critical chain analysis

7/31/2019 Critical Chain Analysis

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Projects Management

Prepared , Collected, and ConciseBy Eng. Ahmed Said Mohamad Refaei



Critical Chain Project Management



References

1. 2. Project Management in construction Sidney M. levy

3. PMBOK

4. PMP Exam. Preparation Rita Mulcahy5. Wiley – Project management a system approach



4

(Almost) A Joke ...



5

•A great deal of today’s

business activities haveproject approach;

•Traditional Darwinism(“The strong eat the weak”)is already substituted bybusiness Darwinism

(“The quick eat the slow”)

A Few General Issues:



Start.

y This Best Practice Guide is based on aresearch project, funded by the

Department of Trade and Industry, that

piloted the implementation of CriticalChain within the UK construction

industry.

y Critical Chain project management has

been used successfully in other industries.

Centre for

PerformanceImprovement



A brief overview of Critical Chainy Critical Chain is a relatively new form of project

management.

y It differs significantly from traditional projectmanagement in the way that it deals with uncertainty.

y Estimated durations in traditional project managementtypically include a safety buffer to take into accountuncertainty within each task.

y These individual safety buffers are often wasted.

y A critical chain project plan reallocates these safetybuffers and strategically places them in a project buffer

where it can best protect the entire project from delays.



A brief overview of Critical Chain

y This project buffer sits at the end of the

Critical Chain of the project.

y

y The critical chain is defined as the longest chain

of dependant tasks.

y

It is similar to the Critical Path in traditionalproject management. However, once the

critical chain is selected it remains the primary

focus throughout the course of the project.



A brief overview of Critical Chainy The methodology behind Critical Chain is

derived from a body of knowledge knownas the Theory of Constraints.

y The Theory of Constraints is itself a

broad methodology for understandingand improving business systems.

y

Critical Chain is the application of theTheory of Constraints to the project

environment.



A brief overview of Critical Chainy The critical chain approach also uses a system

called Buffer Management to monitor andcontrol projects.

y This records the extent to which the mainproject buffer is being consumed by delayswithin the project.

y A traffic light system provides a quick way of assessing the project’s status and provides amechanism for making decisions on whether

or not to instigate recovery actions.



How individual task safety

buffers get wasted:

yDependency between tasks meansthat delays are passed on while early

completions are often wasted.y Student syndrome means that

commencement of tasks are left to

the last minute.

y Parkinson’s Law says that work

expands to fill the time available.



How individual task safety buffers

get wasted:

yMulti-tasking refers to the practice

of working on more than one task

at a time.yThis means that one of the tasks will

be completed later than wouldbe the case if the tasks were

worked on sequentially.



Critical Chain: Addressing the Cascade Effect

y We have seen how delays multiply and gains

don’t add up with the Cascade Effect, andhow this extends projects and contributes to

missed delivery dates.

y It is also apparent that the conventionalmethods (more precise data, cross-functional

teams, and better task discipline) are

ineffective at dealing with this reality.y So what can be done to address the situation,

and bring our projects back on track?



Contradictions in Project

Management

What we want... ...and what we actually do

To finish projects on time We try to finish separate tasks on

time

To take more projects; We try to make our people more

efficient

To decrease the time for project

accomplishment;

We try to decrease the time for task

accomplishment;

To keep projects within their budget; We take risks related to

comparatively small costs;

To make customer happy; We fight with each other on

resource conflicts;

In this column we have only

global, company-

level factors;

In this column we have

only local

factors!



Who was opened the door?

y Eli Goldratt's novel, Critical Chain, opened

the door to a re-thinking of project

management and introduced CriticalChain.



The Five Focused Steps in

Constraint Management:

1. Identify the constraint; 2. Exploit the constraint; 3. Subordinate everything else in the Systemto Art. 2; 4. Eliminate the root cause of the constraint; 5. Go back to Art. 1 – and do not allow

inertia to become the real constraint!

( E. Goldratt )



what of the benefits:y The project can be able to be handed over virtually defects

free delay.

y Other applications of critical chain are now being explored.These include using Critical Chain in◦ i) the pre-construction phase of a project and

◦ ii) as a methodology for managing a construction company’scomplete portfolio of projects.

y A buffer and a task report highlight which tasks areconsuming the project buffer. This allows the site team toidentify which actions are most likely to have the greatest

impact on progressing the project. These reports were usedsuccessfully to discuss with a number of trade contractorsthe need for them to accelerate areas of their work.



