Week09 cc single_project_slides_v1

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Week09 cc single_project_slides_v1

  1. 1. Date/reference/classification 1Session 9Critical ChainSingle-Project ManagementReducing Project Duration by 25%& Increasing Due Date PerformanceWithout Changes of Resource CapacityDr. Thomas Lechler Phone: (201) 216-8174Babbio Center 416 FAX: (201) 216-5385email: tlechler@stevens.edu
  2. 2. Date/reference/classification2© T. Lechler, Ph.D., 20131. Paradigm Question: Process ValueHow much would your organization gain if over 90%of the projects are finished in time?How much would your organization gain if all newprojects starting next month finished 15-25% sooner?• Reduced project cost?• Faster time-to-market?• Greater responsiveness to customers?
  3. 3. Date/reference/classification3© T. Lechler, Ph.D., 20131. Paradigm Question: Management ProblemsWhy is it so difficult to manage projects whichdeliver on time, within budget and with the fullspecification or scope intact ?•__________________________________________________•__________________________________________________•__________________________________________________•__________________________________________________•__________________________________________________
  4. 4. Date/reference/classification4© T. Lechler, Ph.D., 20131. Paradigm Question: Project Manager’s Dilemma• PRESSURE TO INCREASE SAFETY TIME - in order to complete projects on time• PRESSURE TO REDUCE OVERALL PROJECT SCHEDULE - in order to meet thecustomers need for shorter lead timesBe a goodProject ManagerComplete Projectson time(to be realistic)Add protectionto tasksDon’t addprotection totasksPrerequisiteRequirementRespond tocustomers need forshort lead times(quick response)Objective
  5. 5. Date/reference/classification5© T. Lechler, Ph.D., 20131. Paradigm Question: CPM Management of UncertaintyOften projectshave difficultystaying withinbudgetOften scope orspecifications arecut from projectThe Way We ManageUncertainty inProjectsOften projectshave difficultyfinishing on timeYOU CAN’T IMPOSE CERTAINTY ON UNCERTAINTYYOU MUST LEARN TO MANAGE THE UNCERTAINTY
  6. 6. Date/reference/classification6© T. Lechler, Ph.D., 20131. Paradigm Question: CPM EstimationAverage Work UncertaintyMultitasking Set-up TimeTask Estimate - (Duration)Basic Estimation Equation: W = U * DW: Estimate of WorkU: Units of ResourcesD: Duration Inflated Estimates!
  7. 7. Date/reference/classification7© T. Lechler, Ph.D., 20131. Paradigm Question: CPM AssumptionsBasic assumptions of the CPM paradigm:1. Each task is scheduled with 90% likelihood thus the project isscheduled with 90% likelihood. But:Due date on a big project may be less than 10% likely even if thesingle tasks are scheduled with 90%!2. The critical path does not change. But:The critical path changes in many projects!3. Good and bad luck average out. But:Good luck is wasted and bad luck accumulates because- Scheduled tasks are started with delays (Student Syndrome)- Early task finish is often not reported (Parkinson’s Law)=> What are the consequences?
