critical chain project management lean, six sigma and speed

© 2000, Raytheon Company. All Rights Reserved.Revised: October, 2005

Critical Chain Project Management Lean, Six Sigma and SPEED

Kevin OxnamRaytheon Six Sigma Master Expert

“Your Focus Determines Your Reality.” Qui-Gon Jinn, Master Jedi

Star Wars Episode I The Phantom Menace

© 2005, Raytheon Company. All Rights Reserved.

Agenda

• Why– Benefits

• Who Cares?– Why use CCPM?

• What is CCPM?– Schedule and Behavior

• When to use it– And when not to

• Where to go for more information– Web and text references

• How to get started– A (very) short course


Why: The Problems Managing Programs

Programs are Commonly Late and/or Over Budget

• Department of Energy Study of 80 projects– 31 (39%) terminated before completion (after spending $10B)

– Only 15 had completed, most late and over spent

– 38% of Projects had doubled their initial cost estimates

• Australian Construction Study– Only 1 of 8 projects completed on schedule

– Average cost over run of 40%

• Software Study– 30% of projects are cancelled before they complete

– Only 15% considered “successful”

Managing Programs is DifficultManaging Programs is Difficult

Reference: Critical Chain Project Management by Lawrence P. Leach, pages 9-10


Why: Benefits of Critical Chain

• Increases Speed – up to 30-50% faster• Reduces Cost – 10-30% less• Improves Focus• Increases Customer Satisfaction• Never hear these words again:

– “Fire fighting”– “Dropping the ball”– “Falling through the cracks”– “Worry about it later”– “Ask forgiveness”– “We don’t have time”– “Rush to failure”– “Oops”

CCPM Speeds project performanceCCPM Speeds project performance


Who Cares?

• Critical Chain Project Management (CCPM) provides management teams with the ability to – Accurately predict program performance

– Make informed decisions

– Manage risk

– Identify constraints

– Help their teams succeed

– Help suppliers be successful

– Provide outstanding performance for their customers

CCPM is a natural enabler for no-doubt project performanceCCPM is a natural enabler for no-doubt project performance


What is CCPM?

• A program management methodology that considers a project as a system of dependent tasks and each task has its own degree of variation

• The focus is on:– Robust Schedule Design using Reverse Planning– Management and Employee Behavior

Multitasking Visual Controls Barrier Busting

• Identifies – Which tasks are critical– When those tasks are critical

• Critical Chain provides managers: – The information they need to FOCUS on the right tasks at the right time

Focus on Schedule and Behavior to manage variationFocus on Schedule and Behavior to manage variation


Creator of Theory of Constraintsand Critical Chain Project Management

• Eli Goldratt – Introduced the Theory of Constraints (TOC) in his book

The Goal

–Holds a Ph.D. in physics

–Author of numerous books

–Brought TOC first to production environments then to marketing, distribution, personal relationships, and finally to project management


Consider the Chain Analogy


Critical Chain vs. Critical Path

• Critical Path– The longest string of events through a project network

– Normally does not consider the needs of other programs

– Does not necessarily deconflict resources

– “Traditional” Program Management methodology

– Variability of each task is managed randomly

• Critical Chain Project Management (CCPM) – The longest chain of events through a project network with resources

deconflicted

– Minimizes multi-tasking, at least on the Critical Chain

– Multi-Project Management considers other program needs

– Uses “buffers” to account for variability in each chainWith unlimited resources, the Critical Path and the Critical Chain are the sameWith unlimited resources, the Critical Path and the Critical Chain are the same


Product development consists of many knowledge processes ...

All processes ...

and have an “expected”value (average)

Like

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curr

ence

Time

have variation

Task Durations Reflect the Output of a Process


Prior to T0

probability = 050% probability

of finishing on time

50%of area

30%of area

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80% probability

90%probability

Special-Cause Variation

Common-Cause Variation

Probability Distributionis Not Symmetrical

“Management’s function is to improve the system while avoiding two mistakes:Mistake 1 Treating common cause variation as if it were special cause variation;Mistake 2: Treating special cause variation as if it were common cause variation” From Critical Chain Project Management by Lawrence P. Leach, page 45


Why don’t we

meet our schedule

commitments?!?

Time

Probability Curve90% “risk free”Commitment

Effort

Murphy strikes!

Task complete

In spite of detailed schedules with lots of safety margin ...

“As many as 80% (of tasks) complete on the due date” From Critical Chain Project Management by Lawrence P. Leach, page 82


Pad or Safety

Pad or Safety

Pad or Safety

Pad or Safety

Lik

elih

ood

of o

ccur

renc

eHow Do Individual Task Times Affect the Project?

50%

90%

50%

90%

50%

90%

50%

90%

50%

90%

50%

90%

50%

90%

50%

90%

Anticipated Delivery

Handof

f

Handof

f

Handof

f


Project Buffer (owned by the

system)

Lik

elih

ood

of o

ccur

renc

eWhen “Safety” is Owned by the Project

50%

90%

50%

90%

50%

90%

50%

90%

50%

90%

50%

90%

50%

90%

50%

90%

Anticipated Delivery

Handof

f

Handof

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Handof

f

“The uncertainty of the sum of the events is much less than the sum of the uncertainty for each event” From Critical Chain Project Management by Lawrence P. Leach, page 167


Where to Insert Buffers

• Project Buffer – Add a Project Buffer after the last task

• Feeding Buffers– At every point where any task touches the critical chain, add a

Feeding Buffer

• Similarities– Program Buffers and Feeding Buffers are calculated exactly the

same using the longest chain of tasks from the start point to where the buffer will be inserted

