What would you do if government suddenly became a really demanding client? Oded Cohen
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What would you do if government suddenly became a really demanding client? Oded Cohen

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  • Программа Стратегиские Решения - Модуль 1 Управление производством по ТОС 23-26 ноября 2009 Москва
  • Программа Стратегиские Решения - Модуль 1 Управление производством по ТОС 23-26 ноября 2009 Москва
  • Программа Стратегиские Решения - Модуль 1 Управление производством по ТОС 23-26 ноября 2009 Москва
  • Программа Стратегиские Решения - Модуль 1 Управление производством по ТОС 23-26 ноября 2009 Москва
  • Программа Стратегиские Решения - Модуль 1 Управление производством по ТОС 23-26 ноября 2009 Москва
  • Even though the term Throughput is used – we actually refer to the cash payment associated with the order.
  • Wording of injections 5 and 7: To avoid confusion we have to establish a clear cut between the two injections. Injection 5 for resource allocation only . This is done through the use of BM for assigning priorities to tasks. This is nearly automatic procedure – task are given priorities according to the buffer penetration levels. The procedure for resource allocation follows from the priority assigned to the task. Injection 7 is activated when the resource allocation is not enough in order to guarantee the on time completion of the project. Usually, we should be concerned when the project completion buffer is in the red. Therefore, it is expected that project management will consider, suggest and take some drastic actions that will lead to recovery of the buffer. Recovery means that the buffer is not depleted to the extent that the on time delivery is at significant risk. In injection 7 we are looking for actions that beyond just assigning resources. Many times we look for taking actions on tasks of the critical chain that will end up by reducing the duration of a task or several tasks on the critical chain. Not always such actions are within the authority of the project manager or any of the resource managers – and a part of the process includes the thinking, suggestion and obtaining permission and funds for the recovery actions.
  • Figure 12

Transcript

  • 1. Public Sector Efficiency Conference Contractors parallel session: "What would you do if the government suddenly became a really demanding client?" Vilnius, September 2012Copyright © 2012 by Oded Cohen Oded Cohen – TOC For Contractors 1
  • 2. Oded Cohen Oded has nearly 35 years of experience in developing, teaching and implementing TOC methodology, solutions and implementation processes working directly with Dr. Goldratt all over the world. Among the countries to which Oded brings his expertise are the USA, Canada, Japan, India, China, the UK, Poland, Russia, Ukraine, Colombia, Chile, Peru, Turkey and many others. Oded has authored multiple TOC articles and contributed to several TOC books. Oded in the is the author of Ever Improve – A Guide to Managing Production the TOC Way, published in June 2010. Oded co-authored the book Deming & Goldratt: The Theory of Constraints and the System of Profound oded.cohen.gs@gmail.com Knowledge – The Decalogue. www.toc-strategicsolutions.com Together with Jelena Fedurko Oded has co- authored the book TOC Fundamentals, recently published in Russian.Copyright © 2012 by Oded Cohen 2
  • 3. Supplying to the State/Government• This session is for contractors that provide the State or the Government deliverables that have the nature of projects.• Typical projects are in construction, infrastructure, IT, new product development, etc.• As such contractors are expected to meet three conditions – the projects that they are committed to fulfill should be:  On Time  Within Budget  According to the agreed specifications (promises)• The Reality of projects is dominated by uncertainty. As such it is extremely difficult and seems unrealistic to expect to meet the three conditions of Time, Budget and Specifications.• Nevertheless, it is likely that more and more State bodies may demand from the contractors to meet these conditions. Contractors may find such situations challenging. Let’s see what TOC offers.Copyright © 2012 by Oded Cohen Oded Cohen – TOC For Contractors 3
