Critical Chain Project Scheduling

Chapter 11

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1. Understand the difference between common cause and special cause variation in organizations.

2. Recognize the three ways in which project teams inflate the amount of safety for all project tasks.

3. Understand the four ways in which additional project task safety can be wasted.

4. Distinguish between critical path and critical chain project scheduling techniques.

5. Understand how critical chain resolves project resource conflicts.

6. Apply critical chain project management to project portfolios.

Learning Goals

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Theory of Constraints (TOC) & Critical Chain Project SchedulingA constraint limits system output.

The Goal – Goldratt

Critical chain method is a network analysis technique that modifies the project schedule to account for limited resources.

TOC Methodology1. Identify the system constraint. 2. Exploit the system constraint (schedule first).3. Subordinate everything else to the system constraint

(schedule second).4. Elevate the system constraint (remove constraint\add

resources).5. New constraint uncovered? Repeat the process.

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Variation

Common CauseInherent in the system

Special CauseDue to a special circumstance

Managers should• Understand the difference between the two• Do not adjust the process if variation is common cause• Do not include special cause variation in risk estimation

• Causes over estimation of project contingencies• Risk management should be performed on discrete

project risks

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Distribution Based On Common Cause Variation

Funnel experiment

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Distribution Based On Misinterpretation of Variation

Funnel experiment

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CCPM and the Causes of Project DelayHow safety is added to project activities1. Individual activities are overestimated2. Project manager’s added safety margin3. Anticipating expected cuts from

management

time

25%

50%

80%90%

Lognormal (Gaussion Distribution)

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Methods of Wasting Extra Safety Margin1. The “Student Syndrome”

a. Immediate deadlinesb. Padded estimatesc. High demand

2. Failure to pass along positive variationa. Other tasksb. Overestimation penaltyc. Perfectionism

3. Multitasking4. Path Merging

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People tend to put off task with long deadlines in favor of working on immediate deadlines

Demotivated due to knowledge of padded estimated time

Resources in high demandjuggle multiple activitieswhich promote “puttingoff” task

Student Syndrome Model

Parkinson’s Law states – Work expands so as to fill the time available for its completion.

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Finishing early gives the chance to put work on hold to act on other projects or assignments

Fear that future work time estimations may be penalized if task are finished early

Can be seen as time to refine the initial work

Failure to Pass Along Positive Variation (extra time)

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Let’s say each task is 10 days worth of work

Effects of Multitasking On Activity Durations

30 days until all three are done, each task done in 10 days

30 days until all three are done, each task done in 20 days*

*This assumes zero startup time between task changes

Even though Path C is done 15 days early, the successor activity will start 15 days late due to the merge of work

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The Effect of Merging Multiple Activity Paths

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Critical Chain Solutions

Central Limit Theorem

since CLT Example

Activity durations estimated at 50% level

Buffer reapplied at project level◦Goldratt rule of thumb (50%)◦Newbold formula

Feeder buffers for non-critical paths

n

n

Buffers are non-work scheduled activities to maintain focus on the planned activity durations

States that any distribution of sample means from a large population approaches the normal distribution as n increases to infinity.

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Reduction on Project Duration After Aggregation

Original planned time based on a high probability of on-time completion

Shrink planned time to the 50% likelihood level – buffer is transferred to the project level

Shrink buffer acquired by 50% and reapply potential slack.

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Example – Original Project Schedule Using Early Start

A (10) B (50)

C (20) D (10)

E (30)

Slack

90 Days

A (10) B (50)

C (20) D (10)

E (30)

A (10)A (10) B (50)B (50)

C (20)C (20) D (10)D (10)

E (30)E (30)

Slack

90 Days

Critical activities

Non-critical activities

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Example – Reduced Schedule Using Late Start with 50% reduction

45 Days

A (5) B (25)

E (15)

D (5)C (10)

45 Days

A (5)A (5) B (25)B (25)

E (15)E (15)

D (5)D (5)C (10)C (10)

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Example– Critical Chain Schedule with Buffers Added at 50%

67.5 Days

A (5) B (25)

E (15)

D (5)C (10)FeederBuffer (7.5)

Project Buffer (22.5)

67.5 Days

A (5)A (5) B (25)B (25)

E (15)E (15)

D (5)D (5)C (10)C (10)FeederBuffer (7.5)FeederBuffer (7.5)

Project Buffer (22.5)Project Buffer (22.5)

.50 x (5+25+15) = 22.5 days

.50 x (10+5) = 7.5 days

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Critical Path Network with Resource Conflicts

