Critical Chain Project Management (CCPM) - ULisboa · Cri2cal’Chain’,’Eliyahu’M.’Goldra,’1997,’North’River’Press ... The Critical Chain does not equal the Critical

Critical Chain Project

Management (CCPM)

Theory of Constraints views systems as chains The weakest link is the constraint (bottleneck). It is the constraint that keeps the chain from doing any better at achieving its goal • The Theory of Constraints is essentially about change – where is the constraint now? – work on it – where did it change to? •  In order to be performing well the natural state of the system is changing • TOC is a systemic way of thinking – questions are raised at a system-level – helps to establish the necessary conditions to reach the goal

CCPM and TOC

Cost versus Throughput Cost World • Optimize the cost of development • Optimize each link of the chain • Local improvements are rewarding

Throughput World • Optimize the throughput of development • Only the weakest link improves strengthen the entire chain • Local improvements are only rewarding on the bottleneck •  System optimums is not the sum of local optima

CCPM and TOC

Those who make decisions on efficiency and productivity measurements based primarily on costs/expenses live in the "cost world" as opposed to those who measure by throughput (i.e. value, profitability and utility). Two paradigms activities / system (machine / holistic and systemic view)

Throughput – is the rate at which a system generates value. For example, the amount of units per day a factory produces to meet customer orders. Units that go into inventory are not counted as part of throughput

CCPM and TOC

Leach, Lawrence P., 2005, Cri2cal Chain Project Management, Second Edi2on, ARTECH HOUSE, INC

GoldraF (1997) defined the old accoun2ng system as the Cost World because it operates on the assump2on that product cost is the primary way to understand value and make business decisions Labor was mostly applied to very unskilled jobs and, therefore, plen2ful and easy to replace. Therefore, it was easy to vary the workforce with demand Today, the skilled workforce is much less variable, and the tradi2onal fixed costs are much less fixed

CCPM and TOC

Cri2cal Chain , Eliyahu M. GoldraF, 1997, North River Press Leach, Lawrence P., 2005, Cri2cal Chain Project Management, Second Edi2on, ARTECH HOUSE, INC

In the Cost World if managers d

o not need worker

s to produce prod

ucts for

customer need, then t

hey are forwarde

d to produce fo

r inventory,

increasing efficiency (?

??) to make them

selves and their l

ocal plant look

good

Unfortun

ately, the plant do

es not make money on inventory

!!!!!!

CCPM and TOC


CCPM and TOC GoldraF (1997) defines a new way of accoun2ng, called the Throughput World. It is based on three defini2ons

1 Throughput (T): all of the money you make from selling your product (revenue minus produc2on and raw material costs)

2 Inventory (I): all of the money you have 2ed up in fixed assets to enable you to make the throughput (the primary difference here is that fixed assets and work in progress inventory are treated the same)

3 Opera2ng expense (OE): all the money you spend to produce the throughput


GoldraF’s business model is based on two principles

The first principle defines three ways to measure whether or not businesses are achieving the goal of making money. These three measurements are interrelated and easy enough to apply to any process. The three measurements are

throughput, or “the rate at which the system generates money through

sales;” inventory, or “all the money that the system has invested in purchasing

things that it intends to sell;” and opera.on expense, or “all the money the system spends in order to turn inventory into throughput” (GoldraF & Cox, 1992)

The second principle of GoldraF’s model relates dependent events and sta.s.cal fluctua.ons to the manufacturing process. Dependent events are processes that must first take place before other ones can begin (GoldraF & Cox, 1992). An example would be a car assembly line. Before the engine is put into the car, the frame must be finished and the steering wheel cannot be aFached un2l the steering column is put into place, and so on. Sta.s.cal fluctua.ons occur when one is unable to precisely predict events or quan22es (GoldraF & Cox, 1992). The book presents an excellent example illustra2ng this principle. Alex and Jonah sit in a restaurant and Jonah points out that they are able to precisely predict the capacity of the restaurant by coun2ng the available seats. On the other hand, they are unable to predict how long the waiter will need to fulfill their order (GoldraF & Cox, 1992). This uncertainty is referred to as sta.s.cal fluctua.ons.

