1. AACE Internationals 53 rd Annual Meeting Seattle, Washington TCM: Improving Decision Making in a Green World Introduction To Critical Chain Project Management Hilbert Robinson, Afinitus Group, LLC Robert Richards Ph.D,, Stottler Henke Associates, Inc.

2. AACE Internationals 53 rd Annual Meeting Seattle, Washington 2 Are You A Responsible Person? Scenario: You live in New England and Its 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 Question: How early should you leave? __________ Why?_____________________________

3. AACE Internationals 53 rd Annual Meeting Seattle, Washington Presentation Outline 1. Background – Triple Constraints – Murphys Law – Complexity 2. Problem [What to Change] – Localized Risk Management Task Level Insurance Policy Student Syndrome Parkinsons Law Multi-tasking 3. Solution [What to Change to] – Governing Principle - Global Risk Management Project Level Protection Systems Perspective Execution Control 3

4. AACE Internationals 53 rd Annual Meeting Seattle, Washington Background Triple Constraints [Binding Commitments] 1. Time [Minimize] 2. Capacity [Minimize] 3. Content [Maximize] 4

5. AACE Internationals 53 rd Annual Meeting Seattle, Washington Background Murphys 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 5

6. AACE Internationals 53 rd Annual Meeting Seattle, Washington Presentation Outline Background – Governing Principle or Paradigm Shift – Triple Constraints – Complexity – Murphys Law Problem [What to Change] – Localized Risk Management Task Level Insurance Policy Student Syndrome Parkinsons Law Multi-tasking Solution [What to Change to] – Governing Principle - Global Risk Management Project Level Protection Systems Perspective Execution Control 6

7. AACE Internationals 53 rd Annual Meeting Seattle, Washington The Problem Localized Risk Management Strategy 1. Task level insurance policy See opening scenario – answers? And if it was a task in a project?? ** How safe is safe enough?** 2. Student Syndrome The dog ate my homework 3. Parkinson's Law Self-fulfilling prophecy [good estimating?] 4. Multi-tasking [absence of priorities] Hero or villain? 7

8. AACE Internationals 53 rd Annual Meeting Seattle, Washington Problem: Localized Risk Management Multi-tasking causes delays to spread across all projects, adding as much as 20% to all projects One Resource, Four Task, from Four Different Projects 9

9. AACE Internationals 53 rd Annual Meeting Seattle, Washington Presentation Outline Background – Governing Principle or Paradigm Shift – Triple Constraints – Complexity – Murphys Law Problem [What to Change] – Localized Risk Management Task Level Insurance Policy Student Syndrome Parkinsons Law Solution [What to Change to] – Global Risk Management Project Level Protection Systems Perspective Execution Control 9

10. AACE Internationals 53 rd Annual Meeting Seattle, Washington Solution Governing Principle Behind CCPM is: Aggregation of risk… Benefits: 1. Lower overall protection needed 2. Higher degree of coverage achieved 3. Leading to lower incidence of failure 10

11. AACE Internationals 53 rd Annual Meeting Seattle, Washington Solution Global Approach to Risk Management 1. Planning 1. Project Level vs. Task Level Protection 2. Systems Perspective for Multiple Projects Should load for multiple projects be considered? Why? How? 2. Execution Control 1. Promote and encourage team culture 2. Controlled work queues 3. No multi-tasking work rules 4. No batch processing work rules 5. Task assignment prioritization 6. Management by Exception 11

12. AACE Internationals 53 rd Annual Meeting Seattle, Washington 12 Critical Chain Planning Process 1. Traditional Plan 2. Safety Excluded 3. Resource Leveled 4. Critical Chain Marked From Task to Project Protection

13. AACE Internationals 53 rd Annual Meeting Seattle, Washington. 13 Aggregation Principle The Concept of Risk Pooling: Can someone explain why this works? Health Care Example: larger pool = lower cost

14. AACE Internationals 53 rd Annual Meeting Seattle, Washington 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 14

15. AACE Internationals 53 rd Annual Meeting Seattle, Washington 15 Critical Chain Planning Aggregation Principle [where did some of the safety go?]: 1.Pooled protection provides more coverage 2.Location is just as important as amount 3.Sizing Rule of Thumb 2/3rds to 1/3rd Buffer is half of preceding chain PB = Project Buffer FB = Feeding Buffer Compared to 60 days traditional

16. AACE Internationals 53 rd Annual Meeting Seattle, Washington Critical Chain in Execution 16 Schedule Before Execution Starts AS OF DATE 1.T8 experienced a 5 day increase in scope or delay 2.Results in a 2.5 day impact to the project buffer 3.The rest was absorbed by the Critical Chain gap 4. 35-32.5=2.5 7% Complete and 14% Buffer Consumed

17. AACE Internationals 53 rd Annual Meeting Seattle, Washington 17 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

18. AACE Internationals 53 rd Annual Meeting Seattle, Washington 18 C ritical Chain Priority Metric Project Status Trend Chart or Fever Chart

19. AACE Internationals 53 rd Annual Meeting Seattle, Washington 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 19

20. AACE Internationals 53 rd Annual Meeting Seattle, Washington 20 Finite Capacity Pipeline Creating a Multi-Project Schedule Ingredients: 1.CC Plans [shorter] 2.Strategic Pacing Mechanism 3.Strict Priority Scheme 4.Rate Limit Policy/Guidelines Due Dates Are Derived

21. AACE Internationals 53 rd Annual Meeting Seattle, Washington 21 Multi-Project Execution Control Pipeline Status Snap Shot 0 % Buffer Consumed 100 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | % Critical Chain Completed 0 100 1009 1010 10071008100610051003100410021001 By Portfolio of Projects In Execution, Buffer Status Drives Priority Decisions, not Project Importance

22. AACE Internationals 53 rd Annual Meeting Seattle, Washington The Upshot… Benefits 1. Operational Coherence – Stability 2. 20% Shorter Cycle-Times – Speed 3. On-time Performance – Reliability 4. More throughput – Growth Challenges: 1. Simple but not easy to grasp – too simple? 2.Requires a change in mindset 3.Takes 120 days for typical 100 person team 4.We dont need that much improvement 22

23. AACE Internationals 53 rd Annual Meeting Seattle, Washington 23 Questions??? Hilbert Robinson, Afinitus Group, LLC –www.afinitus.com Robert Richards Ph.D,, Stottler Henke Associates, Inc. –AACE2009.R.RichardsPhD@Neverbox.com –www.StottlerHenke.com