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# Critical Chain Project Management Lean, Six Sigma and SPEED

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• &amp;lt;number&amp;gt;
January 30, 2015
The Blue dotted rectangle represents the Critical Path in the schedule
The Red dotted circle represents the Critical Chain
• &amp;lt;number&amp;gt;
January 30, 2015
Side Note:
1) Realistically most programs reduce the size of their schedule as far as they possibly can, what is left over is the buffer size. We as a company are not mature enough yet to be able to plan well enough in advance to create well sized buffers.. However, by using this method, we can compare the desired buffer size with the “left over” and know how much risk we are taking on.
• &amp;lt;number&amp;gt;
January 30, 2015
The Blue dotted rectangle represents the Critical Path in the schedule
The Red dotted circle represents the Critical Chain
• &amp;lt;number&amp;gt;
January 30, 2015
Side Note:
1) Realistically most programs reduce the size of their schedule as far as they possibly can, what is left over is the buffer size. We as a company are not mature enough yet to be able to plan well enough in advance to create well sized buffers.. However, by using this method, we can compare the desired buffer size with the “left over” and know how much risk we are taking on.
• &amp;lt;number&amp;gt;
January 30, 2015
Side Note:
1) Realistically most programs reduce the size of their schedule as far as they possibly can, what is left over is the buffer size. We as a company are not mature enough yet to be able to plan well enough in advance to create well sized buffers.. However, by using this method, we can compare the desired buffer size with the “left over” and know how much risk we are taking on.
• &amp;lt;number&amp;gt;
January 30, 2015
• &amp;lt;number&amp;gt;
January 30, 2015
The buffer index is a way to measure buffer consumption
I have shown three points A, B, C. You can ask the class about the state of these projects.
Take resources off C and put them on B. C will get worse, but that is OK, so that B can get better.
• ### Critical Chain Project Management Lean, Six Sigma and SPEED

1. 1. © 2000, Raytheon Company. All Rights Reserved. Revised: October, 2005 Critical Chain Project Management Lean, Six Sigma and SPEED Kevin Oxnam Raytheon Six Sigma Master Expert “Your Focus Determines Your Reality.” Qui-Gon Jinn, Master Jedi Star Wars Episode I The Phantom Menace
2. 2. Page 2 © 2005, Raytheon Company. All Rights Reserved. Agenda • Why – Benefits • Who Cares? – Why use CCPM? • What is CCPM? – Schedule and Behavior • When to use it – And when not to • Where to go for more information – Web and text references • How to get started – A (very) short course
3. 3. Page 3 © 2005, Raytheon Company. All Rights Reserved. Why: The Problems Managing Programs Programs are Commonly Late and/or Over Budget • Department of Energy Study of 80 projects – 31 (39%) terminated before completion (after spending \$10B) – Only 15 had completed, most late and over spent – 38% of Projects had doubled their initial cost estimates • Australian Construction Study – Only 1 of 8 projects completed on schedule – Average cost over run of 40% • Software Study – 30% of projects are cancelled before they complete – Only 15% considered “successful” Managing Programs is DifficultManaging Programs is Difficult Reference: Critical Chain Project Management by Lawrence P. Leach, pages 9-10
4. 4. Page 4 © 2005, Raytheon Company. All Rights Reserved. Why: Benefits of Critical Chain • Increases Speed – up to 30-50% faster • Reduces Cost – 10-30% less • Improves Focus • Increases Customer Satisfaction • Never hear these words again: – “Fire fighting” – “Dropping the ball” – “Falling through the cracks” – “Worry about it later” – “Ask forgiveness” – “We don’t have time” – “Rush to failure” – “Oops” CCPM Speeds project performanceCCPM Speeds project performance
5. 5. Page 5 © 2005, Raytheon Company. All Rights Reserved. Who Cares? • Critical Chain Project Management (CCPM) provides management teams with the ability to – Accurately predict program performance – Make informed decisions – Manage risk – Identify constraints – Help their teams succeed – Help suppliers be successful – Provide outstanding performance for their customers CCPM is a natural enabler for no-doubt project performance CCPM is a natural enabler for no-doubt project performance
6. 6. Page 6 © 2005, Raytheon Company. All Rights Reserved. What is CCPM? • A program management methodology that considers a project as a system of dependent tasks and each task has its own degree of variation • The focus is on: – Robust Schedule Design using Reverse Planning – Management and Employee Behavior  Multitasking  Visual Controls  Barrier Busting • Identifies – Which tasks are critical – When those tasks are critical • Critical Chain provides managers: – The information they need to FOCUS on the right tasks at the right time Focus on Schedule and Behavior to manage variation Focus on Schedule and Behavior to manage variation
