Theory of Constraints – Introductory Presentation

(TOCIP)

Presented by

Rajeev Athavale

TOC – Application for Projects CCPM

Project Management – Problems, Causes and TOC Solution

What Do We Strive For?

• We strive to deliver our projects – Within Time – Within Budget – With Full Scope

So that we satisfy our customers and our business flourishes! • Every project has these three promises at least

and if we are executing say 100 projects, we have 300 promises to keep!!

• A Tall Order!!!

What Really Happens?

• Usually original Due dates are not met,

• There are too many changes,

• Too often resources are not available when needed,

• Necessary things are not available on time,

• There are fights about priorities between projects,

• There are Budget over-runs,

• There is too much rework

In short, our projects are late, over-budget and do not deliver everything that we promised

What is the Cause?

• Dr. Goldratt said, “Most compromises on content or budget stem from the pressure to meet the promised due date”

• So, if our solution ensures that most projects are delivered on or before the promised due date, there may not be any need to compromise on budget or scope

• And if there is no such pressure, we can deliver our projects within time, budget and with full scope

Wait a Minute…

• But we are not wasting any time

• Also, we use estimation tools to estimate our projects

• We provide some time – about 10 to 15% - for contingencies

• We ensure that people are working all the time

• Still, our projects are late

• Is there something that we are missing?

Do we know…

• That there is a lot of safety built in our task estimates?

• And that we waste most of it?

Safety is Estimates

• People need to give reliable estimates

• How can people give “reliable” estimates if they don’t embed enough safety in it? – After all, they are operating in a highly uncertain

environment

– And they witness a large degree of variability when they actually execute the tasks

– And they are judged by the estimates that they keep

• So we intuitively know that there is a good amount of hidden safety in task estimates

Safety is Estimates

• What we really don’t know is how much safety is hidden in our estimates

– Vast experience across industries, geographies, project sizes tells us that it is easily around 50%

– More the experience, more the safety!

• What we also don’t know is

– How this huge safety gets wasted and

– How we don’t even come to know when it is wasted!

What causes the Waste of Safety?

• Multitasking • Murphy’s Law • Student’s Syndrome • Parkinson’s Law • Dependencies • Meeting Culture • Training Culture • Rocking Chair Syndrome • Wait and Queue

The Vicious Cycle

• We give reliable estimates (Based on our recent worst experience, we pad the tasks with enough safety)

• Due to multitasking, Student’s Syndrome etc. most of this safety gets wasted

• Our projects are delayed; we are blamed

• We learn our lesson – We decide to be even more paranoid for the next

project estimate

– We give even larger estimates

The Vicious Cycle

• Owing to uncertainty, our detailed plans start becoming irrelevant

• We start managing our projects without referring to such plans

• These things lead to problems and sometimes, there is a chaos

• At times, we don’t know what is important and what is not

The Vicious Cycle

• There is increasing pressure on us to show progress

– So we start on as many paths as we could, doing easy things first

– We look good for quite some time until the real problems start showing up

– Suddenly we find that the project which was going well is likely to be delayed

The Vicious Cycle

• Meanwhile, we start on more projects and there are more problems

– Then we do more multitasking

– So it takes more time until we solve the problems

– By then we have yet more problems

– So, we become more and more paranoid in our estimates

The Vicious Cycle

• Things become worse and worse until there is a limit put by the external world which is “Sorry, if that’s really your estimate, then there is no project”

• So we start cutting our estimates substantially

• Due to reasons mentioned earlier, we start going late and then …

• This is the vicious cycle, the negative loop

What is the Root Cause?

• When there is so much of safety that is built in our estimates and it gets wasted, it is obvious that we are not using this safety correctly

• So, what is the way?

• Just by doing that can we really deliver within time, within budget and with full scope?

• What all we need to do?

• What is the solution?

Before We Talk About the Solution…

Do not discuss the solution unless:

• People have understood the problems

• The causes and

• They are able to relate them to their situation

Before We Talk About the Solution… How do we judge a solution to be good? Dr. Goldratt said that a solution is good if: • It results in excellent benefits • It is a Win-Win-Win for all whose collaboration is

needed • The risk (multiplied by damage) is small relative

to the benefits • It is simpler than what we do now • The sequence enables people to come on board –

any cluster of actions brings immediate significant results

• It does not self-destruct

SOLUTION

Dr. Goldratt Said:

• If we want to reverse any vicious cycle, we need to do at least one thing which is exactly opposite of what we have been doing!

• The solution lies here!

• It is called Critical Chain Project Management (CCPM)

What is the basic Difference between CPM and CCPM?

