Critical Chain Method These sides and note were prepared using 1. The book Streamlined: Building Lean Supply Chain Using the Theory of Constraints. Srinivasan. McGraw-Hell. 2. The slides originally prepared by Professor M. M. Srinivasan. 3. Presentation of Dr. Daniel Walsh, Vector Strategies. Continuous Process Improvement Summit. 2012, Northridge, CA. 3. Presentation of Dr. Rob Richards, Stottler Henke. Continuous Process Improvement Summit. 2012, Northridge, CA. Complex solutions do not work, the more complex the problem the simpler the solution must be. Eli Goldratt.

2 Ardavan Asef-Vaziri March-2012Critical Chain Method- Basics Predicting the Future It is tough to make perdition, especially about the future. Yogi (Lawrence P.) Berra, Baseball catcher and manager, The best way to predict the future is to create it. Peter F. Druker. Writer and professor,

3 Ardavan Asef-Vaziri March-2012Critical Chain Method- Basics Motivation

4 Ardavan Asef-Vaziri March-2012Critical Chain Method- Basics  Unavailability of resources.  Not high enough priorities  Murphy Law  …  …..  ….  They ran out of time Why Projects are Late

5 Ardavan Asef-Vaziri March-2012Critical Chain Method- Basics Courtesy of Dr. Daniel Walsh, Vector Strategies. Wrong Metrics - Gedanken

6 Ardavan Asef-Vaziri March-2012Critical Chain Method- Basics Project Management: Problems Usually Faced  Task durations are highly variable. A lot of uncertainty involved in estimating task durations  Project is not clearly defined : Known Work + Known Unknown Work + Unknown Work.  Existing project work is not complete before new projects shift priorities leading to multi-tasking.  Problems in a project cascade into another project.  Constant pressure to increase staff for peak loads.

7 Ardavan Asef-Vaziri March-2012Critical Chain Method- Basics Task Duration  An activity is composed of three types of work: Known Work + Known Unknown Work + Unknown Work.  Due to unknowns, task durations are highly variable. People usually give a number that they expect to have a 10% chance or less of missing. There is 90% or more probability that the duration is less than the given number. Inflated task times reduce productivity and unnecessarily inflate budgets.  CCPM motivates people to give a number they have a high probability (50% or more) of missing. The idea is to pool task buffers and allow the tasks to use the buffer only if they need it.

8 Ardavan Asef-Vaziri March-2012Critical Chain Method- Basics Task Duration The buffer for the critical chain is smaller than the sum of the buffers required for all the tasks on the critical chain. (i)Protecting task times with buffers will degrade on-time performance, (ii)Providing specific due date to complete each specific task is against a systematic approach, and (iii)Aggressive-but-possible task times increase on-time completion of the projects.

9 Ardavan Asef-Vaziri March-2012Critical Chain Method- Basics If each task has mean of 15 and StdDev of 5. With 95% probability each task is completed in 25 days. Project 50 days. But Variance of the critical path is 25+25=50, StsDev of = 7.1 We can have duration of 15 for each task and a 14.2 days project buffer. With 95% probability, the project is complete in 44.2 days. Sequential Tasks Task 1Task 2 Task 1Task 2 Buffer

10 Ardavan Asef-Vaziri March-2012Critical Chain Method- Basics How a Task is Done

11 Ardavan Asef-Vaziri March-2012Critical Chain Method- Basics Task Duration Syndromes  Parkinson’s syndrome : Work expands to fill the time available. People tend to continue working on a task that could have been completed earlier if they are given a pre-specified completion time.  Continue to Polish syndrome (aka: the 3-Minute Egg Rule ): It’s not quality if it’s finished before time is up.  Student Syndrome : When people feel there is plenty of time to complete a task, other things become important and they procrastinate on the task.

12 Ardavan Asef-Vaziri March-2012Critical Chain Method- Basics Managing Projects Under Uncertainty Task 1 Task Task 2 Task 1 Task 3 Task 1 Task 2 Task 3 Task 4 Task 5

13 Ardavan Asef-Vaziri March-2012Critical Chain Method- Basics Consider a simple project with 2 tasks performed by 2 different operators. Sequential Tasks Task 1 Task Assume task durations are uniformly distributed (5,25). On average 15 days. What is average project completion time? Generate 1000 Projects Average StdDev 30 days StdDev < StdDev1 + StdDev2

14 Ardavan Asef-Vaziri March-2012Critical Chain Method- Basics Consider a slightly more complex project. Task 2 Task 1 Task Merging Nodes What is the average project completion time? 33 days Task 3 = Max(Task 1, Task2)

15 Ardavan Asef-Vaziri March-2012Critical Chain Method- Basics 33% Probability of completing project in 30 days? Merging Nodes

16 Ardavan Asef-Vaziri March-2012Critical Chain Method- Basics The affect of resource interdependencies on a simple project. Task 1 Task 2 Task 3 Task 4 Task Merging Nodes and Resources What is the average project duration? What is the probability of competing the project in 45 days.