7. 7. Page 7 © 2005, Raytheon Company. All Rights Reserved. Creator of Theory of Constraints and Critical Chain Project Management • Eli Goldratt –Introduced the Theory of Constraints (TOC) in his book The Goal –Holds a Ph.D. in physics –Author of numerous books –Brought TOC first to production environments then to marketing, distribution, personal relationships, and finally to project management
9. 9. Page 9 © 2005, Raytheon Company. All Rights Reserved. Critical Chain vs. Critical Path • Critical Path – The longest string of events through a project network – Normally does not consider the needs of other programs – Does not necessarily deconflict resources – “Traditional” Program Management methodology – Variability of each task is managed randomly • Critical Chain Project Management (CCPM) – The longest chain of events through a project network with resources deconflicted – Minimizes multi-tasking, at least on the Critical Chain – Multi-Project Management considers other program needs – Uses “buffers” to account for variability in each chain With unlimited resources, the Critical Path and the Critical Chain are the same With unlimited resources, the Critical Path and the Critical Chain are the same
10. 10. Page 10 © 2005, Raytheon Company. All Rights Reserved. Product development consists of many knowledge processes ... All processes ... and have an “expected” value (average) Likelihoodof occurrence Time have variation Task Durations Reflect the Output of a Process
11. 11. Page 11 © 2005, Raytheon Company. All Rights Reserved. Prior to T0 probability = 0 50% probability of finishing on time 50% of area 30% of area Likelihoodofoccurrence 80% probability 90% probability Special-Cause Variation Common-Cause Variation Probability Distribution is Not Symmetrical “Management’s function is to improve the system while avoiding two mistakes: Mistake 1 Treating common cause variation as if it were special cause variation; Mistake 2: Treating special cause variation as if it were common cause variation” From Critical Chain Project Management by Lawrence P. Leach, page 45
12. 12. Page 12 © 2005, Raytheon Company. All Rights Reserved. Why don’t we meet our schedule commitments?!? Time Probability Curve 90% “risk free” Commitment Effort Murphy strikes! Task complete In spite of detailed schedules with lots of safety margin ... “As many as 80% (of tasks) complete on the due date” From Critical Chain Project Management by Lawrence P. Leach, page 82
13. 13. Page 13 © 2005, Raytheon Company. All Rights Reserved. Pad or Safety Pad or Safety Pad or Safety Pad or Safety Likelihoodofoccurrence How Do Individual Task Times Affect the Project? 50% 90% 50% 90% 50% 90% 50% 90% 50% 90% 50% 90% 50% 90% 50% 90% Anticipated Delivery Handoff Handoff Handoff
14. 14. Page 14 © 2005, Raytheon Company. All Rights Reserved. Project Buffer (owned by the system) Likelihoodofoccurrence When “Safety” is Owned by the Project 50% 90% 50% 90% 50% 90% 50% 90% 50% 90% 50% 90% 50% 90% 50% 90% Anticipated Delivery Handoff Handoff Handoff “The uncertainty of the sum of the events is much less than the sum of the uncertainty for each event” From Critical Chain Project Management by Lawrence P. Leach, page 167
15. 15. Page 15 © 2005, Raytheon Company. All Rights Reserved. Where to Insert Buffers • Project Buffer – Add a Project Buffer after the last task • Feeding Buffers – At every point where any task touches the critical chain, add a Feeding Buffer • Similarities – Program Buffers and Feeding Buffers are calculated exactly the same using the longest chain of tasks from the start point to where the buffer will be inserted – Buffer sizing methodologies shown on slide 17
16. 16. Page 16 © 2005, Raytheon Company. All Rights Reserved. Karen 5 2 3 4 1 Traditional Critical Path Planning With Safety Built Into Each Task: Critical Chain: Project Buffer 2 3 5 1 4Feeding Buffer Buffers protect customer from variation Critical Chain vs. Critical Path Multi-tasked resource Karen Customer Commit Date Customer Commit Date Aggressive Task Durations Eliminate Multitasking Click the Mouse to ContinueClick the Mouse to ContinueClick the Mouse to Continue Inherent Variation is managed and controlled through buffers Inherent Variation is managed and controlled through buffers
17. 17. Page 17 © 2005, Raytheon Company. All Rights Reserved. Buffer Sizing How long do we make the buffers? The length of the buffer is a measure of risk, it can be calculated or selected • Method 1 - The Root-Square-Error (RSE) (best choice) – explained on the next page • Method 2 – Percentage (second choice) – Based on the Aggressive Estimates – Rule of thumb – buffer is 50% of the chain • Method 3 – What’s Left Over (can be used in a pinch) – Reduce the schedule as much as possible and whatever is left over is the buffer! • Method 4 - Cut-and-Paste (not recommended) – Get typical estimates of task duration from developers – Cut the estimates in half – Use the shorter estimate for scheduling purposes – Add half of the cut duration to the buffer
