Is Critical Chain Project Management (CCPM) An All or None Deal?

1. Is Critical Chain Project Management (CCPM)An All or None Deal? Dr. Russ Johnson, Jonah President, Improvement Quest, Inc. Loveland, CO 80538 970-581-0075 Improvementquest@aol.com Dr. Russ Johnson, President Improvement Quest, Inc Loveland, CO

2. What is a project? • A temporary endeavor undertaken to create a unique product or service(PMI-BOK 1996) • Consists of three major efforts: • Planning • Execution • Management Dr. Russ Johnson, President Improvement Quest, Inc Loveland, CO

3. What is project management? • The application of knowledge, skills, tools, and techniques to project activities in order to meet or exceed stakeholder needs and expectations. (PMI -BOK, 1996) • A balancing act between the three project commitments • Scope • Time • Budget • Common elements • A scheduling mechanism (software and rules) • Existing management paradigms • Human behavior Dr. Russ Johnson, President Improvement Quest, Inc Loveland, CO

4. Project characteristics All projects have many things in common: • They involve high uncertainty. • They involve three different and perceptually opposing commitments: Due date, budget, and content • They require different levels of a variety of expertise and resources at different times and for different amounts of time • They are impacted by variability within and between events Dr. Russ Johnson, President Improvement Quest, Inc Loveland, CO

5. Establishing some current reality • Do we go back to resources and pressure them to reduce their time and/or cost estimates? • Do we hold resources to the scheduled start and finish dates for activities? • Do we sometimes miss entire activities or at least dependencies in the planning stages of the project? • Do our projects quickly evolve to having multiple critical paths? • Do our projects seem to always be behind? Dr. Russ Johnson, President Improvement Quest, Inc Loveland, CO

6. Are these are fairly typical? • Existing project work is not complete before new projects require a shifting in priorities. • The organization is too slow responding to important opportunities. • Management feels constant pressure to increaseresources to handle peak project loads. • Promised lead times are longer than desired. • There are difficulties completing projects on time. • There is too much rework activity.

7. Are these are fairly typical? • There are difficulties completing projects within budget. • Project scope/content is too often compromised to meet dates and/or budget. • Some projects are abandoned or completed without the organization gaining the promised benefit. • Project Managers and resource managers have frequent conflicts about priorities and resource commitments. • Problems in one part of a project cascade into other parts of the project and/or into other projects.

8. If … • Our reputation is important to us, and • Our past experience has been a mixed bag that has often left our customers less than elated with our performance and shaken their confidence in us, and • We need to be able to communicate status to a variety of people and be able to quickly and accurately predict the impact of change and resource availability and assignment issues, and • Conditions and expectations today are fundamentally different than they were when the current formal project management approach was developed, • Resources are scarce and heavily shared • We are moving from competitive bid to design-build and negotiated contracts • It is becoming more and more critical that we collaborate rather than combat Dr. Russ Johnson, President Improvement Quest, Inc Loveland, CO

9. Then… • Do we need to approach project management differently in terms of a formal planning, execution and monitoring/reporting process? • Is there an alternative to the primary formal project management style or methodology we use today? • If so, do we have the knowledge and experience we would need relative to these alternatives to be able to determine which one would be best for our needs and situation? Dr. Russ Johnson, President Improvement Quest, Inc Loveland, CO

10. A formal project management tool should Help us with: • Planning the project • Executing the plan • Managing the process Set us up for success in both the current projects and future projects Facilitate collaborative efforts and picking the best partners Dr. Russ Johnson, President Improvement Quest, Inc Loveland, CO

11. Even more fundamentally, the system we put in place should … • Improve flow (order to cash in hand cycle time) as the primary objective • Be translatable into practical mechanisms that guides the operation when not to produce • Enable the need to abolish local efficiencies • Include a focusing process to balance flow Dr. Russ Johnson, President Improvement Quest, Inc Loveland, CO

12. Two basic approaches • Traditional – two names same basic concepts • PERT (Program Evaluation & Review Technique) • CPM (Critical Path Method) • Contemporary • Critical Chain Lets examine the traditional Dr. Russ Johnson, President Improvement Quest, Inc Loveland, CO

