Critical Chain Approach to Project Success

1. Critical Chain Approach toProject Success Dr. Saji Gopinath IIM Kozhikode PMI- Project Management Conference 2012

2. Motivation • Theme of This conference • Project Management- a Life skill • What is common in all our projects? • Time overrun • Cost overruns? • Why? • More importantly • Why such overruns happen rarely in our “personal” projects • A new way of looking at projects?

3. PMI Study

4. What do we want from Project Management ? • Reliable on time in full to budget delivery performance More revenue, more Profit, happy customers • A stable plan More Productive use of resources • Simple, objective measures of Project progress ; project health status Shorter meetings, better informed stakeholders - less waste, more productivity • Clear signals for when corrective action is - and is not - necessary Better directed recovery efforts - less waste, more productivity • Direction for ongoing improvement efforts The future brings more revenue, more profit, happier customers than the present

5. And what we normally get!! • Reliable on time in full to budget delivery performance ? A continuous struggle with time, cost and scope ? • A stable plan Repeated rescheduling ? • Simple, objective measures of Project progress ? Clarity at the start and end, thick fog in between ? • Measures of Project health status ? Subjective assessments compounded by human factors ? • Clear signals for when corrective action is - and is not - necessary ? Intervening too much too early, and too little too late ? • Direction for ongoing improvement efforts ? "We'll improve our methods when things get better" but ......WHY?

6. Revisiting the beleifs…. • Do our projects fail because of “bad panning”? • (is planning the most important PM Skill?) • Is the delays happen due to “A” Class items/ Activities • Why do our project finish when it is on “Mission Mode”?

7. Classical Project Management • Performance & Increasing Complexity • Re-look at the fundamental assumptions • Technical and Behavioral Dimensions of Project Management • Why our projects are delaying? • Re-thinking the way we manage our projects

8. Why do our Projects delay? • The time estimates are too tight • The changes in environment is too drastic • The interfacing agencies are inefficient • It is impossible to predict the time of completion of a ‘work package’ (activity) • Others

9. How do we estimate project duration? • Past Data • Top Down or Bottom up approach • Cushions for uncertainty • Activity precedence (network technique) • How much is the cushion you provide??

10. Project Duration • What is the effect? 6 3 5 7 Theory 4 5 20 12 Actual The effect is that the typical cushions you provide on each activity is around 50-100%

11. Conventional Project Management Task Time Estimating • Take best guess at how long a task will take • Consider the effect of unknowns or unplanned interruptions • Add sufficient safety to be able to deliver with 90% probability

12. 1.0 25% 50% 0.8 0.6 0.4 0.2 90% 0 T50 T90 Time

13. Problems with the conventional project management techniques 0.4 Probability of Completing project within x number of days 0.3 0.2 0.1 Number of days to Complete project 1 2 3 4 5 6 7 To keep project on schedule - variability encourages people to pad individual activity times with safety time. • Three mechanisms that inflate time estimates • The worst-case scenario • Add safety time to ensure project is on time • By inflating original time to protect against a global cut Median = 2 days Estimated = 5 days Safety time = 3 days Confidence level 80-90% 50%

14. Buffers on Each Activity Why after all these cushions project get delayed?

15. Conventional SAFETY TIME inflates project completion time But.. Adding safety time to protecting project objectives seldom works….. • Three Ways to Waste Safety time • passing on of previous delays Dependencies between activities cause delays to accumulate • student syndrome Wait until the last minute to start a task • multi-tasking Multitasking caused by limited resources ( resource contention ) • How the Safety Gets Wasted • Adding safety time to resolve the resource contention problem does not help • we add safety everywhere and then we waste it!

16. Effect of Fluctuation Due Date Start Date Finish Date Due Date

17. Behavioral Dimension of Project Environment • Additive Rule • Commitments of duration and total cost of a project are based upon adding up the duration and cost of individual tasks • Parkinson’s Law • Work expands to fill its time • 3-Minute EGG Rule • It’s not quality if it is finished before time is up • Hockey Stick Syndrome (student syndrome) • Waiting to start a task due to more important work at hand

18. The Conflict Avoid Parkisnon’s Law Minimise Project Leadtime Schedule Without safety Manage Projects Successfully Con flict Schedule With SAFETY Meet Project Promise Provide For Murphy

19. Way Out? • Plan A - invest our energy in reducing the extent of the variability: • Allowing longer in Project planning stage for preparing estimates • Training staff in estimating • Use of formal estimating methods • Measuring progress and feeding results back into estimating practice • More detailed specifications • Less flexibility over changes to specifications • Training the staff better in their job content • Using individual performance measures to identify poor performers • Keeping projects short (< 6 months), breaking larger undertakings into several short Projects Doing this can help, but doesn't solve the problem