In The Theory of Constraints, GoldraF introduces mathema2cal formulas to help organiza2ons further judge their processes. These formulas are: • Net Profit = Throughput – Opera2onal Expense Inventory • Produc2vity = ___Throughput_____ Opera2onal Expense • Turnover = ____Throughput______ Inventory

William DeFmer (1997) proposes the following list of principles in his book 1 System thinking is preferable to analy2cal thinking in managing change and solving problems 2 An op2mal system solu2on deteriorates aier 2me as the system’s environment changes. A process of ongoing improvement is required to maintain, update or improve the effec2veness of a solu2on 3 The system op2mum is not the sum of the local op2ma 4 Systems are analogous to chains. Each system has a “weakest link” (constraint) that ul2mately limits the success of the en2re system

DeFmer, William, 1997, Eliyahu M. GoldraF’s The Theory of Constraints, A Systems Approach to Con2nuous Improvement, ASQ Quality Press

CCPM and TOC

…. 5 Strengthening any link in the chain other than the weakest one does nothing to improve the strength of the whole chain 6 Knowing what to change requires a thorough understanding of the system’s current reality, its goal, and the magnitude and direc2on of the difference between the two 7 Most of the UDEs (undesired effects) within a system are caused by a few core problems 8 Core problems are almost never apparent. They manifest themselves through a number of UDEs linked by a network of effect→ cause→ effect 9 Resolving individual UDEs gives a false sense of security while ignoring the underlying core problem. Solu2ons based on local problems are likely to be short-‐lived. Solu2on of a core problem simultaneously eliminates all UDEs

DeFmer, Willim, 1997, Eliyahu M. GoldraF’s The Theory of Constraints, A Systems Approach to Con2nuous Improvement, ASQ Quality Press

CCPM and TOC

10 Core problems are usually perpetuated by a hidden or underlying conflict. Solu2on of core problems requires challenging the assump2ons underlying the conflict 11 System constraints can be either physical, process dependent, or policy-‐based. Physical constraints are rela2vely easy to iden2fy and simple to eliminate. Policy-‐based constraints are usually more difficult to iden2fy and eliminate, but they normally result in a larger degree of system improvement than the elimina2on of a physical constraint 12 Iner2a is the worst enemy of a process of ongoing improvement. Resistance to change is normally very strong 13 Ideas are not solu2ons

CCPM and TOC

DeFmer, Willim, 1997, Eliyahu M. GoldraF’s The Theory of Constraints, A Systems Approach to Con2nuous Improvement, ASQ Quality Press

All systems have a constraint that limits output (therefore, non-‐constraints have excess capacity…) Goal = System Throughput System op2mum is not the sum of the local op2ma Adopted measurement systems should – induce what is good for the whole (system op2ma = Goal) – direct managers to areas needing specific aFen2on

CCPM and TOC Constraint, throughput, measurements

CCPM and TOC TOC – Theory of Constrains and optimal Local optima and global optima don’t relate •  project throughput needs to be protected, but not with a local optima police •  we need to concentrate resources on the bottleneck (not to the benefit of every

task in the project but to the benefit of the bottleneck)

TOC – Theory of Constrains five steps

1. Identify the constraint (IDENTIFY)

2. Decide how to exploit the constraint (EXPLOIT)

3. Subordinate and synchronize (align) everything else to the above decisions (SUBORDINATE)

To improve the performance of that same value-chain, continue

4. Elevate the performance of the constraint (ELEVATE)

5. If in any of the above steps the constraint has shifted, go back to Step 1 (PREVENT ENERTIA)

CCPM and TOC

Tirar partido

A u m e n t a r desempenho

1.  Identify the constraint - the bottleneck to a project

2. Exploit the constraint - work two shifts, increase speed

of machine

3. Subordinate everything else – concentrate on

throughput

4. Elevate the system's constraint - hire more workers,

restructure process, add a machine

5. Go back to step one - prevent inertia

CCPM and TOC

1. Identify the System's constraints The process is analyzed so that a task or activity that limits the productivity of the entire system can be identified. A system constraint may be identified by a long queue of work or long processing times. It can be a resource , … 2. Decide how to exploit the system's constraint In this step, decisions must be made on how to modify or redesign the task or activity so that work can be performed more effectively and efficiently 3. Subordinate everything else to the above decision Now, management directs all its efforts to improving the performance of the constraining task or activity and any other task or activity that directly affects the constraining task or activity 4. Elevate the system's constraint In this step, additional capacity is obtained that will increase (elevate) the overall output of the constraining task or activity. This differs from step 2 in that the added output comes from additional purchased capacity, such as buying a second machine tool or implementing a new information technology 5. If, in the previous step, a constraint has been broken, and most likely the problem was transferred to another resource(another constrain)

CCPM and TOC

WARNING DO NOT LET INERTIA BECOME THE SYSTEM’S CONSTRAINT

…

CCPM and TOC

Constraints relate to

•  MARKET •  CAPACITY •  RESOURCES (people) •  PROCESS DESIGN •  SUPPLIERS •  FINANCE •  KNOWLEDGE OR COMPETENCE •  POLICIES