  • 4. TOC Offer – CCPM Critical Chain Project Management CCPM Implementations in the Public Sector Working with Contractors • Defense -  MRO - Maintenance, Repair and Overhaul  New Product Development • Infrastructure – Roads, Bridges, Railway, Buildings • Utilities -  Air Control  Water, Electricity etc.Copyright © 2012 by Oded Cohen Oded Cohen – TOC For Contractors 4
  • 5. Copyright © 2012 by Oded Cohen 5
  • 6. Results Summar y of many dif ferent project companies • Delivery Performance >95% • Lead Time reduced by 30% • Costs reduced by 15-20% • Capacity increased by 30-50% All without any significant investment – just changing the rules, policies and measures Results achieved within 6-9 monthsCopyright © 2012 by Oded Cohen 6
  • 7. What is unique about CCPM – Critical Chain Project Management? TOC provides a managerial approach to better manage uncertainty that dominates projects.  TOC recognizes that key constraint of projects is the Critical Chain – the shortest chain of dependent activities while the dependency is not only logical but also through the resource availability.  Critical Chain is used for better planning and better controlling the execution of projects plans. • In Project Planning – CCPM promotes good and realistic project plans with built-in protection – Project Buffers and Feeding Buffers. • In Project Execution – CCPM promotes Buffer Management, Priority setting, Early Warning and Recovery Actions. • TOC Provides focus by setting the measurement for project management – to be a reliable provider. • Outstanding performance – reliability and competitive lead times can bring the provider more sales.Copyright © 2012 by Oded Cohen Oded Cohen – TOC For Contractors 7
  • 8. Why is it so difficult to deliver on time • There are too many uncertainties stemming from  the nature of the project (first time, new technology etc.),  the lack of control (customers’ instructions, bureaucracy, other contractors etc.)  and Murphy – what can go wrong – will! • Typical situations that can block the progress of State Projects:  There are too many cost overruns against budget – materials, resources etc.  Existing projects are disrupted by ‘extra work’  Many tasks (activities) take longer than planned  Progress payments are not received when expected  Revisions for late changes to scope hold us up  Too much rework  Too much overtime (especially before milestones and towards the end of the project)  Too many resources are not available when needed (they have many simultaneous tasks)  Priorities constantly shift  Top management under pressure to add more resources  Often scope or specifications are cut from a project TOC claims that a Core Problem is responsible for the existence of the majority of these problems. Any solution must address the Core Problem.Copyright © 2012 by Oded Cohen Oded Cohen – TOC For Contractors 8
  • 9. Understanding theProblemCurrent Reality B D Core Problem A A conflict diagram - Core Cloud C D’ B D Ensure the project Take is on-time corrective actions and in full that compromise (according to specs) project budget A commitments Run projects successfully D’ C Do not take corrective actions Protect budget that compromise commitments project budget commitmentsCopyright © 2012 by Oded Cohen Oded Cohen – TOC For Contractors 9
  • 10. Analysis and solution application What to change? What to change to? Low Performance High Performance Measurements Measurements Future Reality • Elements of the Current Reality GAPS solution and • Closing the Gaps Gap Analysis • Logic of the solution • Benefits Core TOC direction of solution Problem PIVOTCopyright © 2012 by Oded Cohen Oded Cohen – TOC For Contractors 10
  • 11. The TOC Pivot – Managing Constraints Lift The PIVOT GAP TOC Block THE PAST TODAY THE FUTURE What is the constraint of the project management? When does the system create value for the goal of making more money? The shorter is the time to complete the project – the better! At the completion of the project – Throughput is generated and money invested is starting to be returned! Conclusion: Projects have the TIME constraint.Copyright © 2012 by Oded Cohen Oded Cohen – TOC For Contractors 11
  • 12. TOC Direction of Solution CCPM – Critical Chain Project Management: The TIME constraint of the project is Future Reality presented through the Critical Chain – the longest chain of dependent activities. Managing the project through the CC is geared to finish the project in a safe and quick way. TOC direction of solutionCopyright © 2012 by Oded Cohen Oded Cohen – TOC For Contractors 12
