This document discusses the critical chain project management concept introduced by Dr. Eliyahu Goldratt to help projects finish on time and budget. It outlines the five steps: 1) identify constraints, 2) exploit constraints, 3) subordinate everything else to the constraints, 4) elevate constraints, and 5) don't let inertia become new constraints. Buffers are added to the critical chain to account for risks. Tracking focuses on the remaining work in the critical chain and buffers rather than completed work. When properly implemented, critical chain management can improve project team effectiveness, tracking, and decision making to help ensure on-time completion.

1. Presenter:
Kaushik Shah
Crtical Chain Concept by Kaushik Shah 1

2.  Background
 Why to complete project on time?
 Basics of Project
 Step1: Identify system’s constraints
 Step2: Exploit system’s constraints
 Step3: Subordinate everything
 Step4: Elevate system’s constraints
 Step5: Don’t allow inertia to become constraints
 Challenges to implement CCPM
 Summary
 Views about author
Crtical Chain Concept by Kaushik Shah 2

3.  Huge cost and time overruns while executing
most of the projects in year 1950s.
 Critical Path based Project management
introduced during 1960s
 Overall project management improved but
still the project could not deliver on time and
in the given cost
 In year 1997, Dr. Goldratt introduced ‘Critical
chain’ based project management concept to
deliver project on time & budget.
Crtical Chain Concept by Kaushik Shah 3

4.  ROI = Net profit/Investment
◦ Assumption:
 Project will be completed in stipulated time
 Time to market
 Increase Revenue & profit margin
◦ Launch of product ahead of competitor
◦ Investment: Money * Time
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Loss of
Revenue

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Process
Input Output
Few Examples:
 Automotive Industry:
◦ Raw Material -> Assembly Line -> Vehicle
 IT Industry
◦ Requirement -> Software Program -> Application
 Textile Industry
◦ Yarn -> Weaving -> Cloth
Step1 Step2 Step4 Step5
Step3
Chain

6.  Constraint: Anything that limits / hinder to
meet the goal of the project.
Crtical Chain Concept by Kaushik Shah
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Critical Path
* Critical path is a longest path of the project in terms of
time and dependent steps.

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Critical Chain
 Critical Chain: Longest chain, in terms of time &
dependent steps considering common resources

8.  Why do we still fail on commitment?
◦ Reason1: Incorporate ‘Safety’ ( Typically due to Lower safety)
Crtical Chain Concept by Kaushik Shah
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50% 30%
Safety
Time
Probability

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Start of the
task
Unexpected
problem
Delayed
Completion
 Why do we still fail on commitment?
◦ Reason2: Students syndrome

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 Why do we still fail on commitment?
◦ Reason3: Parkinson’s Law: Work expands to fit
allocated time.
 No reward for completing the tasks before time
 Typically cut in the estimation based on past history

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 Why do we still fail on commitment?
◦ Reason4: Multitasking

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 Estimation with
50% probability
 Introduce
buffer with
Safety margin
Project Buffer
Feeding Buffer
7d
7d
7d
3d
6d

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 This is a process to subordinate all other
activities to maintain / improve the critical
chain schedule.

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 Reduce number of Dependent task
◦ Any opportunity for improvement should be
checked against ROI calculation
 ROI = Incremental Net profit / Incremental
investments
 Reduce time to perform task
 Reduce number of Dependency due to
common resources

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 Carefully consider the following:
◦ Any opportunity for moving the critical chain
should be testing using ROI calculation (NP/I)
◦ Ability of non-critical tasks & resources to
subordinate the new critical chain tasks
◦ Risk associated with disrupting the project
 Restart the process in case critical chain
moves

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 Use the following method to track the
project:
◦ Track the project completion using remaining
work and not the completed work
◦ Divide the buffer in 3 equal zone
 Green Zone: No action required
 Yellow Zone: Assess the problem and prepare action
plan
 Red Zone: Implement action plan

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 Cultural change in the organization
 Estimation technique – Buffer calculation
 Multitasking of critical resource
 Make or Buy Decision (Skip/Implement task)

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 Critical Chain project management provides
following major benefits
◦ Project will be completed faster
◦ The project team moral and effectiveness will
improve
◦ Tracking will become easy be looking at critical
chain task and status on Buffer
◦ Effective tool for decision making for choosing or
skipping the task

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 Positive comments
◦ A small idea can change the world – Jargon of
Critical Chain
◦ The book is like a novel which made the subject
interesting
◦ Presented practical examples supported
graphically
 Improvement areas
◦ Lots of background story and main topic was
discussed later part of the book
◦ Difficult to understand the implementation part of
critical chain

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Thank you