  8. 8. Date/reference/classification8© T. Lechler, Ph.D., 20131. Paradigm Question: CPM Assumption 1Two scenarios:1. All single tasks on the critical path are planned with 90%accuracy: The probability to achieve the planned finish date is:38% (=0.9 EXP 9)2. One of the 9 tasks could be only planned with 80% accuracy andone with 50%. The likelihood to achieve the planned finish date is:18%!Start0d 9/1(a) Initiate project5d 9/1(b) Assign PM2d 9/8(h) Design IPF9d 9/12(g) Conduct IPDtraining5d 9/28 (m) Conduct IPFtraining7d 10/5(j) Prepare businesscase7d 10/5(l) Finalize IPP9d 10/18(k) Write IPP3d 10/13(e) Develop projectschedule10d 9/28(i) Assign resources1d 10/12(d) Form PDT12d 9/12(f) Prepare expenseestimates9d 9/28Concept DCP0d 10/28(c) Establishconstraints6d 9/8(n) Reproducedocuments8d 10/14
  9. 9. Date/reference/classification9© T. Lechler, Ph.D., 20131. Paradigm Question: CPM Assumption 2Critical Path is not stable!Determine budget4 1dWed 6/1/94 Wed 6/1/94Selection6 120hThu 6/2/94 Wed 6/22/94Theme7 2dThu 6/2/94 Fri 6/3/94Date8 3dMon 6/6/94 Wed 6/8/94Site9 1wThu 6/9/94 Wed 6/15/94Costumes10 1wThu 6/16/94 Wed 6/22/94Hire11 168hThu 6/23/94 Thu 7/21/94Caterer12 2dThu 6/23/94 Fri 6/24/94Entertainment13 9dMon 6/27/94 Thu 7/7/94Keynote speaker14 2wFri 7/8/94 Thu 7/21/94Public relations15 88hFri 7/22/94 Fri 8/5/94Rent Equipment18 40hMon 8/8/94 Fri 8/12/94Invitation list5 1dWed 6/1/94 Wed 6/1/94
  10. 10. Date/reference/classification10© T. Lechler, Ph.D., 20131. Paradigm Question: CPM Assumption 3– Finish early —do we gain?• Can the next taskstart early?• Good luck iswasted.– Finish late —do we lose?• The next task isforced to delay• Delays areaccumulated.Good luck is wasted and bad luck accumulates!Task1: 10 DaysTask2: 10 DaysTask3: 10 Days +2 DDelay 2 DaysDue DateDelay 2 Days+2 DTask1: 10 DaysTask2: 8 DaysTask3: 10 Days2 DDue Date Not2 Days Earlier2 Days Earlier
  11. 11. Date/reference/classification11© T. Lechler, Ph.D., 20131. Paradigm Question: CPM Assumption 3Task safety wasted:– as a student, did you start on assignments immediately?– you had plenty of time, so you started later! Task safety is wasted right at the beginning31090%ABwasted770%studentsyndrome50% Task estimates includesafety, but what if westart later?Student Syndrome
  12. 12. Date/reference/classification12© T. Lechler, Ph.D., 20131. Paradigm Question: CPM Assumption 3Report early finish after 5 days?– There is always a bit more to do (polishing)– The next person isn’t ready to start anyway– Next time the estimate gets cut We erroneously report when we’re doneactual50% 90%1|0|0 |5 1|5timeprobability5 ?Task estimates includesafety, but what if weget lucky, and finishearly?Parkinson’s Law
  13. 13. Date/reference/classification13© T. Lechler, Ph.D., 20131. Paradigm Question: CPM Assumption 3Slow starts and false finish reporting contaminate project metrics:• Safety is systematically wasted!• Initial expectations seem to be unrealistic…expectedactualB3 2studentsyndromefalse finishreporting5© 2000 ZULTNER & COMPANYprobabilityCombined Effects of:Student Syndrome and Parkinson’s Law
  14. 14. Date/reference/classification14© T. Lechler, Ph.D., 20131. Paradigm Question: CPM LimitationsLimitations of Critical Path Methods (CPM)• CPM resource allocation leads to minimal singleproject duration (local optimum)• CPM does not explicitly take variation (risk) intoaccount• CPM does not maximize the throughput of a multi-project system (global optimum)Critical Path Method leads to sub-optimal resource allocation!
  15. 15. Date/reference/classification15© T. Lechler, Ph.D., 20131. Paradigm Question: CPM Vicious CycleThe Vicious Cycle of CPM– More and more safety is addedover timeHow to break the vicious cycle?– Applying Critical ChainProjectIs LateCut Schedule“it’s just too long”AddSafetyStruggleto DeadlineBlameAssignedGoldratt, Viewer Notebook, 1999, pp.75
  16. 16. Date/reference/classification16© T. Lechler, Ph.D., 20131. The Paradigm Question: System ProblemsIt’s the system, stupid!“Pit a good person against a bad system and the system willwin all the time.”(Rummler and Brache, 2002)Deming’s 85/15• 85% of faults are process related, and it is management’sresponsibility to solve them• 15% of faults are the responsibility of individualemployee’s• Most of the time management is focusing on the “15”rather than the “85”, trying to find the guilty person ratherthan to improve the processDeming, W.E., “Out of the Crisis”, MIT, CIA, Massachussetts, 1986
  17. 17. Date/reference/classification17© T. Lechler, Ph.D., 2013“If you do what you alwaysdid, you’re gonna get whatyou always got”Yogi Berra1. The Paradigm Question: Why change?
