THE CRITICAL CHAIN

The Critical Chain

• A think-tank at Genemodem trying to reduce lead time of modem production from 2 years to 6 months

• Rick Silver, a business professor trying to achieve tenure

• Teaches Project Management to an EMBA class

Current problems at Genemodem

• Budget Overruns• Time Overruns

Greater dependence on vendors

• Uncertainty as nature of beasts• Project leader complaints– Revolves around Uncertainty of:

• Unrealistic schedule• Vendors are chosen according to cost and not reliability• Availability of plant equipment, hence late recruitment

• Uncertainties in projects – Mismanagement• For every step of the project there is a Time-estimate

CONCEPTS IN THE BOOK

Bell Curve• Popular name for

Normal Distribution (Gaussian Distribution) curve

• ‘The higher the uncertainty the longer tail of distribution’

PERT• Statistical tool used in project management• Used to analyze and represent tasks involved in

completing a project.• Identifies• Time needed to complete a task• Minimum time to complete a project

Critical Path

• Determines the maximum time for the completion of a project

• Any delay on CP will delay the completion of project

Gantt Chart

• Project scheduling chart• Involves decisions of the planner when to start

each path• Some choose late start where others chose early

start

Theory of Constraints

• New management philosophy• Introduction of research methods• Broad spectrum of robust applications

Theory of Constraints

1. Identify the system constraintsThe constraints are physical e.g. bottlenecksThe bottleneck can be overcome by adding more resources or by squeezing the maximum from the same

2. Exploit system constraints3. Subordinate everything else to the above decisions4. Elevate the systems constraints5. Inertia: Re-evaluate process to determine new

bottleneck

• Managers must control cost and protect throughputMust ensure that right products should reach right people

• Focus should be on local improvements in order to attain better results for the organizations

Linking chains

• The organization comprises of a network of linked chains and their linkages are very important in order to complete the whole process of producing something

• If one link fails to perform the whole process is disrupted

• The most weakest link is more important.

Focus

• Pareto principle• 80% benefits from solving 20% problems• Pareto is only applicable where the variables

are independent e.g. cost • It is not applicable where variables are

dependent like in throughput

• The goal of Critical Chain is to help projects finish on time, within budget, and without cutting scope.

Main points:• Cultural change in how to manage projects and evaluate

team members• Avoid multi-tasking while on the Critical Chain• 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

Student SyndromeEstimation including Hidden Safety

Student Syndrome

Buffers

• Project buffers Buffer before the completion date

• Feeding buffer Cushion between two tasks

• Resource buffer Buffers of resource to complete a task

The Critical Chain

• Rick receives tenure• The lead time is reduced to 6 months

THANK YOU.