– Buffer sizing methodologies shown on slide 17


KarenKaren

5

2

3 4

1

Traditional Critical Path Planning With Safety Built Into Each Task:Traditional Critical Path Planning With Safety Built Into Each Task:

Critical

Chain:

Critical

Chain:

Project Buffer

2

3

5

1

4FeedingBuffer

Buffers protect customer

from variation

Buffers protect customer

from variation

Critical Chain vs. Critical Path

Multi-tasked resourceKarenKaren

Customer Commit

Date

Customer CommitDate

Aggressive Task Durations Eliminate Multitasking

Click the Mouse to ContinueClick the Mouse to ContinueClick the Mouse to Continue

Inherent Variation is managed and controlled through buffersInherent Variation is managed and controlled through buffers


Buffer Sizing

How long do we make the buffers?The length of the buffer is a measure of risk,

it can be calculated or selected• Method 1 - The Root-Square-Error (RSE) (best choice)

– explained on the next page • Method 2 – Percentage (second choice)

– Based on the Aggressive Estimates– Rule of thumb – buffer is 50% of the chain

• Method 3 – What’s Left Over (can be used in a pinch)– Reduce the schedule as much as possible and whatever is left over is the

buffer!• Method 4 - Cut-and-Paste (not recommended)

– Get typical estimates of task duration from developers– Cut the estimates in half– Use the shorter estimate for scheduling purposes– Add half of the cut duration to the buffer


Root-Square Error Method

• For each task get two estimates:– “Safe” estimate (using traditional estimating methods)– “Aggressive” estimate (assuming Critical Chain behaviors)

• For each task take the difference between the safe and aggressive estimates called delta ()

• Calculate the buffer size using the Root Squared Error Method:

• Example: 5 similar tasks each with safe=20 and aggressive=12. So, =20-12=8

223

22

21 ...SizeBuffer N

Days8.1732088888SizeBuffer 25

24

23

22

21


Manage the Buffers

• Buffers provide focus!

• Variability in the tasks will result in DECREASING or INCREASING the time remaining in the buffers

• Assess risk by the health of the buffers

Project Buffer

Project Due Date

Green Yellow Red

Buffer penetration is a measure of project statusBuffer penetration is a measure of project status


Critical Chain, % Complete

Project Buffer,

% Used

Project Due Date

Project Complete

Project Management by the Buffers

• Manage the variability of the project and you have succeeded in keeping your customer commitments

Green

YellowRed

It is expected that much of the buffer will be consumed when the project is completeIt is expected that much of the buffer will be consumed when the project is complete


Behavior ManagementVisual Controls and Barrier Busting• One Control Room• Daily stand up meetings• “Run Rules” or Time Guard perks for the Critical Chain resource

– Right of Way” – Critical Chain has priority� May interrupt anyone, as necessary� May not be interrupted (except during posted “office hour”)

– No multi-tasking on the critical chain� Begin task immediately upon receipt� Pass task to next step immediately upon completion� Focus on the critical task at hand until complete

– Exempt from meetings� Send designee, if feasible� If required at meeting, first on agenda

• Visual Controls– Badges to identify the Critical Chain element– Signs on the office

One person is on the Critical Chain for a discrete period of time, then a hand-off occursOne person is on the Critical Chain for a discrete period of time, then a hand-off occurs


Where to go for help

Growing body of literature and expertiseGrowing body of literature and expertise

• Literature– The Goal by Eli Goldratt – introduces the Theory of Constraints

– Critical Chain Project Management by Lawrence P. Leach

• Most Common Software for CCPM– ProChain Solutions at prochain.com

An addition to Microsoft's Project software

• Companies who have used CCPM successfully– Raytheon

– US Military

– Honeywell

– Lucent

– Harris Semiconductors

– Israeli Aircraft Industry

– Dozens of others


How to get started

• Visualize and Commit– Decide on Scope of the Critical Chain project (deliverables, end dates)– Get alignment with the team– As required, get alignment with Customer, Planners, EVMS

• Prioritize– Establish Control Room– Stand up meeting time, place– Select Visual Controls

• Characterize & Improve– Reverse Planning– Identify the Critical Chain– Develop Run Rules, Visual Controls

• Achieve– Celebrate every hand-off, every milestone– Help each other succeed along the way– Reward people who help others succeed

A firm commitment to implement both the Schedule and Behavior components is requiredA firm commitment to implement both the Schedule and Behavior components is required


CCPM is a Management Philosophy

• CCPM helps facilitate– Informed decision making

– Daily communication and barrier busting

– Reduced multi-tasking

– Quick understanding of task relationships and status through visual controls

– Variation/Risk Mitigation

– Proactive management of tasks, resources, and barriers

– Hand-in-hand application with IMP/IMS, Risk Management, EVMS

– Accurate prediction of program performance

– Constraint management

– Team success

– Suppliers success

CCPM assures Schedule and Behavior performanceCCPM assures Schedule and Behavior performance


Biography

• Kevin Oxnam has been with Raytheon (formally Hughes) for over 20 years. Kevin has a Bachelors degree in Electrical Engineering and a Masters in Business Administration, both from the University of Arizona. Kevin is a Raytheon Six Sigma Master Expert and a deployment specialist for Critical Chain Project Management.

• (520)794-7270

• [email protected]

critical chain project management lean, six sigma and speed

Education

critical critical chain

project project buffer

project network

buffers project buffer

critical path critical

chain analogy

longest chain of tasks

doubt project performance