  • 13. Overview of the TOC Solution for Project Management CCPMCopyright © 2012 by Oded Cohen Oded Cohen – TOC For Contractors 13
  • 14. TOC Solution for Single Project Management Strategy: The Project is On Time, In Full & Within Budget Tactics: The Project organization implements Critical Chain project management Mindset: Projects to Customers Planning Execution Control are the Injections 2-4 Injections 5-9 Prime Driver – the Drum Injection 1 The Prime MeasurementCopyright © 2012 by Oded Cohen Oded Cohen – TOC For Contractors 14
  • 15. CCPM – Injection 1 Achievement of the delivery commitments is established as a Prime Measurement for managing project environmentCopyright © 2012 by Oded Cohen Oded Cohen – TOC For Contractors 15
  • 16. CCPM – Injection 1 DE Achievement of the delivery commitments is E established as a Prime Measurement for N D B U R managing project environment Inj Measuring On Time Delivery 1. Reliability - The number of projects that were delivered on-time (or early) versus the total number of projects within time “buckets” (e.g. month, quarter, year). [Percentage] 2. For internal use: The amount of money that has been delivered on time or early versus the total value of the projects within time buckets [Percentage]. 3. Also for internal use : The financial impact of the late delivery – T$D – Throughput Dollar Days. [the amount of money delayed multiplied by the number of days late]Copyright © 2012 by Oded Cohen Oded Cohen – TOC For Contractors 16
  • 17. Project Planning the TOC Way CCPM - Injections 2-4Copyright © 2012 by Oded Cohen Oded Cohen – TOC For Contractors 17
  • 18. TOC Solution for Single Project Management Tactics: The Project organization implements Critical Chain project management Mindset: Projects to Customers Planning Execution are the Injections 2-4 Control Prime Driver – the Drum Injections 5-9 Injection 1 Injection 2 Injection 3 Injection 4 Project Planning Critical Chain Diagrams Plan Buffers Criteria for a Good Project Plan: • Provide Financial Benefits • Realistic • Immunized against DisruptionsCopyright © 2012 by Oded Cohen Oded Cohen – TOC For Contractors 18
  • 19. CCPM – Injection 2 Project Planning Diagrams are in place with tasks resourced and estimated for duration – while estimates of durations are challenging but achievableCopyright © 2012 by Oded Cohen Oded Cohen – TOC For Contractors 19
  • 20. CCPM – Injection 2 DE E Project Planning Diagrams are in place N D with tasks resourced and estimated for duration – while B U Inj R estimates of durations are challenging but achievable Project Planning Diagram Build a diagram of task dependencies and check its quality in accordance with the following criteria:  Completeness – No more than 400 tasks  All dependencies are identified  The deliverables ("output") of each task clearly known  All tasks are connected "Finish-Start”  Feasibility  Required resource(s) – main resources, no fractional and no specific names  Duration of tasks – no forced dates CCPM-Injection 2 establishes a mechanism and procedures to develop a quality diagram of the project plan, with duration of the tasks to be set “Challenging, but achievable“.Copyright © 2012 by Oded Cohen Oded Cohen – TOC For Contractors 20
  • 21. CCPM – Injection 2 DE Project Planning Diagrams are in place E with tasks resourced and estimated for duration – while N D B U R Inj estimates of durations are challenging but achievable Estimation times – Current reality in projects Why? Because of Task duration - Behavioral reasons the behaviour of for 80% probability distribution managers – in planning phase managers ask for •Students syndrome estimations in execution – • Parkinson’s Law they treat Probability of • Bad multitasking estimations as completion justified commitments Tasks contain a lot of safety! 50% 80% TimeCopyright © 2012 by Oded Cohen Oded Cohen – TOC For Contractors 21
  • 22. CCPM – Injection 2 DE Project Planning Diagrams are in place E with tasks resourced and estimated for duration – while N D B U R Inj estimates of durations are challenging but achievable Task duration – Behavior Estimation times – must go through a challenging process Probability of Probability of completion 50%80% Time completion 50% 80% Time TOC approach – estimates of duration should be challenging but achievable! In majority of the cases the duration with 50% probability equals HALF the duration with 80% probability.Copyright © 2012 by Oded Cohen Oded Cohen – TOC For Contractors 22