13. Traditional • PERT/CPM • Developed in parallel in the 1950’s • Needed a way to organize highly complex project (Polaris Missile) • Money and resources were not a problem • Many modifications over the years to try to accommodate the fact that money and resources are now a big issue • Constantly increasing sophistication of software and hardware has perpetuated the idea that problems with the process can be solved if we can just get enough data and process it fast enough • Tremendous inertia (50 years of common practice) and investment causes considerable resistance to different approaches Dr. Russ Johnson, President Improvement Quest, Inc Loveland, CO

14. Typical Work Breakdown Structure (WBS) Spring home repair Paint Inside Replace Roof Landscape Yard Move Furniture Cover Floors Mask Windows Paint Remove Dead Tree Plant Shrubs Install Sprinkler System Select Paint Mix Paint Apply Paint Activity to schedule Summary activity

15. How a project looks graphically Network (PERT View) Bar Chart (Gantt View) What do all of these things represent?

16. Traditional (PERT/CPM) • Mechanisms for building the schedule • Assumption of infinite resource availability before identifying the Critical Path Initial Critical Path equals longest sequence of task and path dependencies exclusive of resource dependencies • Projected Lead Time

17. Traditional (PERT/CPM) • Resolving contentions (the real CP) • Assumption of infinite resource availability before identifying the critical path • Resolving resource contentions from start of project to completion giving priority to Critical Path tasks • Increase in Projected Lead Time • with resource contentions resolved • Projected Lead Time

18. 10 10 10 10 10 Assumptions that variation in task times follow a normal distribution 10% Total series variation = square root of thesum of the variances squared 20% 20% 20% 20% 20% +/-5 +/-2 +/-2 +/-2 +/-2 +/-2 50 Reality: the potential impact of bad things is much greater than the potential impact of good 7 10 13 25 10% 50% 90% 90%

19. 10 10 10 10 10 10% 20% 20% 20% 20% 20% +/-5 +/-2 +/-2 +/-2 +/-2 +/-2 50 10 10 10 10 10 What happens in each situation if a task is finished late? or early ?

20. ? ? ? ? ? Assumptions that variations of actual task times will cancel each other out 10% 20% 20% 20% 20% 20% -2/+? -2/+? -2/+? -2/+? -2/+? -5/+? 50 10 10 10 10 10 ? 52 Late 10 10 12 10 10 Early/late 48 10 6 10 12 10 52 No report 10 10 10 12 6

21. 10 Assumptions that variations of actual task times will cancel each other out Total path/integration variation = Probability of event 1 * Probability of event 2 * Probability of event 3 *Probability of event 4 10 Probability of orange integration task starting on time if all four feeding task time estimates are 90% is 66%(.9*.9*.9*.9) 10 10 10

22. No consistent method for determining when tasks with float should start • Do we start these * tasks as soon as possible (ASAP), as late as possible (ALAP), or somewhere in between? * * * * * Float • Critical Path

23. No mechanism for decoupling the overall project from individual task and path variations Today with schedule updated for future

24. Traditional (PERT/CPM) • Managing the schedule • Panic sets in with the first late task • Focus switches from the global perspective of the original project goals to a more local perspective of task completion • At the task level, the focus switches from content, dependencies, and durations to start and end dates • We hold resources to the original schedule dates in place of the necessary conditions that define what is needed to start a task and the deliverables that define when a task is finished Dr. Russ Johnson, President Improvement Quest, Inc Loveland, CO

25. Traditional Project control No reliable mechanisms to determine when a project is in trouble or to determine which activities can afford to wait awhile - No Visibility of the Impact of Decisions or Variability! Importance is placed on achieving task or milestone conformance to scheduled start and completion dates rather than deliverables in an effort to insure or improve project on time performance. When faced with conflicting task priorities and no clear way to determine how much safety remains in each task, resources and Resource Managers multi-task to try to minimize the harm to either task.

