1. Conference 2012 PMI Kerala June 09, 2012 Critical Chain Approach to Project Success Dr. Saji Gopinath IIM Kozhikode PMI- Project Management Conference 2012

2. Conference 2012 PMI Kerala June 09, 2012 Motivation Theme of This conferenceTheme of This conference –Project Management- a Life skill What is common in all our projects?What is common in all our projects? –Time overrun –Cost overruns? Why?Why? More importantlyMore importantly –Why such overruns happen rarely in our “personal” projects –A new way of looking at projects?

3. Conference 2012 PMI Kerala June 09, 2012 PMI Study

4. Conference 2012 PMI Kerala June 09, 2012 What do we want from Project Management ? Reliable on time in full to budget delivery performanceReliable on time in full to budget delivery performance More revenue, more Profit, happy customers A stable planA stable plan More Productive use of resources Simple, objective measures of Project progress ; project health statusSimple, objective measures of Project progress ; project health status Shorter meetings, better informed stakeholders - less waste, more productivity Clear signals for when corrective action is - and is not - necessaryClear signals for when corrective action is - and is not - necessary Better directed recovery efforts - less waste, more productivity Direction for ongoing improvement effortsDirection for ongoing improvement efforts The future brings more revenue, more profit, happier customers than the present

5. Conference 2012 PMI Kerala June 09, 2012 And what we normally get!! Reliable on time in full to budget delivery performance ? A continuous struggle with time, cost and scope ? A stable plan Repeated rescheduling ? Simple, objective measures of Project progress ? Clarity at the start and end, thick fog in between ? Measures of Project health status ? Subjective assessments compounded by human factors ? Clear signals for when corrective action is - and is not - necessary ? Intervening too much too early, and too little too late ? Direction for ongoing improvement efforts ? "We'll improve our methods when things get better"

6. Conference 2012 PMI Kerala June 09, 2012 Do our projects fail because of “bad panning”?Do our projects fail because of “bad panning”? –(is planning the most important PM Skill?) Is the delays happen due to “A” Class items/ ActivitiesIs the delays happen due to “A” Class items/ Activities Why do our project finish when it is on “Mission Mode”?Why do our project finish when it is on “Mission Mode”? Revisiting the beleifs….

7. Conference 2012 PMI Kerala June 09, 2012 Classical Project ManagementClassical Project Management –Performance & Increasing Complexity –Re-look at the fundamental assumptions Technical and Behavioral Dimensions of Project ManagementTechnical and Behavioral Dimensions of Project Management –Why our projects are delaying? Re-thinking the way we manage our projectsRe-thinking the way we manage our projects

8. Conference 2012 PMI Kerala June 09, 2012 Why do our Projects delay? The time estimates are too tightThe time estimates are too tight The changes in environment is too drasticThe changes in environment is too drastic The interfacing agencies are inefficientThe interfacing agencies are inefficient It is impossible to predict the time of completion of a ‘work package’ (activity)It is impossible to predict the time of completion of a ‘work package’ (activity) OthersOthers

9. Conference 2012 PMI Kerala June 09, 2012 How do we estimate project duration? Past DataPast Data Top Down or Bottom up approachTop Down or Bottom up approach Cushions for uncertaintyCushions for uncertainty Activity precedence (network technique)Activity precedence (network technique) How much is the cushion you provide??How much is the cushion you provide??

10. Conference 2012 PMI Kerala June 09, 2012 Performance parameters TimeTime CostCost Any thing else is important?Any thing else is important? –Variability Time?Time? Resource availability?Resource availability? Resource dependence?Resource dependence?

11. Conference 2012 PMI Kerala June 09, 2012 Project Duration What is the effect?What is the effect? Theory Actual The effect is that the typical cushions you provide on each activity is around 50-100% 3 5 7 4 5 20 6 12

12. Conference 2012 PMI Kerala June 09, 2012 Conventional Project Management Task Time Estimating Take best guess at how long a task will takeTake best guess at how long a task will take Consider the effect of unknowns or unplanned interruptionsConsider the effect of unknowns or unplanned interruptions Add sufficient safety to be able to deliver with 90% probabilityAdd sufficient safety to be able to deliver with 90% probability

13. Conference 2012 PMI Kerala June 09, 2012 0.2 0.6 0.8 0.4 1.0 0 Time 25% 50% 90% T 50 T 90

14. Conference 2012 PMI Kerala June 09, 2012 Problems with the conventional project management techniques Three mechanisms that inflate time estimatesThree mechanisms that inflate time estimates –The worst-case scenario –Add safety time to ensure project is on time –By inflating original time to protect against a global cut Median = 2 daysEstimated = 5 days Safety time = 3 days Confidence level 80-90% 0.4 0.3 0.2 0.1 1 2 3 4 5 6 7 Probability of Completing project within x number of days Number of days to Complete project To keep project on schedule - variability encourages people to pad individual activity times with safety time. 50%

15. Conference 2012 PMI Kerala June 09, 2012 Buffers on Each Activity Why after all these cushions project get delayed?

16. Conference 2012 PMI Kerala June 09, 2012 Three Ways to Waste Safety timeThree Ways to Waste Safety time –passing on of previous delays Dependencies between activities cause delays to accumulate –student syndrome Wait until the last minute to start a task –multi-tasking Multitasking caused by limited resources ( resource contention ) How the Safety Gets WastedHow the Safety Gets Wasted –Adding safety time to resolve the resource contention problem does not help –we add safety everywhere and then we waste it! Conventional SAFETY TIME inflates project completion time But.. Adding safety time to protecting project objectives seldom works…..

