1. Critical Chain Project Scheduling

2. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall11-2 Theory of Constraints (ToC) A constraint limits any system’s output. TOC Methodology 1.Identify the constraint 2.Exploit the constraint 3.Subordinate the system 4.Elevate the constraint 5.Repeat the process

3. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall11-3 Variation Common Cause Inherent in the system Special Cause Due to a special circumstance Managers should Understand the difference between the two types Not adjust the process if variation is common cause Not include special cause variation in risk simulation But: not aggregate discrete project risks

4. 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% Galton (or lognormal) Distribution

5. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall11-5 Wasting Extra Safety Margin 1.The Student Syndrome a.More immediate deadlines b.Padded estimates c.Personnel in high demand 2.Failure to pass along positive variation a.Working on other tasks b.„Early delivery penalty” on future estimates c.Perfectionism 3.Multitasking 4.Path Merging: losing positive slacks

6. Parkinson's law Work expands to fill the time available. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall11-6

7. Multitasking and task duration Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall11-7

8. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall11-8 Critical Chain Solutions  Central Limit Theorem  Activity durations estimated at 50% level  Buffer reapplied at project level –Goldratt rule of thumb (50%) –Newbold formula  Feeder buffers for non-critical paths

9. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall11-9 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

10. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall11-10 Critical Chain Solutions Bob Feeder Buffer Project Buffer Bob Buffers protect constraints and prevent delays

11. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall11-11 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

12. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall11-12 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 2

13. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall11-13 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

14. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall11-14 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