26. How does this fit with our fundamental needs of the system? • Improve flow (order to cash in hand cycle time) as the primary objective • Be translatable into practical mechanisms that guide the operation when not to produce • Enable the need to abolish local efficiencies • Include a focusing process to balance flow Dr. Russ Johnson, President Improvement Quest, Inc Loveland, CO

27. Contemporary • Critical Chain • Developed in the early 1990’s • Utilized the Thought Process tools of the Theory of Constraints to analyze the situation and test the solution • Started from scratch taking into account current realities of limited resources, money and time. • Focused not only on the mechanical/software aspects of organizing the project but also looked heavily at the psychological and human behavioral issues of projects • This includes the negative behaviors of years of experience and; • The desired behaviors • Used aspects of traditional approaches where applicable Dr. Russ Johnson, President Improvement Quest, Inc Loveland, CO

28. TOC’s View of Project Management • Improving flow: • Minimize bad multi-tasking both within and between projects • Multi-project environment – Freeze about 25% of the projects to switch focus to finishing work rather than starting • Individual projects • Plan project from a necessity point of view – starting with desired outcome and working to beginning (Handoff) • Separate safety from task time to get an aggressive but possible time to create a sense of urgency Dr. Russ Johnson, President Improvement Quest, Inc Loveland, CO

29. TOC’s View of Project Management • When not to work: • Aggregate ½ of the freed safety to create buffers • Buffers correctly set tasks to the as late as possible position while still protecting the project due date form 95% of the uncertainty • Relative status of buffers tells which task a resource should work on when there is more than one open task for that resource – this minimizes bad multi-tasking • Full Kit concept delays start of task until all necessary inputs are available to minimize ineffective workarounds Dr. Russ Johnson, President Improvement Quest, Inc Loveland, CO

30. TOC’s View of Project Management • Abolish local efficiencies : • Focus is on completing work as fast and accurately as possible and getting it handed off • What constitutes “done” is clearly defined so that tasks can’t be drawn out to fill available time (Parkinson’s law and 3 minute egg rule) • The only dates that are important are necessary milestones and the project completion promise – focus is on content not dates • Review progress by asking how long to finish not what percent is complete Dr. Russ Johnson, President Improvement Quest, Inc Loveland, CO

31. TOC’s View of Project Management • Focusing process to balance flow • Buffer Management: • Buffer status (Green, Yellow, Red) directs management as to when, and how, to react to individual disruptions to flow • Causes for delays that result in buffer consumption are recorded and analyzed to target common offender disruptions to flow. (Pareto) This can be process/activity focused and/or resource focused • Lean, Six-Sigma and other process improvement tools are utilized to systematically and continuously improve flow Dr. Russ Johnson, President Improvement Quest, Inc Loveland, CO

32. The assumption that the earlier we start a project/task, the earlier it will be finished How we estimate durations bad multi-tasking Missing tasks and/or dependencies in the planning stage Flow killers

33. Tactic – Freeze 25% of open projects Multi-project fast lane Level of Management involvement Rate of completion Safe Zone X Number of open projects or tasks

34. Productive work time Nonproductive time Safety (insurance against uncertainty) What is estimated task time really composed of?

35. 10 10 10 10 10 ? ? ? ? ? 10% 20% 20% 20% 20% 20% +/-5 +/-2 +/-2 +/-2 +/-2 +/-2 50 As risk or non-validaccountability increases so will safety Duration 7 10 13 45 Probability 10% 50% 90% 90% ?

36. The Sixes Game You work in my organization You are rewarded according to your performance versus a standard The standard is the maximum number of rolls it should take to get a 6 Your performance is based on your roll of the dice You will be measured on the number of rolls it actually takes you to get a 6

37. How we waste safety Parkinson’s law - Work expands to fill the time available (poor definition of DONE) Three minute egg rule - There is an implication of poor quality if done too soon as well as changed expectations regarding future estimates Student syndrome – Argue for extension of time estimate for all kinds of reasons then, Why do today what you can put off to tomorrow Multi-tasking - Increases lead time for any individual activity as there is unplanned time spent starting and stopping

38. Understanding the problem further Task completion times The time to complete each task consists of: • the time to perform the task, • the time to set up to work on the task (finding everything and remembering where you left off) again and again. • the time to shut down or set down time. • the time the task had to wait for the resource while the resource worked on other tasks.

