Project Management Workshop By Jonathan W. Powell, CGFM, PMP

Agenda 'Cost world' perspective 'Throughput world' perspective Three mechanisms to add 'safety' to projects Three mechanisms that waste project 'safety' Critical chain analysis to ensure project success

The Problem High Tech Industry Product Life Cycle High Tech

The Problem (Cont.) Development time of 2 years New generation of modems every 6 months Not ‘are we going to miss’ but ‘when?’ Huge ramifications –Miss completely –Launch inferior product –Launch good product late Market Share Stock Price

The Problem (Cont.) Genemodem decides to form a think tank –Three managers (Finance, Engineering, Marketing) –No budget restrictions Mission – “Find a way to drastically cut development time”

Solving the Problem

Answer #1 – Cost World Perspective Cost World Perspective = Driving local efficiencies What this fails to account for is the linkage between dependent steps Using the analogy of a chain - It Depends! Which One is the Weakest Link?

Answer #2 – Throughput World Perspective Throughput World Perspective = Driving production [output] Managing by both the Cost World and Throughput World causes irreconcilable conflict Bottleneck

Theory of Constraints Analysis Four Step Process 1. Identify the System’s Constraint Find the weakest link! –Could be physical or it could be something like an erroneous policy 2. Strengthen the Weakest Link Adding more capacity –Hire more people or buy more machines Squeeze the maximum from the capacity we already have

Theory of Constraints Analysis (cont.) Four Step Process (cont.) 3. Subordinate Everything to the System’s Constraint If the bottleneck can only do 3 units/hour, don’t demand 5 units/hour! If 3 units/hour is unacceptable then revisit Step 2 4. Elevate the System’s Constraint Strengthening the weakest link to the point where it is no longer the weakest link Repeat the four steps based on the new weakest link New Bottleneck

Project Management Application –Step 1 – Identify the Constraint The constraint for a particular project is its critical path – Delays to the critical path delay the project as a whole –Step 2 – Strengthen the Constraint The question – We want to strengthen the constraint – the critical path – How do we do this?

The Concept of ‘Safety’ Safety = The difference between the median of the probability distribution and the actual estimate Typical for people to provide estimates that give them over an 80% chance of success However, probabilities of 80% or more yield safeties of 200% or better Three (3) common ways safety is added to a project

Three Common Ways to Add ‘Safety’ Time estimates are based on pessimistic experience Larger number of management levels involved = higher total estimation, because each level adds its own safety factor Estimators also protect their estimates from a global cut

Three Common Ways to Waste ‘Safety’ Students’ Syndrome – first fight for safety time, then wait until the last minute anyway Multitasking ABC 10 ABCABC 20

Three Common Ways to Waste ‘Safety’ (cont.) Reluctance to report an Early Finish

Project Management Application (Cont.) Step 2 – Strengthen the Constraint Example Project, Four Steps of Varying Length (all on the critical path) Step #1Step #3Step #4Step #2Step #1Step #3Step #4Step #2 Project Buffer

Project Management Application (Cont.) Step 3 – Subordinate Everything to the Constraint –Develop feeding buffers for tasks that feed into the critical path –Provide resource buffers – eliminate negative impact of multitasking

Pulling Together the Pieces

Project Management Application (Cont.) Step 4 – Elevate the System’s Constraint –During the natural progression of a project, the critical path may change one or more times A critical path change means that your constraint has changed Determine the new constraint and re-perform four-step analysis –Also, organizations may be performing many projects The same resource may be needed to perform critical path tasks on different projects The dependencies between the critical path tasks of the various projects is called the Critical Chain

Conclusion 'Cost world' perspective 'Throughput world' perspective Three mechanisms to add 'safety' to projects Three mechanisms that waste project 'safety' Critical chain analysis to ensure project success

Credits and Contact Info Jonathan Powell, CGFM, PMP