Critical Chain Project Management

Critical Chain Project Management - Introduction

Agenda
Refresher
Project Network
Critical Path
Earned Value
Traditional Project Estimation
Critical Chain Project Mgmt.
Differences from Critical Path
CCPM Principles
Task & Project Buffers
EVM and Buffer Management
CCPM Behaviors
CCPM Focus

Refresher - Project Network
A project network is a graph (flow chart) depicting the sequence in which a project's terminal elements are to be completed by showing terminal elements and their dependencies.
Float/Slack in project management is the amount of time that a terminal element in a project network can be delayed by, without causing a delay to:
Subsequent terminal elements (free float)
Project completion date (total float).

Refresher - Critical Path
A Critical path is the sequence of project network terminal elements with the longest overall duration , determining the shortest time to complete the project.
The duration of the critical path determines the duration of the entire project. Any delay of a terminal element on the critical path directly impacts the planned project completion date (i.e. there is no slack on the critical path ).
A project can have several, parallel critical paths. An additional parallel path through the network with the total durations just shorter than the critical path is called a sub-critical path.
The critical path method was invented by the DuPont corporation and originally considered only logical dependencies among terminal elements

Refresher - Earned Value
Earned value (EV) compares the work finished so far with the estimates made in the beginning of the project.
Gives a measure of how far the project is from completion.
Allows PM to extrapolate to arrive at Estimate at Completion
Earned Value is measured in terms of
budgeted cost of work scheduled (BCWS) or planned value: for every period the budgets of the tasks that were planned to be finished in this time unit
budgeted cost of work produced (BCWP) or earned value: for every period the budgets of the tasks that actually finished in this time unit
actual cost of work produced (ACWP) or effort spent: for every period the actual costs of the work
budget at completion (BAC): sum(BCWS), the total budget estimated to be spent to complete the project

Refresher - Earned Value
Earned Value is expressed in terms of
the cost variance (CV): BCWP - ACWP, greater than 0 is good
the schedule variance (SV): BCWP - BCWS, greater than 0 is good
the cost performance index (CPI): BCWP/ACWP, greater than 1 is good
the schedule performance index (SPI): BCWP/BCWS, greater than 1 is good
the estimate at completion (EAC): sum(ACWP) + (BAC - sum(BCWP)) / CPI, an estimate of the budget spent at the end of the project

Traditional Project Estimation
Assume Infinite Resources
Protect the whole by protecting the completion date of each step
Pad each step with a lot of safety time
Create a Lifecycle network using these estimates to identify the critical path
Most of the safety time is taken away by:
Student Syndrome
Multi-tasking
Delays accumulate, advances do not
Critical Path is the constraint on the project

The Limitations
“ Work expands to fill (and often exceed) the time allowed.” — Parkinson’s Law
“ Whatever can go wrong, will.” — Murphy’s Law
“ Many people will start to fully apply themselves to a task just in the wake of a deadline”
No matter how long you give students to work on something, they will start the night before.
End Result – When problems are encountered deep into the project, there is no buffer to dig into.

CCPM was developed by Dr. Eliyahu Goldratt
Application of Theory of Constraints (TOC) to Project Management
TOC Presented in his Business Novel The Goal
CCPM Presented in his Business Novel Critical Chain
TOC suggests that all real-world systems have at least one constraint; otherwise they would be capable of infinite throughput, which is clearly impossible.
TOC claims that a real-world system with more than three constraints is extremely unlikely.
Managing a complex system can be made simpler & effective, by providing managers with a few specific focus areas on which to focus -- maximizing performance in the areas of key constraints, or "elevating" the constraint

Systems are Analogous to Chains
Weakest Link is the System’s Constraint
A System’s Optimum Performance IS NOT the Sum of Local Optima
A System Has Only One Constraint at a Time
Constraints Can Never Really be Eliminated
Can Move From One Part of the System to Another
In project management, the critical chain is the sequence of both precedence- and resource-dependent terminal elements that prevents a project from being completed in a shorter time, given finite resources.
If resource availability is not a constraint, then a project's critical chain is identical to its critical path.

Differences from Critical Path
The use of (often implicit) resource dependencies. Implicit means that they are not included in the project network but have to be identified by looking at the resource requirements.
Lack of search for an optimum solution. This means that a "good enough" solution is enough because:
As far as is known, there is no analytical method of finding an absolute optimum
The inherent uncertainty in estimates is much greater than the difference between the optimum and near-optimum ("good enough" solutions).
The identification and insertion of buffers:
project buffer
feeding buffers
resource buffers.

CCPM Principles
Single Integrated Schedule
Eliminate Safeties from Each Task
Management Must Not Insist on Each Task Starting & Finishing “On Time”
Start Right Jobs at Right Time Using Prioritized Task List
Focus on Meeting Milestone Dates , Not Task Dates
Counter Parkinson’s Law
Conserve Available Float/Slack on Each Task, Reduce Time Available
Counter Student Syndrome. Claim Early Finishes Immediately
Start Each Task As Early As Possible
Predict Milestones Based on Buffer Penetration
Focus on Task Throughput , NOT on Task Costs

Task & Project Buffers

EVM and Buffer Management
Earned value (EV) compares the work finished so far with the estimates made in the beginning of the project.
Gives a measure of how far the project is from completion.
Allows PM to extrapolate to arrive at Estimate at Completion
EVM does not distinguish between the progress on the project constraint (i.e. its critical chain) from progress on the non-constraints
Buffer Management focuses on throughput.

CCPM Behaviors
Base Duration & Cost Estimates on Average/Bare Bones Performance
When Problems Occur, Solve the Problem vice Starting New Task
Decrease Frequency & Duration of Meetings
Resolve Conflicts Immediately at the Jobsite
Eliminate Bad Multi-tasking
Resources Focus on One Job at a Time, Work to Completion
Request Only Resources Necessary to Accommodate Priority Work
Request Only Overtime Necessary to Recover Buffer on Priority Work
Move Resources When Work is Done to Next Priority Work Quickly
Work Right Jobs instead of Easy Jobs
Plan for New Work & Scope Changes vice Complaining About it

Project Focus
Identify the System Constraint
Exploit the Constraint
Subordinate Everything Else
Elevate the Constraint
Go back to Step 1
Senior Management Buy in
Promote early finishes
Focus on usage of Project Buffer
Avoid evaluating of team w.r.t. task deadlines
CCPM Focus

Summary and Conclusion
Critical Chain Project Management can dramatically...
Improve project delivery date reliability
Shorten overall project duration
Provide “early warning” of threats to project delivery
Enable earlier, less drastic responses
Reduce Costs
Reduce Overtime
Reduce Rework

Bibliography / Reference
Wikipedia
http://www.wikipedia.org
Critical Chain
Dr. Eliyahu Goldratt
Buffering Against Risk -- Risk Management and Critical Chain.
http://www.focusedperformance.com/articles/ccrisk.html
Getting Out From Between Parkinson's Rock and Murphy's Hard Place – Francis S. Patrick
http://www.focusedperformance.com/articles/ccpm.html
Managing an ERP project using critical chain
M van Loggerenberg. EDS Enterprise Solutions

Thank You

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Critical Chain Project Management

by ShyK on May 27, 2007

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Critical Chain Project Management — Presentation Transcript