Critical Chain Project Management

has three major elements or steps:



Step 1- Creating reliable project

plansy The first step is creating complete, realistic, and optimized project

plans.

y For years, this has been driven by PERT/ CPM (critical path method),

which sought to identify and focus on the longest chain of sequential

activities as the key to reducing and managing project duration. Since

it was developed more than 50 years ago, this insight has been very

powerful, enabling a significant advance in project performance.y At the same time it did not address a factor that has become

increasingly important today―the impact of scarce resources. Many

project managers have felt this for some time.

y During execution many project managers would report that thecritical path had shifted―the result, in most instances, of resource

contention.



y Critical Chain (CCPM) takes into account resource contention alongwith task dependencies to determine the longest "chain" in the

project. In the example below, the critical path of the project is thetask dependencies A1-B-D, clearly a delay on any o f these tasks willdelay the project.

y But since the same resource, A, is required to perform tow task in thesame time window this is not feasible in reality.

y

CCPM considers this and addresses it by leveling project plans asabove. The resource A now creates a new longest chain which cutsacross different legs of the project―exactly what project managershave been seeing in reality for years.

y Efforts to optimize project durations now can be focused not only on

the task dependencies, but also on the critical resources contributingto the Critical Chain.



Step 2- Pipelining to consider

cross-project demandsy Most organizations today operate in multi-project

environments where resources are shared betweenprojects.

y So arriving at sound project plans in isolation is insufficientto resolve all the possible contentions between resources.

y Once realistic project plans are created it is essential tolevel load the pipeline based on the critical or constraint

resources, before reliable delivery dates can bedetermined.

y CCPM takes the individual project plans and staggers themaccording to the capacities of the constraints.



y This smoothes the load on these resources insuring thatplans will not be based on unrealistic overloads from the

start.y This step also minimizes the likelihood of multi-tasking,

and spreads out the naturally available spare capacity of resources to reduce the likelihood of delays propagating

across projects.y As new projects are considered or delivery dates

estimated, it is essential to evaluate how newcommitments will be impacted by existing work.

y

Many have experienced the situation where adding work to the pipeline reduces the overall output and lengthensthe delays on all projects.

y Pipelining in this way insures that cross-project influences

are evaluated and commitments made with confidence.



Step 3- Buffer Driven Task Priorities

y The two diagrams above show how asmoothly loaded plan is turned into peaks

and valleys of work as a result of variability.y While the plan in total is still feasible,

because the total work was loaded

according to capacity, the peaks of work that now exist mean that some tasks willhave to wait while others are done.



y

These pictures highlight the need for our buffers—theyexist to absorb the impacts of such delays.

y Since every task in a project plan has at least onedownstream buffer (either the project or a feeding

buffer), a delay on any task, will show up as a penetrationinto a buffer.

y In the diagram, the first task took longer than expectedto complete, due to an unforeseen problem.

y Immediately the delay shows itself as a penetration intothe buffer. By monitoring the buffers it is readilyapparent, very early on that a project is at-risk, andcorrective action can be initiated.



y In terms of priorities, the buffers also

serve to establish the relative importance

of each task. The percentage of buffer

penetrated is compared to the

percentage of work completed on thatchain to establish the relative “buffer

burn-rate.”



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How To Manage Project This Way ?

1. Identify the Constraint!

It is the Critical Chain that acts as projectconstraint;

It defines its success or failure!



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2. Exploit the Constraint! y “Squeeze” the Critical Chain! Press timely

implementation (“net times!”) of all tasks lying onit!

y Resources work without fixed deadline – theirorders look like “Start at …, work with full priorityand maximal intensity, and when you are ready – pass the task to the next resource!”

y

Protect the whole project length by Project Buffer;

y Main indicator is consumption of the projectbuffer!



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3. Subordinate everything else in the

System to Art. 2!

1. The non-critical parts of project plan are completely

subordinated to the Critical Chain.

2. These part are known as “Feeding chains”;“Subordination” means that these chains must be completed before

planned start of next task in the Critical Chain;

3. Resulting protection time “gap” is called Feeding Buffer .



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About Buffers:

y Project Buffer protects the whole project from variation along the CriticalChain;

y Project Buffer serves as main indicator for project progress; y Feeding Buffer protect the project from variation along feeding chains;

y Buffer length is defined by application of ROT – “Rule of Thumb” - often 50%from “net time length of corresponding chain;

y Definition of timing for feeding chains is shown in sequence 1-2-3 below.



