimated 2. Project manager safety margin 3. Anticipating expected cuts from management time 25% 50% 80% 90% Gaussian Distribution

Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall Wasting Extra Safety Margin 1. The Student Syndrome a. Immediate deadlines b. Padded estimates c. High demand 2. Failure to pass along positive variation a. Other tasks b. Overestimation penalty c. Perfectionism 3. Multitasking 4. Path Merging

Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall FIGURE 11.6 Student Syndrome Model Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall

Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall Effects of Multitasking on Activity Durations FIGURE 11.7 Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall

Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall FIGURE 11.8 Effect of Merging Multiple Activity Paths Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall

Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall Critical Chain Solutions  Central Limit Theorem  If a number of probability distribution are summed, the variance of the sum equals the sum of the variance of the individual distributions  V ∑ = n * V, SD 2 = n * V, SD = n 1/2 * V 1/2  Standard deviation of the sum is less than the sum of the standard deviations!  Aggregating risk leads to reduced risk

Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall Critical Chain Solutions  Central Limit Theorem  Activity durations estimated at 50% level  Buffer reapplied at project level Goldratt rule of thumb (50%) Newbold formula based on desired  ( , 2 , 3  )  Feeder buffers for non-critical paths  ess_WhitePaper.pdf ess_WhitePaper.pdf 11-21

11-22 At 90% probability estimate At 50% probability estimate At ~70 % probability estimate with 50% buffer Time Saved

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Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall CCPM Original50% Probability ActivityDuration A105 B62 C147 D21 E83 F126 Total New estimate = 24 + (52-24)/2 = 38 (50% project buffer)

Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 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 11-25

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Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall Critical Chain Solutions Bob Feeder Buffer Project Buffer Bob Buffers protect constraints and prevent delays 11-28

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Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall Critical Chain Project Portfolios Drum – system-wide constraint that sets the beat for the firm’s throughput company policy one person a department/work unit a resource Capacity constraint buffer – safety margin between projects Drum buffer – extra safety before the constraint 11-30

Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall Applying CCPM to Project Portfolios 1. Identify the drum 2. Exploit the drum a. Prepare a schedule for each project b. Determine priority for the drum c. Create the drum schedule 3. Subordinate the project schedules (next slide) 4. Elevate the capacity of the drum 5. Go back to step

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Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 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 11-33

Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall 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 11-34

Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall Summary Understand the differences 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 methodology resolves project resource conflicts. Apply critical chain project management to project priorities