17. Conference 2012 PMI Kerala June 09, 2012 Due Date Start Date Finish Date Due Date Effect of Fluctuation

18. Conference 2012 PMI Kerala June 09, 2012 Behavioral Dimension of Project Environment Additive RuleAdditive Rule –Commitments of duration and total cost of a project are based upon adding up the duration and cost of individual tasks Parkinson’s LawParkinson’s Law –Work expands to fill its time 3-Minute EGG Rule3-Minute EGG Rule –It’s not quality if it is finished before time is up Hockey Stick Syndrome (student syndrome)Hockey Stick Syndrome (student syndrome) –Waiting to start a task due to more important work at hand

19. Conference 2012 PMI Kerala June 09, 2012 The Conflict ManageProjectsSuccessfully AvoidParkisnon’sLaw MinimiseProjectLeadtime ScheduleWithoutsafety Meet Project Promise ProvideForMurphy ScheduleWithSAFETY Conflict

20. Conference 2012 PMI Kerala June 09, 2012 Way Out? Plan A - invest our energy in reducing the extent of the variability: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 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 (< 6 months), breaking larger undertakings into several short Projects Doing this can help, but doesn't solve the problem

21. Conference 2012 PMI Kerala June 09, 2012 Plan B - Coping behaviours Project Managers fight to be assigned the most viable ProjectsProject Managers fight to be assigned the most viable Projects Project Managers fight for the best staffProject Managers fight for the best staff Project Managers fight to keep the Project scope downProject Managers fight to keep the Project scope down Project Managers exploit changes in scope to unduly extend timelines and budgetsProject Managers exploit changes in scope to unduly extend timelines and budgets Project Managers quit long Projects well before the delivery date Project Managers quit long Projects well before the delivery date Project Managers disregard targets they know to be impossibleProject Managers disregard targets they know to be impossible Staff work double shifts in the final weeks / monthsStaff work double shifts in the final weeks / months Dumping the blame elsewhereDumping the blame elsewhere Doing these may help the individual, but not the organisation

22. Conference 2012 PMI Kerala June 09, 2012 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

23. Conference 2012 PMI Kerala June 09, 2012 What is the way out?

24. Conference 2012 PMI Kerala June 09, 2012 Critical Chain Project Management Adaptation of Principles of Theory of constraintsAdaptation of Principles of Theory of constraints Applying TOC concepts to project managementApplying TOC concepts to project management –Critical Chain is a project management application of the Theory of Constraints (TOC) –According to TOC, the main constraint in any project is the time taken for completion of the Critical Chain Critical Chain Project ManagementCritical Chain Project Management –Conventional approach focuses on successful on- time completion of each individual activity in a project –TOC approach focuses on successful on-time completion of the entire project

25. Conference 2012 PMI Kerala June 09, 2012 Critical Chain Project Management Critical Chain Project Management The TOC philosophy applied to project management attempts to remove the undesirable effects (late, over-budget, and under-performance projects) by attacking individual measurements and uncertainty.The TOC philosophy applied to project management attempts to remove the undesirable effects (late, over-budget, and under-performance projects) by attacking individual measurements and uncertainty. What is TOC Philosophy?What is TOC Philosophy?

26. Conference 2012 PMI Kerala June 09, 2012 Theory of Constraints A system improvement philosophy (as opposed to a process improvement philosophy)A system improvement philosophy (as opposed to a process improvement philosophy) Organizations live or die as systems, not as processesOrganizations live or die as systems, not as processes Success or failure is a function of how well different component processes interact with one anotherSuccess or failure is a function of how well different component processes interact with one another

27. Conference 2012 PMI Kerala June 09, 2012 Theory of Constraints Systems are analogous to chains, or networks of chainsSystems are analogous to chains, or networks of chains Like a chain, a system ’ s performance is limited by the performance of its weakest linkLike a chain, a system ’ s performance is limited by the performance of its weakest link The weakest link is the system ’ s constraintThe weakest link is the system ’ s constraint

28. Conference 2012 PMI Kerala June 09, 2012 Theory of Constraints Another basic principle of TOCAnother basic principle of TOC –A large number of undesirable effects will be caused by a relatively small number of core drivers –Eliminating a very few core problems can result in a huge improvement

29. Conference 2012 PMI Kerala June 09, 2012 TOC and Projects –How does all this relate to projects? Repeating a basic principles of TOCRepeating a basic principles of TOC –A large number of undesirable effects will be caused by a relatively small number of core drivers –Eliminating a very few core problems can result in a huge improvement

30. Conference 2012 PMI Kerala June 09, 2012 How we handle variability in Critical Chain We do not build in any contingency at the Task levelWe do not build in any contingency at the Task level We move all the contingency to the Project level - call this the Completion BufferWe move all the contingency to the Project level - 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 How does all this relate to projects?