  • 23. CCPM – Injection 3 Critical Chain determined through resolving resource contentionCopyright © 2012 by Oded Cohen Oded Cohen – TOC For Contractors 23
  • 24. DE CCPM – Injection 3 E Critical Chain determined through resolving N D B U resource contention R Inj Making the project plan realistic means that we identify and address resource contention situation. This is happening when the plan calls for the same resource to perform more than one task at the same time. Two mechanisms are used to handle the situations: 1. By re-assigning resources that are likely to be available when needed by the plan 2. By sequencing the tasks by creating dependence between tasks due to availability of resources – this is the Critical ChainCopyright © 2012 by Oded Cohen Oded Cohen – TOC For Contractors 24
  • 25. DE CCPM – Injection 3 E Critical Chain determined through resolving N D B U resource contention R Inj Sorting out Resource Contention: The Critical Chain is the chain of dependent events - one that takes into consideration all dependencies (including resource dependency). Critical Path Promise = 56 days G10 B10 M16 Letter and M16 - Resource contention! C20 Finish Colour = Resource W16 M16Critical Chain G10 B10 M16 C20 Finish W16 M16 68 daysCopyright © 2012 by Oded Cohen Oded Cohen – TOC For Contractors 25
  • 26. DE CCPM – Injection 3 E Critical Chain determined through resolving N D B U resource contention R Inj The role of Critical Chain in managing projects The Critical Chain is the chain of task and resource dependencies that prevents the project from being planned in a shorter interval, given finite resources. The Critical Chain provides the major focus and back bone for the planning. It plays even more important role in controlling the execution of the plan. Hence – the name of the solution - CCPMCopyright © 2012 by Oded Cohen Oded Cohen – TOC For Contractors 26
  • 27. CCPM – Injection 4 Buffers are inserted in strategic pointsCopyright © 2012 by Oded Cohen Oded Cohen – TOC For Contractors 27
  • 28. E DE CCPM – Injection 4 N D Buffers are inserted in strategic points B U R Inj Reality in projects – Working to task due dates What happens if it takes more than 10 days - Plan 10 10 16 Actual > 10 (15) 10 16 RESULT - The delay of 5 days is passed on - the project is ”said to have “moved to the right What happens if it takes less than 10 days - Plan 10 10 16 Actual <10 (6) 10 16 Because of working to task due dates the positive variation is not passed on (usually)Copyright © 2012 by Oded Cohen Oded Cohen – TOC For Contractors 28
  • 29. CCPM – Injection 4 DE E Buffers are inserted in strategic points N D B U R Inj Buffer – is a protection mechanism The Critical Chain of each project is being protected by the placing of sufficient time buffers at strategic points within the flow of tasks: Project Completion Buffer (PB) Feeding Buffers (FB) Feeding Buffer - Project Completion FB Buffer - PB G10 B10 M16 C20 W16 M16Copyright © 2012 by Oded Cohen Oded Cohen – TOC For Contractors 29
  • 30. Execution Control the TOC Way CCPM - Injections 5-9Copyright © 2012 by Oded Cohen Oded Cohen – TOC For Contractors 30
  • 31. TOC Solution for Single ProjectManagement Tactics: The Project organization implements Critical Chain project management Mindset: Planning Projects to Customers Execution Control are the Injections 2-4 Injections 5-9 Prime Driver – the Drum Injection 1 Injection 5 Injection 6 Injection 7 Injection 8 Injection 9 Reporting Resource Recovery POOGI Critical Buffer Management Priority availability Actions Resources Criteria for Good Execution Control : Priority, Recovery, POOGI The Reality of the Project Execution – DELAYS! The TOC Way means: Manage through the Buffers!Copyright © 2012 by Oded Cohen Oded Cohen – TOC For Contractors 31
  • 32. Introduction to Execution Control Buffer Status The penetration to the buffer states the amount of days consumed from the buffer. Buffer is split into three parts and the consumption zone is colored by a relevant color – green, yellow, and red. The planned size 100% of the buffer project completion Buffer consumption The buffer status is used for Self-expediting, Priority of assigning of resources and for Prompting management actions and decisionsCopyright © 2012 by Oded Cohen Oded Cohen – TOC For Contractors 32
  • 33. CCPM - Injection 5 Tasks are performed according to the status of their corresponding buffers through using Buffer Management. Resources inform daily how much time it will take them to complete the task.Copyright © 2012 by Oded Cohen Oded Cohen – TOC For Contractors 33