FeederBuffer

FeederBufferBob

Bob

Bob

Critical Path

FeederBufferFeederBuffer

FeederBufferFeederBufferBob

Bob

Bob

Critical Path

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The Critical Chain Solution

Bob FeederBuffer

ProjectBuffer

FeederBuffer Bob

FeederBuffer Bob

The Critical Chain is shown as a dotted line

Bob FeederBuffer

ProjectBuffer

FeederBuffer Bob

FeederBuffer Bob

BobBob FeederBufferFeederBuffer

ProjectBufferProjectBuffer

FeederBuffer BobFeederBufferFeederBuffer BobBob

FeederBuffer BobFeederBufferFeederBuffer BobBob

The Critical Chain is shown as a dotted line

Buffers protect constraints and

prevent delays 1st -Bob’s task on the CP – redraw critical chain network

2nd -Bob’s task are prioritized and worked in order

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Needed CCPM Culture Changes Due dates & milestones are eliminated

The only firm commitment is at the project level

Realistic likelihood estimates – 50% level not 90%

Create a “No blame” culture for missing a date

Subcontractor deliveries & work scheduled ES

Non-critical activities are scheduled LS

Factor the effects of resource contention if necessary

Critical chain usually not the critical path

Solve resource conflicts with minimal disruption

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Drum – system-wide constraint that sets the beat for the firm’s throughput.

Drum – person, department, policy, resource

Capacity constraint buffer (CCB) – safety margin separating projects scheduled to use the same resource

Drum buffer – extra safety margin immediately before the constraint resource

Critical Chain Project Portfolios

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Applying CCPM to Project Portfolios1. Identify the resource constraint or drum2. Exploit the drum

a. Prepare a critical chain schedule for each projectb. Determine priority for the drumc. Create the drum schedule

3. Subordinate the project schedulesa. Schedule projects based on drum scheduleb. Designate critical chain c. Insert capacity constraint buffersd. Resolve any conflictse. Insert drum buffers so the constraint is not starved for work

4. Elevate the capacity of the drum5. Go back to step 2

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CCPM– Three Projects Stacked To Use A Drum Resource

Time

Resource Supply

A A A

B B B

C C

Time

Resource Supply

Priority: 1. Project A2. Project B3. Project C

A A A

B B B

C C

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Enough resources for two projects at once Start with A and B, schedule C when time is

available

Applying Critical Chain Buffers’s To Drum Schedules

Time

Resource Supply

A & B startimmediately

A A A

B B BC

C

Project Cstart date

CCB

Time

Resource Supply

Resource Supply

A & B startimmediately

AA AA AA

BB BB BBCC

CC

Project Cstart date

CCB

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Subordinating Project Schedules

Schedule projects based on drum

Designate critical chain

Insert capacity constraint buffers

Resolve any conflicts

Insert drum buffers so the constraint is not starved

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1. For questions 1 and 2, refer to the BAE Systems case earlier in the chapter. What are the practical implications internally (in terms of team motivation) and externally (for the customer) of making overly optimistic project delivery promises?

2. In considering how to make a big change in organizational operations (as in the case of switching to CCPM), why is it necessary to go through such a comprehensive set of steps; that is, why does a shift in project scheduling require so many other linked changes to occur?

3. Explain the difference between “common cause” variation and “special cause” variation. Why are these concepts critical to understanding successful efforts to improve the quality and reliability of an organizational system?

4. What are the three reasons Goldratt argues are used to justify adding excessive amount of safety to our project duration estimates? In your project experiences, are these arguments justified?

5. What are the reasons we routinely waste the excessive safety we acquire for our project activities? Are some of these reasons more prevalent in your own experiences than others?

Discussion Questions

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6. How does aggregation of project safety allow the project team to reduce overall safety to a value that is less than the sum of individual task safeties? How does the insurance industry employ this same phenomenon?

7. Distinguish between “project buffers” and “feeder buffers.” What are each of these buffer types used to do?

8. It has been said that a key difference between CCPM safety and ordinary PERT chart activity slack is that activity slack is determined after the network has been created, whereas critical chain path safety is determined in advance. Explain the distinction between these ideas: How does the project team “find” slack in a PERT chart vs. how is activity buffer used in critical chain project management?

9. What are the steps that CCPM employs to resolve conflicts on a project? How does the concept of activity late starts aid this approach?

10. What are the key steps necessary to employ CCPM as a method for controlling a firm’s portfolio of projects?

11. What is a “drum resource?” Why is the concept important to understand in order to better control resource requirements for project portfolios?

Discussion Questions