17 Ardavan Asef-Vaziri March-2012Critical Chain Method- Basics 1000 Instances

18 Ardavan Asef-Vaziri March-2012Critical Chain Method- Basics 1000 Instances  A project’s most likely completion time is much larger than the sum of the averages of the tasks making up it’s longest path (due to synchronization or due to task dependencies).  So, how do we quote estimated completion time of the project?  Do people give a number that they know has a high (50% or more) chance of missing?

19 Ardavan Asef-Vaziri March-2012Critical Chain Method- Basics Task and Project Durations – the Traditional Way So, the average task times are “padded” to accommodate any possible delays. Instead of specifying a 50% time estimate (which fails half the time), a 98% confidence estimate is developed for the tasks and project duration. 98% of [5,25] = 5+.98*20 = = 24.6 What is the chance the project will complete in 70 days? 5 25 Task 1 Task 2 Task 3 Task 4 Task 5

20 Ardavan Asef-Vaziri March-2012Critical Chain Method- Basics Given CPM computation, the project will take 15 weeks, and all tasks are on the critical path. If the project was scheduled for 20 weeks, there is a 5 week project buffer. T1 T3 T5 T4 T S

21 Ardavan Asef-Vaziri March-2012Critical Chain Method- Basics Project Buffer and Feeding Buffers a) Compute the project buffer. b) Compute and identify the feeding buffer(s).

22 Ardavan Asef-Vaziri March-2012Critical Chain Method- Basics Courtesy of Dr. Daniel Walsh, Vector Strategies. Fever Chart

23 Ardavan Asef-Vaziri March-2012Critical Chain Method- Basics Courtesy of Dr. Daniel Walsh, Vector Strategies. Fever Chart

24 Ardavan Asef-Vaziri March-2012Critical Chain Method- Basics Buffer Management: Allocate Resources to Tasks Based on “Buffer Burn Rate” Buffer 50% work completed 60% buffer consumed Chain 2 Burn Rate: % of buffer consumed vs. % of work completed. Automatically calculated on an ongoing basis to assess how much buffer is still available for future uncertainties. Task Priorities : Tasks that lie on chains with less safety remaining are given top priority. This ensures that buffers are not wasted, and also reduces pressure to multitask. Buffer 33% work completed 20% buffer consumed Chain 1

25 Ardavan Asef-Vaziri March-2012Critical Chain Method- Basics Multi Tasking

26 Ardavan Asef-Vaziri March-2012Critical Chain Method- Basics Most heavily loaded shared resource (constraint), determines throughput Project starts are based on constraint’s capacity, Pressure to multitask also comes down Most heavily loaded resource Pipelining Pipelining is more efficient than starting projects ASAP Pipelining: Release Projects Based on Constraints Instead of Starting ASAP  Realization Technologies, Inc.

27 Ardavan Asef-Vaziri March-2012Critical Chain Method- Basics  Erroneous assumptions: Protecting task times with buffers will improve on-time performance (this is a biggie) By finishing too soon, people hurt their future negotiating power. Providing milestones for each task is good It is good to induct work as soon as possible Multitasking is beneficial What to Change?

28 Ardavan Asef-Vaziri March-2012Critical Chain Method- Basics Summary: Sources of Project Delays  Synchronization Delays  Integration (assembly) points  Resources and tasks  Delays due to Behavioral Effects  Parkinson’s Law  Student Syndrome  Continue to Polish Syndrome  Queuing Delays  Induct work ahead of schedule  Multitasking

29 Ardavan Asef-Vaziri March-2012Critical Chain Method- Basics  50% chance od failure, not 1%. Avoid the 3 syndrome.  Aggregation, project buffer, feeding buffers  Integrate the resources into the CPM.  Proactive, leading, how much of PB is consumed.  Not how many days have you worked on the task, but how many days do you need to complete the task.  Team work culture at the project level not individualism at task level  Managing by exception, fever chart, what are todays priorities?  Avoid multi-tasking, follow constraint recourse based release.  Avoid inducting work ahead of schedule (ASAP).  Do not switch the Critical Chain Summary

30 Ardavan Asef-Vaziri March-2012Critical Chain Method- Basics Courtesy of Dr. Rob Richards, Stottler Henke

31 Ardavan Asef-Vaziri March-2012Critical Chain Method- Basics Courtesy of Dr. Rob Richards, Stottler Henke

32 Ardavan Asef-Vaziri March-2012Critical Chain Method- Basics Courtesy of Dr. Rob Richards, Stottler Henke

33 Ardavan Asef-Vaziri March-2012Critical Chain Method- Basics

34 Ardavan Asef-Vaziri March-2012Critical Chain Method- Basics

35 Ardavan Asef-Vaziri March-2012Critical Chain Method- Basics

36 Ardavan Asef-Vaziri March-2012Critical Chain Method- Basics