39. Multi-tasking A A A A A A A A B B B B B B B B C C C C C C C How work was planned C How work was performed Actual resource time

40. The multi-tasking Game Our job is to complete three tasks: • Write a column of numbers from 1-26 • Write the letters of the alphabet from A to Z • Draw a repeating sequence of Square, circle, triangle until you have 26 objects • You must alternate columns as you complete your task (number, letter, shape) We will time to see how long it takes

41. Is the buffer time already in the estimate? Have we validated that uncertainty exists and that we need to protect ourselves from it? Have we discovered that everyone protects themselves by adding significant amounts of safety time? Is it true that the more project experience the more safety included? Who has control of the safety? Who should? Have we discovered that a significant amount of the safety that is built in to the tasks is, in the end, wasted?

42. Separating the work from the safety Traditional – Distributed safety time remains within the tasks and in the control of each resource. Everyone must protect themselves as we know Murphy will strike we just don’t know when and where. Critical Chain - Aggregated safety time is gathered and placed strategically in the control of the project manager but available to the resources when needed. We still don’t know when and where Murphy will strike but we control the insurance. 50 % for work 25% freed 25% for insurance/buffer Buffer Freed safety

43. Traditional Give plans and specs and ask for a price and duration Try to get their numbers to match your needs after the fact Each variable is now played against the otherLower cost=longer timeLess time=reduced scope The resource is in control of the negotiations TOC – Critical Chain Confirm capability to perform scope and deliverables Determine prerequisites Get estimate of duration and first availability(90% skewed time likely) Split time 50:50 Check fit to schedule Ask for cost reminding that others are bidding under same circumstances Negotiations

44. Critical Chain Task Definition and Building of the Project Network Task Definition and Building of the Project Network (begin with the end in mind) • Clear identification of deliverables needed to accomplish project goals stated in terms of expected outcomes for, or impacts to, the organization • Clear identification of expectations of project plan and management is included in the project goals definition • The tasks are defined from the end (future) of the project to the beginning (current time) • Task definition is complete when all starting tasks have either already begun or their required inputs are already available Dr. Russ Johnson, President Improvement Quest, Inc Loveland, CO

45. Defining tasks and relationships simultaneously Task thataccomplishesthe need or overcomesthe obstacle Need orobstacle Clearly statedobjectives of theproject and theproject plan Need orobstacle Tasks are defined by starting with the project goal(s) and then working earlier in time until currently occurring activities are reached by asking: In order to… I must immediately have completed Need orobstacle When branches occur, one branch is completed before starting another

46. Determining the who, what, and how long ? Tasks definition is complete when the starting tasks are either already in process or all inputs needed to begin them are available. The resources needed to perform the tasks can now be brought in to help verify that no tasks or needed inputs or requirements have been missed. This includes adding detail where what is needed is uncertain (outsourced activity). Once the work is defined, the times to complete the work can be determined.

47. Converting to the Gantt view • There is no need to convert WBS scheduled activities to PERT view (precedence diagram) to determine task dependencies (task to task and paths/integrations) as this was done simultaneously with task identification • This information does still need to be entered into our scheduling software • The network view must still be converted to the Gantt view to determine time relationships to allow us to identify the Critical Chain and immunize the schedule from variability • The software does this for us Dr. Russ Johnson, President Improvement Quest, Inc Loveland, CO

48. How a project looks graphically Network View ? Bar Chart (Gantt View) The need and obstacle elements of the network view disappear in the Bar Chart (Gantt View) as they do not contain elements of work or time

49. Mechanisms for immunizing the schedule • TOC - Critical Chain • Task, path, and resource dependencies are all considered prior to identifying the “Critical Chain” • Resource contentions are resolved from project completion toward start • Strategically sized and placed buffers allow decoupling of the overall project from individual task and path variations • Buffer = 1/3 of total path time (task + Buffer) Dr. Russ Johnson, President Improvement Quest, Inc Loveland, CO

50. Identifying the Critical Chain Move all tasks to as late as possible and all dependencies are taken into account (task, path and resource)