• In Critical Path method, we take care of Task Dependencies

• In Critical Chain method, we take care of not only Task Dependencies but Resource Dependencies also

• Is that all? – Not Really

Solution

The solution lies in the answers to the following questions:

• Where does the constraint reside in our projects?

• How do we use the built-in safety / buffer better?

• What do we measure to know the progress of our projects?

• What cultural changes are needed to implement the solution successfully?

Components of the Solution

• Reducing Bad Multitasking

• Full-kit preparation

• Project planning

• Staggering the projects

• Execution management

Let us understand each one of them briefly…

Reducing Bad Multitasking

• Freezing projects

– When there are too many projects going around, the opportunity and temptation to multitask is very high

– Any amount of coaching / lecturing will not reducing the tendency to multitask

– The easy way to do that is to significantly reduce the opportunity to multitask

– The objective of “Freeze” is to improve the flow and throughput of projects by reducing the number of open projects

Accelerating the project completion

• If a significant number of projects are frozen, some resources are freed up

• We use these resources to accelerate the open projects

• Since we had too many projects running, we had thinly spread our resources across projects

• Now we have the opportunity to allocate optimum number of resources for the open projects

• This improves the rate of completion significantly

Full-kit preparation What is Full-Kit? • Look at an operation theatre before a surgery • You will find that all the necessary instruments,

equipments, medicines etc. are checked, calibrated, tested and kept ready

• Patient is physically and mentally prepared for the surgery

• His health reports are available and checked • All the necessary people such as surgeon,

anesthetist, nurses etc. are present before the surgery

This is full-kit for a surgery

Full-kit preparation

• For projects, Full-kit is detailed specifications, authorizations, materials, licenses, drawings, tools & equipments etc. that are needed before starting a project

• Prepare Full-Kit at:

– The start of a project

– The start of certain activities in project

– A task

Project Planning

• Preparing “Good Enough” Project Plan and Schedule

• Staggering the projects

Project planning

Any realistic Plan should: • Match the current rate of completion - A plan

must predict outcome which is at least as high as currently achieved

• Not cause overload on key resources • Be based on project structures (PERTs) that are

“good enough” • Be based on priorities given to the projects that

reflect the true management preference

What is meant by a “Good Enough” schedule?

• It must be credible to all those associated with the project

• It must be owned by project team members and management

• The schedule must be used for – Setting priorities,

– Updating status,

– Analyzing possible actions and

– Making predictions

Creating Good Enough Project Network

• Create a “Good Enough” project task network – Avoid too detailed network

– Don’t make it a task manual or even a Reminder List

– Let a task represent a group of related work

– Any task that takes less than 2% of the project’s lead time need not appear in the plan; but should be a part of a group of a related task, unless you have a very good reason for keeping it on the schedule

Creating CCPM Network

• Remove safety from tasks and pool it at strategic points

– The Longest Path i.e. Critical Chain – Project Buffer

– All other paths that meet the Critical Chain – Feeding Buffer

– Typically, 50% of the task estimate is pooled at these strategic points

Creating CCPM Network

Creating CCPM Network

• Note: We are not cutting the estimates; we are removing the safety from the individual tasks and pooling it at the strategic points

• Review the resultant CCPM plan and try to reduce the project lead time

Staggering the Projects

• It is necessary to reduce the workload by freezing the projects; necessary, but not sufficient!

• Individually, every project plan may look great; but it cannot take care of resource contention across projects

• In multi-project environments most key resources work across projects; so there are many occasions when there is a resource contention

• Not considering resource contentions across projects makes the plan unrealistic to start with and encourages, by design, Bad Multitasking

Staggering the Projects

• While scheduling a pipeline of prioritized projects, CCPM identifies the resource, which is – Commonly used across projects, – Heavily in demand, and – Its unavailability constrains the projects’ completions

• After identification of such a resource, CCPM staggers the projects considering the availability of such heavily loaded resource combined with individual critical chain project schedules

• In this way the resource conflicts between projects are minimized

Execution Management

• As execution proceeds, some tasks may take longer

– This is expected because we have trimmed the estimate by 50%

– This is normal; there is no need to get panicked

• When a task takes longer than the time allotted, the corresponding buffer gets consumed

Execution Management

• Similarly, some tasks may get finished before the time allotted – This can happen since we have minimized bad

multitasking and taken certain other steps

• When a task takes less time, the corresponding buffer gets replenished

• We keep measuring the buffers and use that information to manage the execution

• Depending upon the chain completion and buffer consumption, colors are assigned and “Fever Chart” is prepared for each project

Fever Chart for a Project

Which projects will get priority?

Fever Chart for a Group of Projects

How do you know the progress of various projects?