20. Plan B - Coping behaviours • Project Managers fight to be assigned the most viable Projects • Project Managers fight for the best staff • Project Managers fight to keep the Project scope down • Project Managers exploit changes in scope to unduly extend timelines and budgets • Project Managers quit long Projects well before the delivery date • Project Managers disregard targets they know to be impossible • Staff work double shifts in the final weeks / months • Dumping the blame elsewhere Doing these may help the individual, but not the organisation

21. Plan C: Approach the problem in a different way We can reduce variability, but we cannot eliminate it, because it is inherent to the nature of a Project We must manage the variability that remains

22. What is the way out?

23. Critical Chain Project Management • Adaptation of Principles of Theory of constraints • Applying TOC concepts to project management • Critical Chain is a project management application of the Theory of Constraints (TOC) • According to TOC, the main constraint in any project is the time taken for completion of the Critical Chain • Critical Chain Project Management • Conventional approach focuses on successful on-time completion of each individual activity in a project • TOC approach focuses on successful on-time completion of the entire project

24. Critical Chain Project Management • The TOC philosophy applied to project management attempts to remove the undesirable effects (late, over-budget, and under-performance projects) by attacking individual measurements and uncertainty. • What is TOC Philosophy?

25. Theory of Constraints • A system improvement philosophy (as opposed to a process improvement philosophy) • Organizations live or die as systems, not as processes • Success or failure is a function of how well different component processes interact with one another

26. Theory of Constraints • Systems are analogous to chains, or networks of chains • Like a chain, a system’s performance is limited by the performance of its weakest link • The weakest link is the system’s constraint

27. Theory of Constraints • Another basic principle of TOC • A large number of undesirable effects will be caused by a relatively small number of core drivers • Eliminating a very few core problems can result in a huge improvement

28. How we handle variability in Critical Chain • We do not build in any contingency at the Task level • We move all the contingency to the Project level - call this the Completion Buffer How does all this relate to projects? Individual Tasks can now be late without affecting the completion date of the Project The Project due date is protected as long as the accumulated lateness along any one chain is less than the completion buffer

29. What difference does this make to our probability of being late ? Under 'normal' practice, if any task is later than its contingency allowance, we have a problem Under Critical Chain, we only have a problem if the total lateness exceeds the total contingency This second condition is much less likely than the first [ Law of averages / Central limit theorem] and increasingly so as the number of tasks increases

30. Critical Chain Project Management • Uncertainty always present – it doesn’t go away • Take the safety out of each of the critical path tasks and lump them into a safety net at the end of the project • Identify constraints along the path and set up buffers in front of tasks that can suffer from the constraint (constraints = time and resources) • Allow tasks to start when predecessors are completed and resources are available

31. Revisiting activities

32. Power of Aggregation

33. Remove safety time from individual activities • Safety buffers • Pooled buffers Conventional Project Schedule Task buffers(safety time) are hidden within individual activities Job 1 Job 2 Job 3 Job 4 Critical Chain Schedule Buffers are pooled, and made explicit Project Buffer, Project buffer is safety time added to the end of the critical chain to protect the completion date of the project.

34. Feeding buffer on the non-critical path Critical Chain Feeding path Project Buffer Feeding Buffer If Slack remains, then schedule as late as possible Feeding buffers are designed to protect the critical chain from delays on non-critical paths

35. Resource buffers • a wakeup call to alert resources to be ready to work on critical tasks • Scheduled idle time can provide better info about resource’s availability (capacity) Feeding Buffer Critical Chain Alert Wkr A Project Buffer Alert Wkr B Resource Buffers Alert Wkr C

36. Critical Chain Project Management • Critical Chain - set of tasks which determines overall project duration, taking into account both precedence and resource dependencies; improvement along Critical Chain will likely result in improvements to the project as a whole; improvements elsewhere will not • Project buffer - protects project commitment dates from fluctuations on the Critical Chain • Feeding buffer - protects Critical Chain from fluctuations on feeding tasks; provides the possibility for Critical Chain tasks to start early • Resource buffer - protects the Critical Chain from lack of availability of required resources; also provides the possibility for Critical Chain tasks to start early

37. Critical Chain Project Management Task 1 1 2 3 4 Project Buffer Original Critical Path 2 3 4 Original Critical Path with Buffer (Safety removed from individual tasks)

40. Critical Chain Project Management About Buffers Identify the points at which to place project, feeding, and resource buffers Buffer sizes determined approximately, based either on average task duration estimates, or a combination of average and worst-case duration estimates Individual buffer sizes can be adjusted based on intuitive assessment of risk Buffer insertion may cause the Critical Chain, and hence the project completion date, to be pushed later

41. Critical Chain Project Management • The Critical Chain approach to scheduling helps minimize project duration and WIP, delay investment as far as possible, and maximize the chance of on-time completion

42. Last word • The development of new project management techniques have not reduced uncertainty • Hence we need ways to manage and not avoid uncertainty • Critical Chain Management is a way to achieve this

43. Thank You saji@iimk.ac.in / saji.gopinath@yahoo.in 9400050850