critical chain

Team 7David D. Cho

Minyoung KimBin (Raymond) Xiao

Hua Zhang

The Company: Genemodem Impressive Track Record: Profits growth

in 6 consecutive years CEO: Daniel Pullman (fully supported

product development project) VP of Engineering: Issac Levy (insisted

on hiring a consulting firm to do an in-depth analysis of Genemodem’s product development)

The Challenges:1. Short product life-span (like a triangle, only six months, continue to shrink)

2. Long product development time (roughly twenty four months)

Resolution: Drastically cut development time

Target: Drastically cut development time Think tank: Mark Kowalski, Ruth Emerson

and Fred Romero Test ground: A226 Time span: Before A226 is ready (roughly

16 months) Resources: No budget restrictions Incentives: 10,000 shares each (current

price $62.48, 62.48*10,000=$624,800)

Place : University (Business school)

Characters : Rick Silver (Associate Professor),

Jim Wilson (Full Professor) Main Event: - Mr. Rick Silver is newly assigned to teach a course in the Executive MBA. - He is recommended by Jim Wilson, due to his unique style of ‘teaching through open discussion’.

- Jim Wilson suggests Rick Silver to teach ‘Project Management’ course and also he needs Rick Silver in finishing some interesting research.

Place : A dinner event for Universities Presidents

Characters : Ms. BJ von Braun and 4 other presidents Main Event: - Ms. BJ initiated conversation with other presidents about recent decrease in the number of MBA applicants.

- Presidents are sharing about their ideas of that reasons for the decrease could be both ‘over capacity of business schools’ and ‘less demand of MBA degree’. - They also talks about that Ivy leagues are not experiencing any decrease due to their reputation and strong financial ability to attract academic calibers.

Chapters 4-6

Textbook definition:“ A set of activities aimed to achieve a specific objective and have a clear start,

middle and end”. Professor Silver’s definition:

A complex initiative that needs pictures, diagrams, time charts, or showing

sequential or parallel steps in order to manage it.

Regardless of industry or project type, there are three common problems to all projects:

Budget overrunsTime overrunsCompromising content

B.J Von Braun - President of University

Saturating demand for new MBAsOverextending capacityLarge fixed overhead for business program that might potentially decline

Christopher Page –Dean of Business School

Demand will not taper offNeed investments to maintain talent in the business schoolsTalent will bring increase reputation and increase demand

Agreements: Ability of graduates to get jobs as indicators of demandUse of survey tool as measurement

BJ VonBraun already has the results – she gets Page to agree to the decision-making conditions, then shares results with him.

Sacred cow project for CEOProject is grossly over budget and significantly latePayback period pushed from 3 to 5 years, which still seems unrealisticAll use uncertainty as reasons for delay - Upper management blames external environment and lower ranks blames internal sources

Most problems in projects are direct or indirect results of uncertainty

Most individuals add a safety margin to any deadline, usually around 80%

IOM580 Project Management Team 6Leon Tseng, Jasmine Yeh, Troy Yu, Hiroshi

Harima

Scene 1: Conversation between B.J. and Chris Page

Trim the budget according to the

forecast!!

We shouldn’t change with such small fluctuation

Scene 2: Conversation between B.J. and Bernard Business

schools fail to deliver the markets!!

Management is art. It cannot be

taught as a science

……………

Rick and Jim talk about the research subject: Overdue and OverrunsThe budget

overruns are not the main reasons for the extended payback period

It is caused by the delays in completing

projects

Agree, but….

Rick explains PERT and Gantt techniques to students

Critical path is…

It’s an optimization problem!!

Should postpone the investments

until really necessary

Make an early start and keep the

slack!!

Class discussion gets heatedThe issue must be addressed from management’s point of

view, too!!if starting too many things

managers would be bound to lose

focus

Using late starts, we lose slacks and

everything becomes important

The control mechanism measures the progress of the project. The problem is that by the time the

progress report indicates something is wrong, it’s usually too late.