  18. 18. Date/reference/classification18© T. Lechler, Ph.D., 20131. The Future of Project Management• Critical Chain allows to shorten your projects• minimum 15-25% reduction• on large projects, often more than 25%• NO added resources (and less overtime!)• NO sacrifice of value or features• NO increase in risk• NO cutting of quality
  19. 19. Date/reference/classification 19Critical ChainPerformance Impact
  20. 20. Date/reference/classification20© T. Lechler, Ph.D., 2013On-time performance N CPM N CCGreater Than 90% 9 7% 8 53%80% To 90% 12 10% 3 20%70% To 80% 18 15% 1 7%60% To 70% 20 17% 0 050% To 60% 18 15% 1 7%40% To 50% 15 12% 0 0Less Than 40% 27 22% 0 0No Response 2 2% 2 14%Results from: http://www.pdinstitute.com/surveys/surveyresults.htmQuestion: On-time performance for the projects of my organization is:CC promises higher due date performance!2. Critical Chain Performance Impact: Average
  21. 21. Date/reference/classification21© T. Lechler, Ph.D., 20132. CC Performance Impact: Selected Cases• Harris Corporation• Microelectronics plant, Mountaintop, PA• Project Goal: To be operational in 27 months• Facility Construction:• Critical Chain Plan: 18 months• Result with CC: 13 months, 4% over budget• Industry norm: 28-30 months• Facility Operation:• Result with CC : Full production in 21 months• Industry norm 46-54 months total
  22. 22. Date/reference/classification22© T. Lechler, Ph.D., 20132. CC Performance Impact: Selected CasesLucent Technologies: Fiber Optic Cable Business UnitSituation before CCM• Product realization cycle forFiber Optic Cable was same asits competitors.• Designs based on tools tooklonger time to come to market.• Many designers were overloadedand multi-tasking on severalprojects simultaneously.Situation After CCM• Goals of implementation wereachieved.• On-time delivery was markedlyimproved• The organizations capacity todevelop products markedlyincreased.• With no increase in staff, thenumber of projects werecompleted.• The production introductioninterval was reduced by 50%.
  23. 23. Date/reference/classification23© T. Lechler, Ph.D., 20132. CC Performance Impact: Selected CasesSuccessful Cases of Companies That Used Critical Chain• (http://www.goldratt.com/success.htm)• Seagate Technology• F-22 Project Raptor• Lucent Technologies• The Clowes Group• Valmount Industries• BAE Systems (this article can be viewedin(www.ets.news.com)
  24. 24. Date/reference/classification24© T. Lechler, Ph.D., 2013CC-Project Before AfterWarfighter SystemsTesting (US Air ForceOperational Test &Evaluation Center)18 projects in 6 months.On time delivery unknown.26 projects in 6 months.75% projects on time;30% reduction in cycle time.Aircraft Repair andOverhaul (US NavalAviation Depot, CherryPoint)Average turnaround time (TAT)for H-46 aircraft was 225 days.Throughput was 23 per year.Reduced TAT to 167 days, a 25%reduction while work scope wasincreasing.Throughput is 46 per year.70% reduction in backlogSubmarine Maintenanceand Repair (US NavalShipyard, Pearl Harbor)Job Completion Rate 94%On-time delivery less than 60%.Cost per job was $5,043.Job Completion Rate now 98% On-timedelivery 95+%.Cost per job reduced 33% Overtimereduced by 49%$9M saving in first year.2. CC Performance Impact: Selected Cases
  25. 25. Date/reference/classification25© T. Lechler, Ph.D., 20132. CC Performance Impact: SummaryThe Impact of CC across approx. 80 cases:• Increased systems throughput ~ 20%• Reduced project schedule ~ 15% - 40%• Increased on-time delivery ~ 93%• Reduced backlog ~ 30% - 70%• Reduced overtime ~ 20% - 50%CC shows dramatic performance improvements!
