Critical Chain Project Management

BCS Nottingham & Derby

Winter School 2006

Steven Wray, BA, MBA, MBCS, C Eng

Phone: 07951 727 490e-mail: steve@wrayassociates.comweb: www.wrayassociates.com

What makes a Project ?

• One end-point

• At least two tasks, linked by dependency

• Significant inherent unpredictability in how long the tasks will take.

What do we want from Project Management ?

What do we want from Project Management ?

• Reliable on time in full to budget delivery performanceMore revenue, more Profit, happy customers

• A stable plan

More Productive use of resources

• Simple, objective measures of Project progress Shorter meetings, better informed stakeholders - less waste, more productivity

• Simple, objective measures of Project health status Shorter meetings, better informed

stakeholders - less waste, more productivity• Clear signals for when corrective action is - and is not - necessary

Better directed recovery efforts - less waste, more productivity

• Direction for ongoing improvement effortsThe future brings more revenue, more profit, happier customers than the present

What is our normal experience from today's way of Project Management ?

What is our normal experience from today's way of Project Management ?

• Reliable on time in full to budget delivery performance ?

Or A continuous struggle with time, cost and scope ? • A stable plan

Or Repeated rescheduling ? • Simple, objective measures of Project progress ?

Or Clarity at the start and end, thick fog in between ?• Simple, objective measures of Project health status ?

Or Subjective assessments compounded by human factors ?

• Clear signals for when corrective action is - and is not - necessary ?

Or Intervening too much too early, and too little too late ?

• Direction for ongoing improvement efforts ?

Or "We'll improve our methods when things get better"

'Normal' Practice in the planning phase

• We identify the tasks in the Project and specify the resources needed for each one

• We allocate to each task sufficient time that we are confident will allow it to be completed with those resources. That is, the time the task should take on average, plus some contingency to give us the confidence we seek

• We apply task dependencies, and work out the longest path of tasks in the Project

• The time along this path is the time-line of the Project

Normal practice in the execution phase

• As long as every task completes on time (within its contingency), its successors will be started on time

• As soon as any task finishes late (outside its contingency), its successors will start late, and this normally means they will finish late

• In order to rescue a Project which shows any lateness, we have to squeeze the remaining tasks in the Project

• Typically we have to compromise on time, cost or scope and reschedule

The Estimating Dilemma

• If I allow more time for every task in the plan, each task is less likely to be late, but the Project end date will be later...

• If I allow less time, the end date will be earlier, but the Project is more likely to overrun

• BUT I have to deliver the Project on time

How long should we allow in the plan for a task ?

• Some staff work more quickly than others• Sometimes staff are distracted or interrupted• Sometimes necessary resources are delayed• Some staff are risk-averse in their commitments• Some organisations reinforce risk-aversion

How long do we allow in the plan for a task ?

The average time the task ought to take an average performer who focuses on it

PLUS The time we expect to be spent on distractions

PLUS A contingency time to take account of:• The spread between average and low performers• Our uncertainty in the average time• Our uncertainty in the time for distractions• How risk-averse we are or have to be

Some simple maths

If we set our estimates so that we are 90% sure that any one task will be completed on time

If we have 20 tasks in our Project

The Probability that all the tasks

will be on time is: 0.920 = 12%

For 50 tasks, the Probability of all on time is: 0.950 = 1%

Emphasising

• Doing things by the text-book, with 20 tasks, each of which we are 90% sure will complete on time, we have an 88% probability of being late for the Project

• With 50 tasks, its a lot worse: its a 99% probability of being late for the Project

What if we change our estimating to a 95% confidence level ?

• NB This will inflate the time for every task maybe by 25 - 50% because we will need more contingency

• For 20 tasks the probability of being late is now 64% (was 88%)

• For 50 tasks we are late now 92% (was 99%)

We have very much extended our Project time-line, and increased our chances of success from 12% to 36% for the small Project, and from 1% to 8% for the large Project

Surely, there's a better way...