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Tough Issues!

y We must create attitude in people which

does not allow the “Student Syndrome”! y Apply “relay race method” (“When I get a

task, I will start it immediately, I will do it in

the fastest possible way, I will do nothing elseand I will transfer it immediately to next link

of project chain!”)

y No multitasking is allowed!

y Make this basic part of Company culture!



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4. Eliminate the root cause of theConstraint

y Double the resources along theCritical Chain;

y Other possibilities include doubling

of feeding chains and/or their

acceleration.



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Project Buffer As Indicator

• The project leader sees a chart like that below; this may happen in

real time;

•Delay in accomplishment of certain task look like “crawling

upwards” of corresponding task point – upwards to the red area;

•Rule is simple: if points are in green area – do not do anything; if in

yellow area – check what is going on; if in the red area – (only then!)

take action!

P r o j e c t B u f f

e r

C o n s u m p t i o

n

0 25 50 75 100

Critical Chain Accomplishment (%)

0



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Managing of More Projects

y Here we manage CRITICAL (Strategic)RESOURCE – a Company-level resource which

defines whether things will be done on time ;

y Here we buffer this resource by STRATEGICRESOURCE BUFFER;

y This buffer is located in front of the task(s) of the

Strategic Resource in order to guarantee itscontinuous work.



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Example for Two-Project

Management Set



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But If We Still Have Problems …

... Just apply the Five Focusing Steps: 1. Identify the constraint; 2. Exploit the constraint; 3. Subordinate everything else in the System to Art. 2; 4. Eliminate the root cause of the constraint; 5. Go back to Art. 1 – and do not allow inertia to

become the real constraint!

E l



Example:

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y Critical Path = Task1+Task2+Task3+ Lag+ Task6

y

= 5+4+2+1+8 = 21 Days.y The Gantt chart representation of the same is given below.

y Project Duration = Task1+Task2+Task3+ Lag+ Task6

y = 5+4+2+1+8 = 21 Days.

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CPM is helpful in:

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◦ • Project Planning and control.

◦

• Time-cost trade-offs.◦ • Cost-benefit analysis.

◦ • Contingency planning.

◦ • Reducing risk.



To overcome above limitations Critical Chain

Project Management (CCPM) plays important role.

◦ CPM assumes low uncertainty in schedule dates.

◦ Does not consider resource dependencies.

◦ Less efficient use of buffer time.

◦

Less focus on non critical tasks that can cause risk.◦ Based on only deterministic task duration.

◦ Critical Path can change during execution.

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Limitations of CPM:



Critical Chain Project

Management (CCPM):

y According to PMBOK Critical chain method is

a schedule network analysis technique thatmodifies the project schedule to account forlimited resources.

y

It mixes deterministic and probabilisticapproaches to schedule network analysis.y The critical chain concept was coined by

Eliyahu Goldratt.y Following few sections briefly describe the

concepts Critical Chain depends on and areuseful to understand the example that will

follow shortly after that. 40

CCPM t k d t f th b t ti f



CCPM takes advantage of the best practices of:

y - PMBOK: Planning and control processes.y - TOC (Theory of Constraints): Remove bottleneck to

resolve constraints.

y - Lean: Eliminate waste.

y - Six Sigma: Reduce Variations.

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y - Parkinson’s Law: Work expands to fill the available time.

y - Student Syndrome: People start to work in full fledge

only when deadline is near.

y - Murphy's Law: What can go wrong will go wrong.

y - Bad Multi Tasking: Bad multitasking can delay start of

the successor tasks.

CCPM helps to overcome following

phenomenon.



CCPM is based on:

y

- Resource constrained situations.y - Optimum use of Buffer (amount of time added

to any task to prevent slippage of schedule)◦ o Project Buffers (PB): Amount of buffer time at the

end of the project.◦ o Feeding Buffers (FB): Amount of buffer time at the

end of a sequence of tasks.

◦ o Resource Buffers (RB): It is an alert that is used toindicate that resource is needed to perform a task.This alert can be set few days before a resource isactually needed.

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CCPM Example:



CCPM Example:y We will consider the same example that was explained in section

Critical Path Method Example.y CCPM can be applied using following three steps:

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1. Remove safety time and

reduce tasks durations by50%.

y Project Duration = Task1+Task2+Task3+ Task6

y = 3+2+1+4 = 10 Days.y Note:

y All safety time durations are removed. For example 1 day

lag after Task 2 and 4 days after Task5 are removed.

y All tasks durations are reduced to half (50%). For example

Task 1 is 3 Days instead of 6 days.