  26. 26. Date/reference/classification26© T. Lechler, Ph.D., 20133. What is CC? Critical Chain vs. CPMTraditional PM scheduling problems:• Resource conflicts• Delays• Uncertainty (scope change, context, resources)CC offers a solution:• Performance improvement with same resource base• Reduces resource conflicts• Reduces uncertainty• Addresses multi-project environments
  27. 27. Date/reference/classification27© T. Lechler, Ph.D., 20133. What is CC? Critical Chain vs. CPMCritical Chain three level approach:1. Philosophical Level: Theory of Constraints2. Single-Project Level: Managing Variation3. Multi-Project Level: Systems ApproachCritical Path one level approach:1. Single Project Level: Managing Due Date• Does not account for variation• Does not account for behaviors• Does not account for multi-project systemCritical Chain promises advantages over CPM!
  28. 28. Date/reference/classification28© T. Lechler, Ph.D., 20133. What is CC? Philosophical Level: ToCTheory of Constraints:1. Systems perspective2. Focus on the system’s bottle neck3. Throughput mindset4. Avoid sub-optimization5. Use simple toolsElyahu Goldratt, “The Goal,” 1988
  29. 29. Date/reference/classification29© T. Lechler, Ph.D., 20133. What is CC? Philosophical Level: ToC StepsTheory of Constraints:Step 1: Identify the systems constraint(s)Step 2: Decide how to exploit the system’s constraint(s)Step 3: Subordinate everything else to the above decisionStep 4: Elevate the system’s constraint(s)Step 5: If in the previous step, a constraint has been broken goback to step 1, but do not allow inertia to become thesystem’s constraintElyahu Goldratt, “The Goal,” 1988
  30. 30. Date/reference/classification30© T. Lechler, Ph.D., 20133. What is CC? Philosophical Level: CC EstimationAverage WorkTouchTimeUncertaintyBuffersMultitaskingMinimizeSet-up TimeBasic Estimation Equation: W = U * D
  31. 31. Date/reference/classification31© T. Lechler, Ph.D., 2013• Realistic task estimates are 90% estimates.• They include safety– to assure on-time completion despite unknownsIn 90% of the cases the task will be finished EARLIER!In 10% of the cases the task will be finished LATER!5550%90%1|0|0 |5 1|5timeprobability10%10expected safety commitmenttask duration4. What is CC? Single-Project Level: Local vs. Global Safety
  32. 32. Date/reference/classification32© T. Lechler, Ph.D., 20134. What is CC? Single-Project Level: Local vs. Global SafetyIs trying to keep every task on-time an efficient wayto make the project deadline on time?Probability of meeting the due date 73%!550%90%550%90%550%90%1055 10105traditionalcommittedprojectduration:30 daysDEADLINE
  33. 33. Date/reference/classification33© T. Lechler, Ph.D., 20134. What is CC? Single-Project Level: Buffer Sizing5525 758.66525 25+ + =project buffersafetytakesquarerootsquare standard deviation50% 90%5 5555duration55safetydurationdurationsafetySingle-Project Level: Local vs. Global SafetyHow much buffer is needed for a 90% Due Date estimate?Goldratt’s Heuristic: Buffer Size = 50% of accumulated safety!