• Plan A - invest our energy in reducing the extent of the variability:

- Allowing longer in Project planning stage for preparing estimates- Training staff in estimating- Use of formal estimating methods- Measuring progress (CSC tools) and feeding results back into estimating practice- More detailed specifications- Less flexibility over changes to specifications- Training the staff better in their job content- Using individual performance measures to identify poor performers - Keeping projects short (c 6 months), breaking larger undertakings into several

short Projects

Doing this can help, but doesn't solve the problem

Plan B - Coping behaviours

• Project Managers fight to be assigned the most viable Projects • Project Managers fight for the best staff• Project Managers fight to keep the Project scope down• Project Managers exploit changes in scope to unduly extend timelines

and budgets• Project Managers sandbag Project plans to create headroom • Project Managers quit long Projects well before the delivery date• Project Managers disregard targets they know to be impossible

• Staff work double shifts in the final weeks / months• Dumping the blame elsewhere

Doing these may help the individual, but not the organisation

We can reduce variability, but we cannot eliminate it, because it is inherent to the nature of a Project

Plan C: Approach the problem in a different way

We must manage the variability that remains

How we handle variability in Critical Chain

• We do not build in any contingency at the Task level• We move all the contingency to the Project level - we call

this the Completion Buffer

Individual Tasks can now be late without affecting the completion date of the Project

The Project due date is protected as long as the accumulated lateness along any one chain is less than the completion buffer

What difference does this make to our probability of being late ?

Under 'normal' practice, if any task is later than its contingency allows, we have a problem

Under Critical Chain, we only have a problem if the total lateness exceeds the total contingency

This second condition is much less likely than the first [ Law of averages / Central limit theorem] and increasingly so as the number of tasks increases

The Completion Buffer

• A Buffer is a block of time which protects a deliverable from being affected by delays upstream. The Completion Buffer protects the Project completion date

• Over the course of the Project we expect our buffers to be used up, in proportion to progress made

Scarcity of Resources

• In putting together the plan, we must take into account scarcity of resources

• In particular, if two tasks want exclusive use of the same resource, at the same time, they have to be staggered

• This affects the plan in a similar way to the task dependencies

Scarcity of Resources

Task C – 10 d

Task B – 10 d

Task A – 10 d

Project Time required - 20 d

Task C depends on both A and BEach task uses a different resource

Scarcity of Resources

Task C – 10 d

Task B – 10 d

Task A – 10 d

Task C depends on both A and B, Both A and B need exclusive use of the same resource

Project Time required - 30 d

Resource conflict

The Critical Chain

• We identify the longest chain of dependent tasks by resource through the Project - this is the Critical Chain, at the end we place the Completion Buffer

The time taken to complete the Project is the time taken to complete the Critical Chain

Any delay in the Critical Chain delays the Project completion

Task C

Task B

Task A Completion Buffer

Completion Buffer

Committed end date

Task C

Task B

Task A

In Practice

Task C

Task A Completion Buffer

The buffer is 25-33% ofchain length

Project duration held constant

Task B

Feeding Chains

• All the other chains of tasks we call Feeding Chains , because each one at some point feeds into the Critical Chain

• Every task in the Project is part of either the Critical Chain or a Feeding Chain

Feeding Buffers• We must not allow anything to delay the Critical Chain

• We must protect the critical chain from being delayed by lateness in the Feeding Chains

• We start the feeding chains a little early, and insert a block of time to decouple the Critical Chain from each Feeding Chain

• We call these blocks of time Feeding Buffers

Task C

Task B

Task A

Task D

Completion Buffer

Feeding Buffers

FB

Planning Phase Summary

• There is no contingency at task level• The Project due date is protected by the a block of time

called the Completion Buffer• The Critical Chain is the longest chain of tasks through

the Project• All other chains of tasks are Feeding Chains• We place Feeding Buffers to decouple the Critical Chain

from the feeding chains

Execution phase....

• We have a great plan - what can happen in execution ?

Critical Chain in the Execution phase....

• No multi-tasking - when someone starts a task they stick to it until it's completed

Bad Multi-tasking

Whenever I put down one task and pick up another, I lose productive time

How much time is lost switching depends on how deep or shallow the task in hand is

Putting a stop to multi-tasking in effect creates extra capacity

More Bad Multi-tasking

If we have two people, each available 50% to our Project, and they have to work together, they are effectively 25% available

If we have four such people, it's effectively 6%, so we'll wait on average 8 working days to get them together for half a day

Real-life case: Ten team leaders, each on 50% availability: Out of two Project meetings held, 3 came to both, 5 to one or the other, 2 to neither

Very Bad Multi-tasking

When someone stops doing a task on the Critical Chain, and starts doing something else, they are delaying the entire Project

Critical Chain in the Execution phase....

• No multi-tasking - when someone starts a task they stick to it until it's completed

• We begin each task as soon as resource is available and prerequisite tasks are complete

The timings in the plan are for planning, not a commitment on execution

Critical Chain in the Execution phase....