Early vs. Late Start of Critical Path A waste of time Concentration on minor considerations and

neglect the major ones The main thing is for the project manager to

focus◦ Both early and late start jeopardize the ability to

focus, even though to different degrees Measuring Progress of Projects Measurement should induce the parts to do

what is good for the system as a whole Measurement should direct managers to the

point that needs their attention

Manage for Cost or Manage for Throughput

Theory of Constraints (TOC)◦ Only one or two true constraints in system

TOC says that conflict implies a faulty assumption and that must be corrected◦ Example: The only way to achieve good cost

performance is through good local performance everywhere (Sub-Optimization)

◦ Incorrect assumption and root of problems in many organizations

Strengthening the Chain◦ 1) IDENTIFY, 2) EXPLOIT,

3) SUBORDINATE, 4) ELEVATE

ManageWell

ProtectThroughput

ControlCost

Manage AccordingTo

Cost World

Manage AccordingTo

Throughput World

Prime Measurement Again, there is only one (or two)

constraints in a system◦ Identification of the system constraint should

drive identification of the Prime Measurement The main reason for an operational

measurement is to induce the departments to do what is good for the company as a whole

“Tell me how you measure me and I’ll tell you how I’ll behave.”

Book examples changes at a steel mill

Group 5Regina Anderson

Ken FongBrent HawkinsJianhua Zhang

Lots of safety in typical estimates (at both the project and task levels)◦ Estimates usually given at 80% conf. levels◦ Equates to 200% margin of safety

But why do tasks and project still overrun!?

The student syndrome◦ No rush to start, wait until the last minute◦ Leave just enough time (the ‘true’ estimate)◦ Consequence:

No margin for errors, delays, or the unexpected Safety already spent during the initial start delay

Multitasking◦ Results in increased lead times

Days 5 10 15 20 25 30

----------------------------> A: 10 days----------------------------> B: 10 days

----------------------------> C: 10 days

A B C A B C------------------------------------------------------------>A: 20 days

------------------------------------------------------------>B: 20 days------------------------------------------------------------>C: 20 days

A B C

Dependencies◦ Causes delays to accumulate while wasting away

the advances◦ Example: 4 dependent tasks, 3 finishes ahead (-5

days), 1 finishes behind (+15 days) Statistically, gainers average out the laggards In reality, the advances are lost, early finishes are

rarely reported Results in a net delay of 15 days

Ex: soldiers in a line building a road◦ Lead time and WIP inventory interchangeable

Represented by the distance between the soldiers◦ Differences in production rates cause soldiers to

move at different paces, i.e. creates gaps Soldiers will eventually spread out, with the largest

gap at the bottleneck

Solutions◦ Chain them all together tightly, aka assembly

line / conveyor belt method Throughput suffers, everyone moves at the pace of

the slowest producer◦ Chain them together with some slack = J.I.T.

Similar to conveyor belt example Introduces containers which allows for a limited input

buffer to accumulate Creates additional inventory however

A better solution◦ Chain the leader to the bottleneck

Leader moves at the pace of the bottleneck Length of chain from leader to bottleneck = buffer Eliminates need for excess buffers / WIP inventory

Keeps a buffer only at where it is needed, the bottleneck

Critical Chain:Chapters 16 thru 18

Group 3Katelyn Fang ∙ Sherry Liu ∙ Kevin Nagatori ∙ Adam Terry

IOM 580Dr. Ardavan Asef-Vazir

Spring 2009

Pitfalls of Managing a Program:1. Pad each step’s completion dates.2. Pad each step with a lot of safety time3. Waste safety time:

Student Syndrome Multi-Tasking Delays accumulate and advances do not

Bottleneck: a resource with capacity that is not sufficient to produce the quantities that the market demands.

Critical Path: the constraint of the project.

Feeding Buffer: a buffer used by the non-critical path so that it does not affect the critical path.

Project Plan with buffer at each step

Project Plan with buffer at Critical Path and Feeder Buffers for Non-Critical Path

Before / Most Common

After / Best Way

Monitoring Progress◦ Before => Monitor critical path by % complete◦ After => Adding feeding buffer monitoring

Days consumed on feeding buffer Days consumed compared with original buffer days Days left on feeding buffer

◦ Conclusion => Focus on continuous monitoring

2 Types of Projects◦ Projects done solely by the company

Reduce lead time estimates Eliminate milestones Frequent reporting

◦ Projects done by vendors and subcontractors Talk their language Pay for vendor responsiveness

Penalty for not finishing a project on time◦ Cash Flow◦ Sales◦ Market Share◦ Stock Value

Group 2 Chapters 19-21

Student (Ted) looks at the relationship between contractors and owners

Lose-Lose:◦ Contractor bids low to

obtain contract◦ Contractor makes more

money off of changes and delays

◦ Owner pays high price for changes

◦ No incentives for contractor to complete the project on time

The Win-Win relationship:◦ Owner benefits from a

project which is completed early

◦ Owner shares this benefit with contractor in incentive bonus for finishing early

◦ Owner punishes contractor for finishing late with heavy penalties

◦ Contractors no longer bid on price but ability to complete project faster