critical chain
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Critical Chain. Team 7 David D. Cho Minyoung Kim Bin (Raymond) Xiao Hua Zhang. Chapter 1. The Company: Genemodem Impressive Track Record: Profits growth in 6 consecutive years CEO: Daniel Pullman (fully supported product development project) - PowerPoint PPT PresentationTRANSCRIPT
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