  • 34. CCPM-Injection 5 Tasks are performed according to the status of their corresponding buffers through using Buffer Management. Resources inform daily how much time it will take them to complete the task. Buffers StatusCopyright © 2012 by Oded Cohen Oded Cohen – TOC For Contractors 34
  • 35. CCPM-Injection 6 Resource Availability is monitored in anticipation of a new planned taskCopyright © 2012 by Oded Cohen Oded Cohen – TOC For Contractors 35
  • 36. E DE CCPM-Injection 6 Resource Availability is monitored in N D B U R Inj anticipation of a new planned task In order to ensure resources for the tasks in CC – look ahead! The length of the project is determined by the CC. Any delay on CC can bring the whole project to be late. When a resource is not available for a task on CC and the task has to wait for the resource – it causes delays on CC. In order to prevent such situations – project manager must ensure that all resources assigned for CC were available when they are needed. This can be achieved through early check and early warning. This is like a “wake-up call” for a resource on CC.Copyright © 2012 by Oded Cohen Oded Cohen – TOC For Contractors 36
  • 37. CCPM-Injection 7 BM for recovery actions is in placeCopyright © 2012 by Oded Cohen Oded Cohen – TOC For Contractors 37
  • 38. DE CCPM-Injection 7 E BM for corrective actions N D B U R Inj (expediting) is in place Restoring the level of the Buffers The reality of the project is DELAYS! The penetration to the buffer presents a risk to the expected completion of the project. When the trend of Buffer Consumption is too high or when the remaining level of buffer is below Low(=RED!), managers are expected to come with ideas of how to restore the buffer to higher level. These ideas are discussed and actions agreed.Copyright © 2012 by Oded Cohen Oded Cohen – TOC For Contractors 38
  • 39. CCPM-Injection 8 Buffer penetration reasons are reviewed periodically for POOGICopyright © 2012 by Oded Cohen Oded Cohen – TOC For Contractors 39
  • 40. DE CCPM-Injection 8 E Buffer penetration reasons are N D B U reviewed periodically for POOGI R Inj Buffer Management Statistics The commitment to POOGI is performed through collecting statistics of major reasons for delays while the buffers are depleted. The reasons are collected and used for statistical analysis. A periodically meeting to review the statistics of the reasons for buffer penetration is held. The meeting is used to decide on the necessary actions to eliminate causes for buffer penetration. Improvement initiatives are agreed and the progress of implementing these initiatives is monitored by the Buffer Management Committee assigned.Copyright © 2012 by Oded Cohen Oded Cohen – TOC For Contractors 40
  • 41. CCPM-Injection 9 Resources are monitored as potential CR – Critical ResourcesCopyright © 2012 by Oded Cohen Oded Cohen – TOC For Contractors 41
  • 42. DE CCPM-Injection 9 E Resources are monitored as potential N D B U Inj R CR – Critical Resources Please note that in reality there is a pressure to dedicate resources to projects. This stems from the demand for resources to be available when needed (as per the evolution of the original plan). Nevertheless – resources can be used in more than one leg of the project and hence can become critical. Even though the Critical Chain mechanism ensures that there is no resource conflicts and contentions in the plan – the unfolding reality can cause resource contention and highly utilized resources can cause delays and penetration to the buffer.Copyright © 2012 by Oded Cohen Oded Cohen – TOC For Contractors 42
  • 43. CCPM Implementation Map Deliverables for starting the next phase Phase 1 Phase 2 Phase 3 Mindset: Planning Execution Tactical Strategic Customer Systemic Control technical deliverable: orders are the approach to & deliverable: Prime Driver project plan Global Projects are for managing diagrams CCPM for delivered on time improvements projects – planning and within budget and The Drum execution according to control is in original promises place Deliverable: Top Deliverable: There is a management accepts good enough plan that the business serves as a base for the opportunity associated proactive execution with on-time delivery controlCopyright © 2012 by Oded Cohen Oded Cohen – TOC For Contractors 43