• No multi-tasking - when someone starts a task they stick to it until it's completed

• We begin each task as soon as resource is available and prerequisite tasks are complete

• We finish each task as soon as we can

Early finishes on Critical Chain tasks bring forward the whole Project

Early finishes on Feeding Chains increase the protection of the Critical Chain

Sometimes we call these three together 'Roadrunner' style

Summarising Practical differences...

• Planning phase:– The Project is analysed into the Critical Chain and Feeding

Chains

– Contingency is aggregated into a Completion Buffer protecting the Project end-date, and Feeding Buffers protecting the Critical Chain

• Execution Phase– No Multi-tasking

– Early finish / allowing early start of following tasks

– Subordination to the Critical Chain

Measures and Management

• How do we know how the Project is doing ?

Measures and Management

Making less progress than planned will eat into the Completion buffer

Making more progress than planned will add to the Completion buffer

C

B

D

A

At day 5, task A has 8 days remaining (of 10) - Completion Buffer is eroded by 3 days

Task D is completed - no effect on Completion Buffer

Measures and Management

• Question 1: How many days work until the Project is completed ?

• Answer = the number of days left on the Critical Chain

It is the time on the Critical Chain that determines the time required to complete the Project

Measures and Management

• Question 2: How certain are we about the answer to Question 1 ?

• Answer = the proportion of the Completion Buffer that we have left, compared to the proportion of the Critical Chain still to do

The Completion Buffer protects the end date. The less (more) it is eroded, the less (more) the end date is at risk

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 1or 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

Rem

aini

ng

Don't overreact to buffer erosion

• We expect our buffer to be used up over the course of the Project

• Our date is not threatened if the buffer is used up in proportion to progress – If we have 2/3 of the completion buffer left and only 1/3 of

the Project to do we are doing fine

• Our date is threatened if the buffer is used up disproportionately– If we have 2/3 of the Project still to do but have only 1/3 of

the completion buffer left we have a problem

Measures Summary

• We have simple, objective measure of Project progress• We have a simple, objective measure of Project health

status• We have a simple rule for triggering - and not triggering -

corrective action

We can redefine the Project progress meeting as the Buffer Management Meeting

Buffer Management Meeting

Attendees: Project Manager, Project Sponsor / Owner, Task Managers, Resource Managers

Agenda:

1. Reminder of what tasks are on the Critical Chain.

2. Review Project status ( % Critical Chain outstanding).

3. Review Completion buffer status (Red, Amber, Green).

If necessary, initiate corrective actions.

4. Review Feeding buffers status (Red, Amber, Green). If necessary, initiate corrective actions.

5. Review tasks in progress to ensure earliest completion in full.

6. Review tasks not started to ensure earliest start where appropriate.

Using Buffer Management to drive ongoing improvement

• Buffer Management measures are fact-based and objective

• Buffer Management meetings highlight buffer erosion / Project delays

• Preventing the causes of delay will speed up your Projects

• Your process of ongoing improvement is simply to eliminate the causes of delay by following up on the issues highlighted in Buffer Management meetings

• As your Projects run faster and more reliably, continue to eliminate more and more causes of delay

How Does Critical Chain help our Project Management ?

Aggregated contingency and 'Roadrunner' style Effective due-date protection and extra effective capacity More reliable on time in full to budget delivery performance

Identification of Critical Chain and Feeding Chains Focus

Buffers Flexibility A stable plan

Buffer measures Objectivity and clarity Better focused meetings, better directed recovery efforts, better informed

stakeholders, less waste and more productivity Less encouragement of 'coping behaviours‘

Buffer Management Focus for ongoing improvement efforts

Without CCPM

• If the plan is not based on the Critical Chain, it may be infeasible• If the Critical Chain is not known, the Project Manager cannot focus

on it

• Without contingency the plan is not robust

• If contingency is all in the task estimates, it's still not robust it’s just longer, and there is no sense of urgency

• Without feeding buffers, an early completion will not help the end date, because the next task has to wait for its other prerequisites

• With multi-tasking and interruptions > 25% capacity is wasted• Interruptions on Critical or Feeding Chains delay Project Completion• Measures are backward-looking or misdirect attention• Improvement processes lack focus

Multi-Project PipelinesThe Goal is to maximise Project throughput over some timeframe

The constraint is one of the resources available

The pipeline can be overcommitted

Resources can be used on the wrong Project

Projects can delay one another

• Starting point is that each Project has a fully defined CCPM plan, and

• We have a defined set of global resources• Assumption that one of the resource constraints

dominates the others over the timeframe (Pacing Resource)

• Execute a single pipeline plan which is feasible and robust

Multi-Project Pipelines

Example

Which is the Pacing Resource ?