18. 18. Page 18 © 2005, Raytheon Company. All Rights Reserved. Root-Square Error Method • For each task get two estimates: – “Safe” estimate (using traditional estimating methods) – “Aggressive” estimate (assuming Critical Chain behaviors) • For each task take the difference between the safe and aggressive estimates called delta (∆) • Calculate the buffer size using the Root Squared Error Method: • Example: 5 similar tasks each with safe=20 and aggressive=12. So, ∆=20-12=8 22 3 2 2 2 1 ...SizeBuffer N∆++∆+∆+∆= Days8.1732088888SizeBuffer 2 5 2 4 2 3 2 2 2 1 ==++++=
19. 19. Page 19 © 2005, Raytheon Company. All Rights Reserved. Manage the Buffers • Buffers provide focus! • Variability in the tasks will result in DECREASING or INCREASING the time remaining in the buffers • Assess risk by the health of the buffers Project Buffer Project Due Date Green Yellow Red Buffer penetration is a measure of project statusBuffer penetration is a measure of project status
20. 20. Page 20 © 2005, Raytheon Company. All Rights Reserved. Critical Chain, % Complete → ↑ Project Buffer, % Used Project Due Date Project Complete Project Management by the Buffers • Manage the variability of the project and you have succeeded in keeping your customer commitments Green Yellow Red It is expected that much of the buffer will be consumed when the project is complete It is expected that much of the buffer will be consumed when the project is complete
21. 21. Page 21 © 2005, Raytheon Company. All Rights Reserved. Behavior Management Visual Controls and Barrier Busting • One Control Room • Daily stand up meetings • “Run Rules” or Time Guard perks for the Critical Chain resource – Right of Way” – Critical Chain has priority  May interrupt anyone, as necessary  May not be interrupted (except during posted “office hour”) – No multi-tasking on the critical chain  Begin task immediately upon receipt  Pass task to next step immediately upon completion  Focus on the critical task at hand until complete – Exempt from meetings  Send designee, if feasible  If required at meeting, first on agenda • Visual Controls – Badges to identify the Critical Chain element – Signs on the office One person is on the Critical Chain for a discrete period of time, then a hand-off occurs One person is on the Critical Chain for a discrete period of time, then a hand-off occurs
22. 22. Page 22 © 2005, Raytheon Company. All Rights Reserved. Where to go for help Growing body of literature and expertiseGrowing body of literature and expertise • Literature – The Goal by Eli Goldratt – introduces the Theory of Constraints – Critical Chain Project Management by Lawrence P. Leach • Most Common Software for CCPM – ProChain Solutions at prochain.com  An addition to Microsoft's Project software • Companies who have used CCPM successfully – Raytheon – US Military – Honeywell – Lucent – Harris Semiconductors – Israeli Aircraft Industry – Dozens of others
23. 23. Page 23 © 2005, Raytheon Company. All Rights Reserved. How to get started • Visualize and Commit – Decide on Scope of the Critical Chain project (deliverables, end dates) – Get alignment with the team – As required, get alignment with Customer, Planners, EVMS • Prioritize – Establish Control Room – Stand up meeting time, place – Select Visual Controls • Characterize & Improve – Reverse Planning – Identify the Critical Chain – Develop Run Rules, Visual Controls • Achieve – Celebrate every hand-off, every milestone – Help each other succeed along the way – Reward people who help others succeed A firm commitment to implement both the Schedule and Behavior components is required A firm commitment to implement both the Schedule and Behavior components is required
24. 24. Page 24 © 2005, Raytheon Company. All Rights Reserved. CCPM is a Management Philosophy • CCPM helps facilitate – Informed decision making – Daily communication and barrier busting – Reduced multi-tasking – Quick understanding of task relationships and status through visual controls – Variation/Risk Mitigation – Proactive management of tasks, resources, and barriers – Hand-in-hand application with IMP/IMS, Risk Management, EVMS – Accurate prediction of program performance – Constraint management – Team success – Suppliers success CCPM assures Schedule and Behavior performanceCCPM assures Schedule and Behavior performance
25. 25. Page 25 © 2005, Raytheon Company. All Rights Reserved. Biography • Kevin Oxnam has been with Raytheon (formally Hughes) for over 20 years. Kevin has a Bachelors degree in Electrical Engineering and a Masters in Business Administration, both from the University of Arizona. Kevin is a Raytheon Six Sigma Master Expert and a deployment specialist for Critical Chain Project Management. • (520)794-7270 • kaoxnam@raytheon.com