CCPM Example:



CCPM Example:

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y Project Duration = Task1+Task2+Task5+ Task6

y = 3+2+2+4 = 11 Days.

y Note:

y • Task3, Task4 and Task 5 are moved to start from LateFinish dates.

y • Task2 and Task5 are to be done by resource R2 and so

that aligned to remove resource constraints.

2. Create schedule on Late Finish dates and Remove resource

constraints and identify critical chain.

CCPM Example:



CCPM Example:

45

y

Project Duration = Task1+Task2+Task5+ Task6 + PBy = 3+2+2+4+5 = 16 Days.

y Note:

y • Project Buffer (PB) = 50% of Project Duration (11 Days) = 5.5 Days = 5 Days

(Rounded).y • Feeder Buffer (FB) for non critical tasks on chain. For example Task 4 is added

2 days FB.

y • Buffer calculation is done by taking 50% of project duration for simple case

and by Square root of the sum of the squares method (SSQ) for aggressive case.

3. Add Project Buffer of 50% of the tasks duration and add

Feeder buffer to non critical chain.

C i f CPM d CCPM



Comparison of CPM and CCPM

results:

◦ Project Duration can be reduced by 25-40%.

◦ Resources can be utilized effectively.

◦

Project is fully focused on both critical and non criticaltasks

y According to the results we found above, project

duration by CPM traditional approach is 21 daysand the project duration for the same amount of

work by using CCPM is 16 Days. Using CCPM:

46

Gl



Glossaryy bad multitasking - The behavior of people who split their time

between multiple project tasks in a way that extends the cycle time of

individual projects or multiple projects and often results in poor

quality results.

y buffer - An amount of time that represents a schedule contingencyreserve.

◦ Buffers are included at various points in a project task network. They

provide the ability to eliminate any padding, from individual task duration

estimates and to clearly show the predicted and potential project schedule.◦ They are managed to assess the degree of risk remaining for on-time

project completion.

◦ Buffer durations are best determined through risk analysis.

y

constraint - In the Theory of Constraints and Critical Chain, aconstraint is the most significant leverage point for improving a system.

◦ In Critical Chain, the constraint is the cycle time of projects, both

individually and the combined cycle time of the entire collection of an

organization's projects.

47

Gl



Glossary

y Critical resource - When considering all of the projects that an

organization has in place, this is the resource that most impacts the

cycle time of the combination of projects.

y

cycle time (project) - The length of time from the start of the projectuntil its completion. Project duration.

y Feeding buffer - Feeding Buffers are time periods without scheduled

work placed at points where a non-critical chain tasks join the Critical

Chain.◦ This buffer protects the Critical Chain from any delays on the tasks feeding it.

◦ A Feeding buffer is normally 50% of the total time allocated to the tasks on

that feeding chain, though this can vary and is best determined by performing

risk analysis on the tasks in the non-critical path.

y Parkinson's Law - Work expands to fill the time available. For

example, a software engineer who has done the mandatory work for a

task before the due date decides to add some "bells and whistles" that

are not mandatory.

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Glossary



Glossaryy Project buffer - The Project buffer is a time period with no scheduled work,

placed after the final task of a project in order to protect the completion date

from delays, especially along the Critical Chain.

◦ The Project buffer time is normally 50% of the total time estimates of all the

tasks on the Critical Chain, though this can vary and is best determined byperforming risk analysis on the tasks.

◦ An average cost is applied to the project buffer for budgetary purposes, since

the project is expected to consume the buffer as it proceeds to completion.

y student syndrome - A human behavior where a person waits until close to a

due date to begin working on a task. Procrastination

y Throughput - The rate at which an organization generates money through

sales.

◦ Usually, this is revenue received from customers minus the cost of raw

materials (directly variable cost).y Strategic Resource buffer - A time period during which the critical resource

will have no scheduled work. This insulates each project that uses the strategic

resource from impacts of previous projects and ensures that future projects will

not be impacted by uncertainty affecting the strategic resource.

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Glossary



Glossaryy relay runner work ethic - The relay runner goes as fast as possible to

complete her leg of the race and pass the baton to the next runner.

◦ In a project, a task is completed as quickly as possible and the work or

resource handed off to the successor(s).

◦

The relay runner work ethic is a prerequisite to healthy performance in anyproject environment.

◦ If it is in place and rewarded, then punitive management for late task delivery

can be eliminated.

y

Resource buffer - The Resource buffer is intended to alert resources to theirapproaching responsibility to the Critical Chain. It is like an alarm clock.

◦ It DOES NOT lengthen the estimated time of the project.

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