How many Products can we deal with in a 50 day quarter ?

We run the engineering department of a manufacturing company making custom products

Each product ordered is a new variation on a few standard designs

Typically, for each product ordered, we spend 5 days on the specification, 10 days on the design, 2 days on the test plan, and 3 days on the manual

We have 2 people who do specifications, 3 who do designs, one test planner and one manual-writer

Example

Specification: 2 x 50 = 100/5 gives 20 products

Design: 3 x 50 = 150, 150/10 gives 15 products

Test Plans: 1 x 50 / 2 = 25 products

Manuals: 1 x 50 /3 = 17 products

Design = Pacing Resource

We run the engineering department of a manufacturing company making custom products

Each product ordered is a new variation on a few standard designs

Typically, for each product ordered, we spend 5 days on the specification, 10 days on the design, 2 days on the test plan, and 3 days on the manual

We have 2 people who do specifications, 3 who do designs, one test planner and one manual-writer

ExampleWe run the engineering department of a manufacturing company making custom products

Each product ordered is a new variation on a few standard designs

Typically, for each product ordered, we spend 5 days on the specification, 10 days on the design, 2 days on the test plan, and 3 days on the manual

We have 2 people who do specifications, 3 who do designs, one test planner and one manual-writer

What is the consequence if:

The test planner is off for two weeks ?

One of the designers is off for two weeks ?

The documentation task for a product overruns by 50% ?

The design task for a product overruns by 50% ?

The specification task for a product overruns by 50% ?

Answers

Loss of output on the pacing resource has a permanent, pervasive effect

Loss of output on the other resources has a temporary, local effect

We need to protect the Pacing Resource

Planning the Pipeline

Stagger Projects on the Pacing Resource

Buffer the Pacing Resource

A feasible and robust due-date for each Project

Priorities in the pipeline

• In order of net profit per hour of time on Pacing Resource

• In sequence of strategic priority• Committed Projects first, then new Projects• Look at the effects of different sequences

Pacing Resource Schedule

Product 793Schedule

Product 794Schedule

RB RB RBRB Design 792

Design 793

Design 794

Spec Test plan / Manual

Design

Spec Test plan / Manual

Design

Execution Phase

Hierarchy of subordination:• Never interrupt the Pacing Resource• Only interrupt a Critical Chain task to start the Pacing

Resource• Only interrupt a Feeding Chain task for a Critical Chain

task

Measures in 2-D

100 %

100 % 0 %

0 %

Critical Chain Remaining

Com

plet

ion

Buf

fer

Rem

aini

ng

5

4

3

2

1

Buffer Management

Management team (Project Managers, Resource Managers) looks at:

• Pacing Resource schedule• Resource Buffer status• Critical Chains vs Completion Buffers picture• Resources: best resources allocated to most important

Projects ?• Pacing Resource tasks in Progress - early completions ?• Pacing Resource tasks due to start - early starts ?

Record buffer erosion to focus improvement effort

Summary - Multi- Project

• Start with all Projects fully-defined in CCPM• Identify Pacing Resource• Load the pipeline by staggering Projects on the Pacing

resource• Buffer the Pacing Resource• Apply hierarchy of subordination• Manage by Buffer Management • Use Buffer Management to drive improvement

Without CCPM

• If we haven't identified the Pacing Resource:– our pipeline may be infeasible– we will waste capacity

• Without a resource buffer, the pipeline won't be robust

• Without good measures, management is unfocused or wrongly focused

• Without Buffer Management, improvement is unfocused

In Practice

• The logic of CCPM works• Many success stories: A50, Lucent, Phillips, US Navy• Implementation is not a trivial undertaking• As CCPM brings Projects under control, the constraint

moves to management• Aggressive reductions in cycle time are both possible

and necessary

Books

"Critical Chain" by Eli Goldratt 0-88427-153-6

"Critical Chain Project Management" by Lawrence P Leach ISBN 1-58053-903-3

"Enterprise-Focused Management" by Ted Hutchin ISBN 0-72772-979-9

Questions ?