  34. 34. Date/reference/classification34© T. Lechler, Ph.D., 20134. What is CC? Single-Project Level: Buffer SizingAn efficient way to manage risk:– pool task variation in a project buffer,– the project schedule is shorter,– risk is not increased!555expected duration safety8.6650%90%project buffersavings15 6© 2000 ZULTNER & COMPANYCriticalChaincommitted projectduration:24 daysDEADLINE
  35. 35. Date/reference/classification35© T. Lechler, Ph.D., 20134. What is CC? Single-Project Level: Buffer Management2|02|5 1|0 |095 5 5-1 dayminimum buffer required6 5 853 105+2 days510-5 daysfinished!2131|5 |53|08.67.15.0actual buffer+1 buffer-days+5 buffer-days+5 buffer-daysBUFFER STATUSHow many buffer-daysare needed to meet thedue date with 90%probability?How could good andbad luck averagedout?Buffers absorb risksCC Buffer Metric: Actual Buffer/Minimum Buffer Required
  36. 36. Date/reference/classification36© T. Lechler, Ph.D., 20136:Prog 3:HW5:HWFeeding Buffer2:CS6:Prog 3:HW3:Eng 5:HW4:CS 2:CS Project BufferResource Leveled Critical Path (in Red)Critical Chain (in Red) Buffered ScheduleIndividual activities are scheduled at their average durations (no safetymargin) 15%-25% decrease of project duration4:CS 3:EngCPM NetworkCC Network4. What is CC? Single-Project Level: Feeding & Project BuffersDue Date
  37. 37. Date/reference/classification37© T. Lechler, Ph.D., 20134. What is CC? Single-Project Level: Resource BuffersFor Relay Runners– resources get a countdown– assure the resource can start immediately– activities start as soon as possibleNOT when the schedule says310ABResourceBuffer7start!10current task next task31021three days to gotwo days to goone day to gogood luck strikes—early finishthe plan
  38. 38. Date/reference/classification38© T. Lechler, Ph.D., 20134. What is CC? Single-Project Level: Relay Runner EffectsResources seem to be working “faster” but• Overtime goes down• Speed may go down• Throughput goes way up• Quality goes up (slightly to a lot)• Projects take much less time• Resources will be idle more often• Resource utilization goes down
  39. 39. Date/reference/classification39© T. Lechler, Ph.D., 20134. What is CC? Single-Project Level: Computation StepsCritical Chain computation steps for single project schedule:• Compute baseline schedule using average activity durations and ALAP• Aggregate safety margins into Project Buffer• Identify Critical Chain (CC)• Protect CC using Feeding Buffers• Try to keep baseline schedule and CC fixed during execution• Use buffers as proactive warning system during execution
  40. 40. Date/reference/classification40© T. Lechler, Ph.D., 20137. What is CC? SummaryCC (1996):• Feeding Buffer• Resource Buffer• Project BufferCC Metrics• Actual Buffer/ Minimum required buffer• Due date performance (% of milestones finished or mean projectduration and its standard dev.• Operating expenses (# of hours invested)• Inventory (amount of work in process not finished yet, hours investedin unfinished work orders/activities)• Project Quality (# development cycles and # of changes)
  41. 41. Date/reference/classification41© T. Lechler, Ph.D., 20137. What is CC? SummaryCritical Chain Advantages (CC)• Provides a systems approach for managing multipleprojects sharing a set of resources• Improved system throughput (global optimum)• Explicitly takes variation (risk) into account• Efficiently! (reduces time to market)• Provides a visible, and powerful way to manage risk andlikelihood of on-time delivery• A base for real risk management (reduces % of lateprojects)Critical Chain promises advantages over CPM!
  42. 42. Date/reference/classification42© T. Lechler, Ph.D., 2013
  43. 43. Date/reference/classification43© T. Lechler, Ph.D., 2013Implementing CC: Creating a Project ScheduleThe Five Focusing Steps of ToC1. Identify the constraint2. Exploit the constraint3. Subordinate everything else to the above decision4. Elevate the constraint5. Don’t let inertia become the constraint(If the constraint is broken, go to 1)
  44. 44. Date/reference/classification44© T. Lechler, Ph.D., 2013Implementing CC: Step 0Before creating the CC project schedule• Define the project and its purpose• Define the fundamental measurements for the project
  45. 45. Date/reference/classification45© T. Lechler, Ph.D., 2013Implementing CC: Step 11. Identify the Critical ChainA. Lay out the project network with all tasks as late as possible(latest completion time of tasks)B. Working backwards, identify the contention (usually resource) toaddress nextC. Remove the contention by adding more resources, or movingtasks earlierD. Continue until all conflicts are resolvedE. Identify the longest dependent chain
  46. 46. Date/reference/classification46© T. Lechler, Ph.D., 2013Implementing CC: Step 2-42. Exploit the Critical ChainUse 50% task times and a project buffer3. Subordinate everything else• Protect the CC with feeding buffers• Resolve new conflicts from buffers by moving tasks earlier4. Elevate (shorten) the Critical ChainAdd resources, change procedures, etc.
