1. Critical Chain Project Scheduling
Chapter 11

2. Learning Goals
Understand the difference 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 resolves project resource conflicts.
Apply critical chain project management to project portfolios.

3. Theory of Constraints (TOC) & Critical Chain Project Scheduling
A constraint limits system output.
The Goal – Goldratt
Critical chain method is a network analysis technique that modifies the project schedule to account for limited resources.
TOC Methodology
Identify the system constraint.
Exploit the system constraint (schedule first).
Subordinate everything else to the system constraint (schedule second).
Elevate the system constraint (remove constraint\add resources).
New constraint uncovered? Repeat the process.

4. Variation Special Cause Due to a special circumstance
Common Cause Inherent in the system
Managers should
Understand the difference between the two
Do not adjust the process if variation is common cause
Do not include special cause variation in risk estimation
Causes over estimation of project contingencies
Risk management should be performed on discrete project risks

5. Distribution Based On Common Cause Variation
Funnel experiment

6. Distribution Based On Misinterpretation of Variation
Funnel experiment

7. CCPM and the Causes of Project Delay
How safety is added to project activities
Individual activities are overestimated
Project manager’s added safety margin
Anticipating expected cuts from management
time
25%
50%
80%
90%
Lognormal (Gaussion Distribution)

8. Methods of Wasting Extra Safety Margin
The “Student Syndrome”
Immediate deadlines
Padded estimates
High demand
Failure to pass along positive variation
Other tasks
Overestimation penalty
Perfectionism
Multitasking
Path Merging

9. Student Syndrome Model
People tend to put off task with long deadlines in favor of working on immediate deadlines
Demotivated due to knowledge of padded estimated time
Resources in high demand juggle multiple activities which promote “putting off” task
Parkinson’s Law states – Work expands so as to fill the time available for its completion.

10. Failure to Pass Along Positive Variation (extra time)
Finishing early gives the chance to put work on hold to act on other projects or assignments
Fear that future work time estimations may be penalized if task are finished early
Can be seen as time to refine the initial work

11. Effects of Multitasking On Activity Durations
Let’s say each task is 10 days worth of work
30 days until all three are done, each task done in 10 days
30 days until all three are done, each task done in 20 days*
*This assumes zero startup time between task changes

12. The Effect of Merging Multiple Activity Paths
Even though Path C is done 15 days early, the successor activity will start 15 days late due to the merge of work

13. Critical Chain Solutions
Central Limit Theorem since CLT Example
Activity durations estimated at 50% level
Buffer reapplied at project level
Goldratt rule of thumb (50%)
Newbold formula
Feeder buffers for non-critical paths
States that any distribution of sample means from a large population approaches the normal distribution as n increases to infinity.
Buffers are non-work scheduled activities to maintain focus on the planned activity durations

14. Reduction on Project Duration After Aggregation
Original planned time based on a high probability of on-time completion
Shrink planned time to the 50% likelihood level – buffer is transferred to the project level
Shrink buffer acquired by 50% and reapply potential slack.

15. Example – Original Project Schedule Using Early Start
Critical activities
Non-critical activities

16. Example – Reduced Schedule Using Late Start with 50% reduction

17. Example– Critical Chain Schedule with Buffers Added at 50%
.50 x ( ) = 22.5 days
.50 x (10+5) = 7.5 days

18. Critical Path Network with Resource Conflicts
Feeder
Buffer
Bob
Critical Path

19. The Critical Chain Solution
Buffers protect constraints and prevent delays
1st -Bob’s task on the CP – redraw critical chain network
2nd -Bob’s task are prioritized and worked in order

20. Needed CCPM Culture Changes
Due dates & milestones are eliminated
The only firm commitment is at the project level
Realistic likelihood estimates – 50% level not 90%
Create a “No blame” culture for missing a date
Subcontractor deliveries & work scheduled ES
Non-critical activities are scheduled LS
Factor the effects of resource contention if necessary
Critical chain usually not the critical path
Solve resource conflicts with minimal disruption

21. Critical Chain Project Portfolios
Drum – system-wide constraint that sets the beat for the firm’s throughput.
Drum – person, department, policy, resource
Capacity constraint buffer (CCB) – safety margin separating projects scheduled to use the same resource
Drum buffer – extra safety margin immediately before the constraint resource

22. Applying CCPM to Project Portfolios
Identify the resource constraint or drum
Exploit the drum
Prepare a critical chain schedule for each project
Determine priority for the drum
Create the drum schedule
Subordinate the project schedules
Schedule projects based on drum schedule
Designate critical chain
Insert capacity constraint buffers
Resolve any conflicts
Insert drum buffers so the constraint is not starved for work
Elevate the capacity of the drum
Go back to step 2

23. CCPM– Three Projects Stacked To Use A Drum Resource
Time
Resource Supply A B C
Priority: Project A
2. Project B
3. Project C

24. Applying Critical Chain Buffers’s To Drum Schedules
Enough resources for two projects at once
Start with A and B, schedule C when time is available

25. 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

26. Discussion Questions
For questions 1 and 2, refer to the BAE Systems case earlier in the chapter. What are the practical implications internally (in terms of team motivation) and externally (for the customer) of making overly optimistic project delivery promises?
In considering how to make a big change in organizational operations (as in the case of switching to CCPM), why is it necessary to go through such a comprehensive set of steps; that is, why does a shift in project scheduling require so many other linked changes to occur?
Explain the difference between “common cause” variation and “special cause” variation. Why are these concepts critical to understanding successful efforts to improve the quality and reliability of an organizational system?
What are the three reasons Goldratt argues are used to justify adding excessive amount of safety to our project duration estimates? In your project experiences, are these arguments justified?
What are the reasons we routinely waste the excessive safety we acquire for our project activities? Are some of these reasons more prevalent in your own experiences than others?

27. Discussion Questions
How does aggregation of project safety allow the project team to reduce overall safety to a value that is less than the sum of individual task safeties? How does the insurance industry employ this same phenomenon?
Distinguish between “project buffers” and “feeder buffers.” What are each of these buffer types used to do?
It has been said that a key difference between CCPM safety and ordinary PERT chart activity slack is that activity slack is determined after the network has been created, whereas critical chain path safety is determined in advance. Explain the distinction between these ideas: How does the project team “find” slack in a PERT chart vs. how is activity buffer used in critical chain project management?
What are the steps that CCPM employs to resolve conflicts on a project? How does the concept of activity late starts aid this approach?
What are the key steps necessary to employ CCPM as a method for controlling a firm’s portfolio of projects?
What is a “drum resource?” Why is the concept important to understand in order to better control resource requirements for project portfolios?