Execution Management

CCPM measures the buffers; it helps us to:

– Assess the magnitude of problems (e.g. how much do we care that something is a week late)

– Determine the extent to which a project is in trouble

– Protect (and set realistic expectations for) customers

• “Buffer Management” is the key for managing Execution successfully

CCPM CULTURE

CCPM Culture for Top Management

• Encourage focusing and discourage Bad Multitasking

• Commit due dates based on the staggering mechanism

• Measure the project progress only on the basis of Chain Completion and Buffer Penetration

• Offer help; do not ask why there was a delay and who is responsible for it

CCPM Culture for Managers

• Embrace uncertainty as a fact of life • Make realistic estimates – Be paranoid; but not

hysterical • Flow is the number one consideration • Eliminate behaviors that waste Safety • Drive a “project buffer recovery" process for cross

departmental actions and exceptions not handled by task management when a project is in red zone

• Offer help; do not ask why there was a delay and who is responsible for it

• Seek help when you need it

CCPM Culture for Task Managers

• Flow is the number one consideration; ensure that the tasks are not stuck

• Avoid Bad Multitasking

• Assign maximum effective number of resources per task

• Only follow priorities as represented by the buffer colors

• Make preparations in advance for incoming tasks

CCPM Culture for Resources

• Follow Relay Runner Ethic

Features of CCPM • New way for Project Management • Helps to define where to focus • Takes care of both Task as well as

Resource Dependencies • Embraces Uncertainty as a part of life • Exploit variation for project advantage • Simple and meaningful Measurements • Project Prediction made easy

Pitfalls addressed • Student’s Syndrome • Bad Multi-Tasking • Parkinson’s Law • Murphy’s Law • Loss of Safety due to dependencies • Panic due to frequent changes • Team Morale Issues

CCPM provides • Thumb rules for Project Planning • Resolution for priority issues • Challenging environment for the team • Information as decisions • New ethics and code of conduct for the

PMs, RMs and TMs • Provides visibility to individuals as to

how they influence project’s success

CCPM does not • Ask for ideal scenarios, perfect data • Create Information Overload or

Information Vacuum or Out-of-date reports

• Create Analysis Paralysis or a huge bureaucracy overhead

• Need a Rocket Science

Critical Chain Project Management

(CCPM)

Benefits of CCPM • Improved Project Management Success • Reduced Time to Market • Simplified Project Management • In-process Controls • Creates environment for Teamwork and

high Productivity • Increased Team Satisfaction • Competitive Edge

Backup Slides

Some Quotes

• I love deadlines. I like the whooshing sound they make as they fly by

• Project Management: “The art of declaring man hours with a straight face when you know perfectly well they're 100% fiction”

• Any project can be estimated accurately (once it's completed)

• For a project manager overruns are as certain as death and taxes

Projects are Balancing Acts

Dependent

Events Statistical

Variation

Human

Behavior

Quality and

Scope

Timing and

Schedule

Budgeted

Costs

Understanding Variability in Estimates

What is 8 times 8?

8? Or 8±1? What is 8?

64? Are you sure?

So, what is

8±1 times 8±1?

Somewhere between

49 and 81!

So, what if it is 8±2 times 8±2? ...

An estimate is not a single number

It’s a range of possibilities - a statistical entity

An estimate is an estimate –

Not a sacrosanct number

Not a commitment

Example

• Tomorrow morning at 9.00 a.m. you need to attend a meeting in an office 15 KM away from your home

• At what time will you start from your home? • What is the best time that you have ever taken? • Suppose you are told that you will be meeting

your boss and he will give you promotion letter! And if you are late, he will not give you promotion!!

• At what time will you start from home? (Some people said, they will go there tonight and stay in the office!!!)

Probability Curve

Probability Curve

• Almost certainly projects contain substantial variability

• Most people are unaware of this, and can’t tell you “How much variability is considered while estimating?”

• Even if they could, they’d be too suspicious of your motives to tell you

Where are you going to put

this line?

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Multi-tasking

When someone is working on four tasks, he is spending 10% of his productive time on each task.

That adds up to 40% of his time. Where does the other 60% go?

That missing 60% goes to ...

That missing 60% goes to:

• Breaking concentration on the task A • Picking up task B • Organizing materials related to task B • Remembering where you were last time you

worked on task B • Establishing concentration on task B • Overcoming emotional inertia • Recreating the train of thought that got you to

the current point on task B.... and so forth and so on

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Learn More…

• Read Theory of Constraints (TOC) Application for Projects: Learn CCPM in Detail

• Theory of Constraints – Do It Yourself Kit for Small & Medium size Enterprises for Projects: Learn how to implement CCPM

• Theory of Constraints (TOC) Basic Concepts and Decision Making: Learn more about TOC

• Visit https://leanpub.com/u/rajeevathavale

• For Training and consulting contact:

rajeev_athavale@yahoo.com