  47. 47. Date/reference/classification47© T. Lechler, Ph.D., 2013Implementing CC: Step 55. Go back to step 1. Do not allow inertia to become the constraint!We have now applied the Five Focusing steps of Theory of Constraints(ToC) to schedule a project
  48. 48. Date/reference/classification48© T. Lechler, Ph.D., 2013Implementing CC: Case 1• Variation…– Non-critical path• if it slips, could impact the critical path– Protect the critical path — with a feeding buffer• absorbs non-critical path variation• prevents the critical path from shifting10 10 16201616A5 5 8FB 1188CPB 1410CPM Project PlanCC Project Plan
  49. 49. Date/reference/classification49© T. Lechler, Ph.D., 201320 6020 40 2060Airframe+10ComponentAircraftComplete20 3030Implementing CC: Case 2Let’s establish a Critical Chain ScheduleAircraft Project – Traditional ScheduleEngine+20Critical Path: 140 MonthsAircraftStart
  50. 50. Date/reference/classification50© T. Lechler, Ph.D., 201310 3010 20 1030AirframeEngineComponentAircraftComplete10 1515Implementing CC: Case 2Cut task estimates by 50%AircraftStart
  51. 51. Date/reference/classification51© T. Lechler, Ph.D., 201310 3010 20 1030AirframeEngineComponentAircraftComplete10 1515Implementing CC: Case 2Push all tasks to start as late as possible.
  52. 52. Date/reference/classification52© T. Lechler, Ph.D., 201310 3010 20 1030AirframeEngineComponentAircraftComplete10 1515Implementing CC: Case 2Eliminate Resource Contention
  53. 53. Date/reference/classification53© T. Lechler, Ph.D., 201310 3010 20 1030AirframeEngineComponent AircraftComplete10 1515Implementing CC: Case 2Resource contention eliminated by movingComponent branch 15 months backward.+15
  54. 54. Date/reference/classification54© T. Lechler, Ph.D., 201310 3010 20 1030AirframeEngineComponent AircraftComplete10 1515Implementing CC: Case 2Eliminate Resource Contention+15
  55. 55. Date/reference/classification55© T. Lechler, Ph.D., 201310 3010 20 1030AirframeEngineComponentAircraftComplete10 1515Implementing CC: Case 2Resource contention eliminated by movingEngine branch 5 months backward.+5+15
  56. 56. Date/reference/classification56© T. Lechler, Ph.D., 201310 3010 20 1030AirframeEngineComponent AircraftComplete10 1515Implementing CC: Case 2Eliminate Resource Contention+5+15
  57. 57. Date/reference/classification57© T. Lechler, Ph.D., 201310 3010 20 1030AirframeEngineComponent AircraftComplete10 1515Implementing CC: Case 2Resource contention eliminated by movingAirframe branch 5 months backward.+5+5AircraftStart+15
  58. 58. Date/reference/classification58© T. Lechler, Ph.D., 201310 3010 20 1030AirframeEngineComponent AircraftComplete10 1515Implementing CC: Case 2The longest path through the network considering bothTASK and RESOURCE DEPENDENCIES is the CriticalChain (CC = 70 months).+5+5AircraftStartCC+15
  59. 59. Date/reference/classification59© T. Lechler, Ph.D., 201310 3010 20 1030AirframeEngineComponent AircraftComplete10 1515Implementing CC: Buffer Management (Project Buffer)Using Buffer Management: Project BufferProject Buffer = 38.08 months (accurate calculation)Total project duration = 108 months+5+5AircraftStartProject BufferCC+15
  60. 60. Date/reference/classification60© T. Lechler, Ph.D., 201310 3010 20 1030AirframeEngineComponent AircraftComplete10 1515Implementing CC: Buffer Management (Feeding Buffer)Using Buffer Management: Feeding BuffersLocations of feeding buffers+5+5Project Buffer+15
  61. 61. Date/reference/classification61© T. Lechler, Ph.D., 20131010 20 1030AirframeEngineComponent AircraftComplete10Implementing CC: Buffer Management (Feeding Buffer)Using Buffer Management: Feeding BuffersDurations of feeding buffers moves project start to anearlier start date!Total project duration: 129 months153015 PB=38FB=26.5FB=30FB=10
  62. 62. Date/reference/classification62© T. Lechler, Ph.D., 2013Implementing CC: Conclusions10 3010 20 1030AirframeEngineComponent AircraftComplete10Use Project BufferUse “Float” as “quasi feeding buffers”Total project duration = 108 months compared toStandard schedule with 140 monthsAircraftStartProject BufferCC1515FB=5FB=5

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