31. Conference 2012 PMI Kerala June 09, 2012 What difference does this make to our probability of being late ? Under 'normal' practice, if any task is later than its contingency allowance, 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

32. Conference 2012 PMI Kerala June 09, 2012 Critical Chain Project Management Uncertainty always present – it doesn ’ t go awayUncertainty always present – it doesn ’ t go away Take the safety out of each of the critical path tasks and lump them into a safety net at the end of the projectTake the safety out of each of the critical path tasks and lump them into a safety net at the end of the project Identify constraints along the path and set up buffers in front of tasks that can suffer from the constraint (constraints = time and resources)Identify constraints along the path and set up buffers in front of tasks that can suffer from the constraint (constraints = time and resources) Allow tasks to start when predecessors are completed and resources are availableAllow tasks to start when predecessors are completed and resources are available

33. Conference 2012 PMI Kerala June 09, 2012 Revisiting activities

34. Conference 2012 PMI Kerala June 09, 2012 Power of Aggregation

35. Conference 2012 PMI Kerala June 09, 2012 Remove safety time from individual activities Job 4 Job 2 Job 3 Job 1 Conventional Project Schedule Task buffers(safety time) are hidden within individual activities Critical Chain Schedule Buffers are pooled, and made explicit Project Buffer, Safety buffersSafety buffers Pooled buffersPooled buffers Project buffer is safety time added to the end of the critical chain to protect the completion date of the project.

36. Conference 2012 PMI Kerala June 09, 2012 Feeding buffer on the non-critical pathFeeding buffer on the non-critical path Feeding Buffer Project Buffer If Slack remains, then schedule as late as possible Critical Chain Feeding path Feeding buffers are designed to protect the critical chain from delays on non-critical paths

37. Conference 2012 PMI Kerala June 09, 2012 Resource buffersResource buffers –a wakeup call to alert resources to be ready to work on critical tasks –Scheduled idle time can provide better info about resource’s availability (capacity) Resource Buffers Critical Chain Project Buffer Feeding Buffer Alert Wkr A Alert Wkr B Alert Wkr C

38. Conference 2012 PMI Kerala June 09, 2012 Critical Chain Project Management Critical Chain - set of tasks which determines overall project duration, taking into account both precedence and resource dependencies; improvement along Critical Chain will likely result in improvements to the project as a whole; improvements elsewhere will notCritical Chain - set of tasks which determines overall project duration, taking into account both precedence and resource dependencies; improvement along Critical Chain will likely result in improvements to the project as a whole; improvements elsewhere will not Project buffer - protects project commitment dates from fluctuations on the Critical ChainProject buffer - protects project commitment dates from fluctuations on the Critical Chain Feeding buffer - protects Critical Chain from fluctuations on feeding tasks; provides the possibility for Critical Chain tasks to start earlyFeeding buffer - protects Critical Chain from fluctuations on feeding tasks; provides the possibility for Critical Chain tasks to start early Resource buffer - protects the Critical Chain from lack of availability of required resources; also provides the possibility for Critical Chain tasks to start earlyResource buffer - protects the Critical Chain from lack of availability of required resources; also provides the possibility for Critical Chain tasks to start early

39. Conference 2012 PMI Kerala June 09, 2012 Critical Chain Project Management 234 1234 Project Buffer Task 1 Original Critical Path Original Critical Path with Buffer (Safety removed from individual tasks)

40. Conference 2012 PMI Kerala June 09, 2012

42. Critical Chain Project Management About BuffersAbout Buffers –Identify the points at which to place project, feeding, and resource buffers –Buffer sizes determined approximately, based either on average task duration estimates, or a combination of average and worst-case duration estimates –Individual buffer sizes can be adjusted based on intuitive assessment of risk –Buffer insertion may cause the Critical Chain, and hence the project completion date, to be pushed later

43. Conference 2012 PMI Kerala June 09, 2012 Critical Chain Project Management The Critical Chain approach to scheduling helps minimize project duration and WIP, delay investment as far as possible, and maximize the chance of on-time completionThe Critical Chain approach to scheduling helps minimize project duration and WIP, delay investment as far as possible, and maximize the chance of on-time completion

44. Conference 2012 PMI Kerala June 09, 2012 Last word The development of new project management techniques have not reduced uncertaintyThe development of new project management techniques have not reduced uncertainty Hence we need ways to manage and not avoid uncertaintyHence we need ways to manage and not avoid uncertainty Critical Chain Management is a way to achieve thisCritical Chain Management is a way to achieve this

45. Conference 2012 PMI Kerala June 09, 2012 –Thank You saji@iimk.ac.in / saji.gopinath@yahoo.in 9400050850