CCPM and TOC

Critical Chain is THE project constraint

Goldratt argues that most of the time, system constraints trace back to

a flawed policy rather than to a physical constraint

CCPM and TOC


Activity schedule estimate

CCPM syndromes

Activity schedule estimate

CCPM syndromes

Student syndrome

CCPM syndromes

Student syndrome CCPM syndromes

Parkinson’s Law

“WORK EXPANDS TO FILL THE TIME AVAILABLE”

CCPM syndromes

CCPM syndromes

IMAGINE WRITING your thesis , it is a good metaphor for Pakinson’s Law Why?

because writing is a process of inquiry, of discovery that you

improve, and detail, and improve … and you don’t finish!

Murphy – A reference to Murphy’s Law

“if anything bad can happen, it WILL happen"

In project management, many unexpected problems tend to occur that delay comple2on

Don’t ask me if it will occur, ask me when!

GoldraF says that Murphy exists!

Always!!!

CCPM syndromes

Key point …… remove excess time Everyone estimates ....“Student Syndrome”, “Parkinson’s Law”, … Functional managers protect their resources Senior management (& client) wants everything for yesterday! Solution: Reduce all activity estimate durations by 50% and place aggregated time buffers to protect project schedule and resource constraints

CCPM on the way

Key point …… manage to the constraint Scarce resources lie on both critical and non-critical paths Resources can be scarce because of other concurrent projects Scarce resources comprise the “Critical Chain” (abrange, são incluídas)

Critical Chain: The longest set of dependent activities, with explicit consideration of resource availability, to achieve a project goal The Critical Chain does not equal the Critical Path. Critical Chain is the longest pass of dependent activities, being the dependence an effect of either sequence or use of the same resources. If there is no resource restriction Critical Chain is the Critical Path

CCPM on the way

Key point …… multi-tasking is inefficient Spreads resources over several tasks at once Loses focus Restarts (set up times) = loses efficiency Solution = “Roadrunner” Performance Focus 100% of resource’s time on one task until it is complete

CCPM on the way

CCPM on the way Student syndrome dissolved

Jan, Shu-Hui & Ho, 2006, ISARC, CONSTRUCTION PROJECT BUFFER MANAGEMENT IN SCHEDULING PLANNING AND CONTROL

CCPM on the way Buffers

Resources must focus on one task at a 2me and pass on the results as soon as the task is complete immediately con2nuing with the next

CCPM on the way


Using CCPM we normally agree that the bottleneck is the critical chain. To protect it and increase its effectiveness (reduce waist of time) we use a Project Buffer (PF) at the end of CC (we use an overall safety to the project and not to the single activities) (remember we reduced the safety at the activity level using the 50% rule and remember what we said about local and system optima) We use the Feeding Buffer (FB) at the end of each non-critical pass when joining with the critical chain, to prevent repercussion of delays. Even when delays are exceeded and are superior to the buffer (feeding) capacity, project buffer can still absorb delays

PF and FB are time buffers

With CCPM due date is a limit (we don’t think in terms of finishing dates as we are in throughput world). Like that we eliminate the students syndrome Besides it is necessary to guaranty the redness of resources to activities in the critical chain. The Resource Buffer is a warning flag to prepare the resource


Broken Critical Chain, Oak Logic Consulting, Communications in Business

CCPM on the way Aggressive time estimates and Buffers

Broken Critical Chain, Oak Logic Consulting, Communications in Business

CCPM on the way Multitasking

CCPM on the way Multitasking

1.   Iden@fy the cri2cal chain

-‐  Lay out the late-‐finish network of tasks. The tasks must iden2fy the mean 2me-‐dura2on es2mate (50–50 2me) and primary resource requirements. (For tasks with mul.ple resources, iden.fy the primary resource you believe will be a constraint. If there are several constraint resources, break the task up for each primary resource)

-‐  If you do not have resource conten2on in your project, go to the last step -‐  Iden2fy the conten2on you will resolve first. This should be the conten2on nearest to

project comple2on or the one that shows the most conflict. If several show about the same amount of poten2al conflict, choose the first one you come to working backwards from the end of the schedule

-‐  Remove resource conten2on by sequencing tasks earlier in 2me. (Do not worry about crea.ng new conflicts with this step; you will resolve those in sequence)

-‐  Return to the end of the schedule and follow step 1.4 for the next resource. As you resolve conflicts for the next resource, you must maintain the lack of the conflict for the resources you resolved earlier. Repeat un2l all iden2fied resource types are resolved

