1. Critical Chain Project Management in the Supply Chain Presented By Greg Sullivan APICS Nashville Chapter 19 Feb 2008 Sullivan Group Consulting, Inc.

2. Projects Does anyone here today work in a project ? What do you want from your projects ? What percentage of Projects complete: –On Time ? –On Budget ? –Entire Scope Achieved ? –All design quality targets met completely ? What Happens near the end of a Project ?

4. Product Dev.

5. Results of Critical Chain

6. A Working System

7. The conventional way of dealing with complex systems is: Dissect it to sub-systems! What are the drawbacks?

8. Effects of Subsystems Silos are formed Communication becomes more difficult Objectives are different Silos are misaligned Metrics cause misalignment Unified action of company is difficult System does not achieve its Goal

9. “No one has to change, survival is optional.” - W. Edwards Deming

10. Dr. W. Edwards Deming wrote in Chapter 4 of his book, The New Economics “The prevailing style of management must undergo transformation. A system can not understand itself. The transformation requires a view from outside. The aim of this chapter is to provide an outside view - a lens - that I call a system of profound knowledge. It provides a map of theory by which to understand the organizations that we work in.”

11. . Learn the new philosophy, top management and everybody. # 2. Learn the new philosophy, top management and everybody. - W. Edwards Deming’s 14 Points # 5. Improve constantly and forever the system of production and service. - W. Edwards Deming’s 14 Points

12. Projects Does anyone here today work in a project ? What do you want from your projects ? What percentage of Projects complete: –On Time ? –On Budget ? –Entire Scope Achieved ? –All design quality targets met completely ? What Happens near the end of a Project ?

13. Do you have sufficient resources ? Time ? Time ? People ? People ? Money and equipment ? Money and equipment ?

14. Quality / Value TIME Final Result BUDGET Original Plan Waste VALUE ADDED / NON-VALUE ADDED COMPONENTS IN A PROJECT 0

15. TIME BUDGET Original Scope Waste PROJECTS CONSIST OF VALUE ADDED TASKS MERGED WITH DELAYS 0 Delays Tasks Consider the sequence of tasks along the Critical Path of a Project

16. TIME BUDGET Original Scope Waste 0 Delays Tasks How Do Task Times Get Chosen by Task Managers ?

17. Estimating Task Times Pretend that you are the experienced task manager and you must tell the Project manager how long a task will take. Let’s say this task is writing the Inspection Plan for a new product, or writing some computer code for a business application. Task times are variable, making a statistical distribution likely……

18. Frequency DistributionMedian 0143871 TASK MANAGERS DISTRIBUTION OF TASK COMPLETION TIME TASK: 134-36 Performed: 152 Times Days to Complete Task

19. Task Manager’s Choice How Much Time Will Task Take ? How Much Time Will Task Take ? What happens if Murphy Strikes ? What happens if Murphy Strikes ? How do I avoid Missing the Task Due Date ? How do I avoid Missing the Task Due Date ?

20. Frequency Distribution Days to Complete Task Median 0143871 TASK MANAGERS PROTECTED ESTIMATE OF TASK TIME TASK: 134-36 Performed: 152 Times 90% Confident that Task Will Complete in 42 days

21. Task Manager Decision What Choice would you make ? 10 Days 10 Days 14 Days 14 Days 42 Days 42 Days

22. Frequency Distribution Days to Complete Task Median 0143871 TASK MANAGERS TYPICALL CHOOSE THE INFLATED TASK TIME TASK: 134-36 Performed: 152 Times 90% Confident that Task Will Complete in 42 days 42 Days

23. Why do Most Task Managers Select a Longer Time than the Mean or the Median ? They know that things happen. (Murphy) They need to buffer their task so that it is not responsible for project delays. A good task manager makes sure that his group is “taken care of ”. He is responsible for his group & task, not the entire project.

24. TIME BUDGET Original Scope Waste 0 Individual Task Buffers Tasks Each Task has a Buffer built- in to allow for Murphy

25. Parkinson’s Law “..work expands so as to fill the time available for its completion.“ - Cyril Northcote Parkinson, 1955 - Cyril Northcote Parkinson, 1955Implication: Each task will use as much time as it is allowed, when given a due date. Each task will use as much time as it is allowed, when given a due date.

26. Student Syndrome Student syndrome: the latest possible start of tasks in which the buffer for any given task is wasted beforehand, rather than kept in reserve. Implication: The individual Task buffer is used before the task begins based on the latest start date, leaving no individual task reserve, and guaranteeing late/rushed projects! The individual Task buffer is used before the task begins based on the latest start date, leaving no individual task reserve, and guaranteeing late/rushed projects!

27. TIME BUDGET Original Scope Waste WHAT WOULD HAPPEN IF WE USED THE MEDIAN TIME FOR EACH TASK, & PLACED ALL TASKS ON CRITICAL CHAIN WITH NO BUFFERS BETWEEN TASKS ? 0 Built In Delays Tasks

28. TIME BUDGET Original Scope Waste WHAT WOULD HAPPEN IF WE USED THE MEDIAN TIME FOR EACH TASK, & PLACED ALL TASKS ON A CRITICAL CHAIN WITH TASK BUFFERS ? 0 Built In Delays Tasks

29. TIME BUDGET Original Scope Waste WE NOW HAVE A PROJECT BUFFER ! And the Possibility of An Early Completion Date 0 PROJECT BUFFER Tasks

30. What About Things that go Wrong ? Won’t the Project get Delayed If any one task takes longer than the Median Time? Yes, any task taking longer than the median time will push the Critical Chain into the Project Buffer and use part of the Buffer. But ….. Now we can see the size of the “Project Buffer Penetration” and take actions to minimize it, possibly by cross-leveling resources. We also have a way to compare multiple projects

31. Having a common “Project Buffer” allows every task to share in the consolidated buffer. Some tasks will need to use the buffer and others will help to “Regain Buffer”. If any one task gets done earlier, the next task on the critical chain can begin, allowing the entire project to earlier completion Task managers no longer work in their “Silos” but participate as a team by helping keep all tasks from using the buffer. Note: Tasks have no due dates. Task Teams just collect data on the days required to finish and plot them in CCPM.

32. Summary of Human Behavior Factors Affecting Projects Parkinson’s Law Student Syndrome Bad Multitasking Protection of Work Silos

33. How is the Critical Chain different than the Critical Path ? Both reverse schedule the project Both use a project Gantt Chart Both use a Work Breakdown Structure Critical Path selects the longest sequence of dependent tasks, regardless of resource availability, and allows task buffering Critical Chain selects the longest sequence of tasks required to be completed by the most scarce resource and requires project buffering

34. What are your recommendations to improve Future projects ? Are your managers interested in improving projects ? How much better are you today than 5 years ago ? What plans do you have to improve ?

35. Boeing Contrasts 787 Dreamliner Project encountered huge delays –Delays became known only a the last second –Used traditional Project management 777 -200 ER –Project delivered ahead of time, under budget –Used Critical Chain Project Management CCPM

36. Boeing Case Example 777-200ER Over 10,000 Drawings

37. Boeing 777-200ER Changes in Behavior with CCPM

40. Upcoming Memphis Events on CCPM and “How to do it” 5 Part Live Goldratt Webcast Series being offered in Memphis Dates are Feb through Mar 2008 Contact Greg Sullivan for details

41. THANK YOU

42. Some Examples