-‐  Iden2fy the cri2cal chain as the longest chain of dependent events

CCPM on the way


2 Exploit the cri2cal chain -‐  Review your plan to determine if sequencing can shorten the overall project

dura2on. If so, do it. Do not trial-‐and-‐error various solu2ons -‐  Add the project buffer to the end of the cri2cal chain

3 Subordinate the other tasks, paths, and resources to the cri2cal chain -‐  Protect the cri2cal chain by adding feeding buffers to all chains that feed the cri2cal

chain. Size these buffers using the longest preceding path. (Note: All noncri2cal chains feed the cri2cal chain to complete the project. If chains go directly to the project buffer, they also need feeding buffers)

-‐  Resolve any resource conten2ons created by adding feeding buffers through sequencing tasks earlier in 2me

-‐  Move to an earlier 2me any dependent tasks preceding those moved 4 Elevate (shorten) the lead-‐2me of the project by using added resources for certain windows of 2me to break conten2on 5 Go back to step one. Do not allow iner2a to become the constraint

CCPM on the way


CCPM on the way 1-7

CCPM on the way 1-7

CCPM on the way 1-7

CCPM on the way 1-7

CCPM on the way 1-7

CCPM on the way 1-7

CCPM on the way 1-7

•  A resource buffer isn’t a time buffer at all; it’s a flag to warn that a

particular resource will be needed soon

–  So it’s an alarm clock!

•  A resource buffer is established some time interval before the resource

is needed (1 week, a month, etc.)

Buffers

CCPM on the way

CCPM on the way Buffer Management % of critical chain to execute

/ % of project buffer to consume

If during Project execution the Project Buffer reaches half of its initial length what does it mean?

Ques2on

BUFFER

OK WATCH & PLAN ACT

Remaining Project Buffer:

20 15

14 8

7 0

Remaining Feeding Buffer:

8 7

6 4

3 0

Buffers Provide Focus and Early Warning

Buffers to Monitor Project Status

%CBR/%CCR >=1

%CBR/%CCR 1>2/3

%CBR/%CCR 2/3>

Completion Buffer Remaining (%CBR) Critical Chain Remaining (%CCR)

Corrective Action We compare the percentage of the Completion Buffer Remaining (%CBR) with the percentage of the Critical Chain Remaining (%CCR) We set trigger points for corrective action, for example: • When the ratio %CBR / %CCR is 1 or more, Project status is GREEN - Watch • When %CBR / %CCR is between 1 and 2/3, Project status is AMBER - Prepare a recovery plan • When %CBR / %CCR is less than 2/3, Project status is RED - Implement recovery plan

Measures in 2-D

100 %

100 % 0 %

0 %

Critical Chain Remaining

Com

plet

ion

Buf

fer R

emai

ning

CRITICAL PATH / CRITICAL CHAIN

•  Places high value on the completion of tasks on time

•  Employs techniques to minimise slack or float

•  Uses the amount of slack or float to set priorities

•  Places low value on tasks being completed on time

•  Inserts buffers even on paths that are not critical

•  Manages buffers to minimise unplanned expediting, overtime and other costly deviations from schedule.

CCPM differences

• Resources are given due dates, not task durations • No buffer, later tasks are forced to make up any slide • Local optimization instead of systemic • Management attention on all tasks • Resources not de-conflicted • Judge resources on whether they completed by due date and quality of work

CRITICAL PATH / CRITICAL CHAIN

CCPM differences

•  Cultural change in how to manage projects and evaluate team members

•  Avoid multi-tasking •  Protect against uncertainty by aggregating

all safety time at the end of the project •  Concentrate on the constraint of the project:

the longest chain of dependent tasks or resources

“Good enough” is an important idea in developing cri2cal-‐chain project plans. For mathema2cal reasons, it is impossible to build a precise op2mizing algorithm for resource leveling. The procedure to develop the cri2cal-‐chain plan ensures that the plan you build will be “good enough.” This means that the overall length of the schedule will be, within a small part of the length of the project buffer, nearly the shortest or op2mum schedule path. Since reality will change many assump2ons, and we cannot explicitly predict the results of sta2s2cal fluctua2ons, this is good enough

CCPM differences

Leach, Lawrence P., 2005, Cri2cal Chain Project Management, Second Edi2on, ARTECH HOUSE, INC STOP HERE

Documents

Critical Chain Project Management (CCPM) - ULisboa · Cri2cal’Chain’,’Eliyahu’M.’Goldra,’1997,’North’River’Press ... The Critical Chain does not equal the Critical