2. 1 Finishing Projects Fast James R. Burns Professor of Operations Management and Information Technology Texas Tech University

3. Presentation by James R. Burns2 Outline--Sources Generalities Goldratt concepts Mascitelli concepts McCONNELL concepts Kerzner concepts Maturity concepts Other sources

4. Presentation by James R. Burns3 Goal: Make some suggestions as to how projects can be completed fast and frugally

5. Presentation by James R. Burns4 Why Projects???? A way to discretize and plan work that Enables comparisons among projects Enables the work to be: formally defined formally planned formally budgeted formally executed formally controlled Formally finished

6. Presentation by James R. Burns5 Most firms Recognize project management to be a core competence today Have established project management centers of excellence for training and development of project managers and project management careers Encourage their employees to propose project initiatives with simple one-page statements of work

7. 9–6 Rationale for Reducing Project Duration Time Is Money: Cost-Time Tradeoffs Reducing the time of a critical activity usually incurs additional direct costs. Cost-time solutions focus on reducing (crashing) activities on the critical path to shorten overall duration of the project. Reasons for imposed project duration dates: Time-to-market pressures Unforeseen delays Incentive contracts (bonuses for early completion) Imposed deadlines and contract commitments Overhead and public goodwill costs Pressure to move resources to other projects

8. 9–7 Options for Accelerating Project Completion Resources Not Constrained Adding resources Outsourcing project work Scheduling overtime Establishing a core project team Do it twice—fast and then correctly Resources Constrained Fast-tracking Critical-chain Reducing project scope Compromise quality

9. Presentation by James R. Burns8 The Stages in the Project Management Lifecycle Conceptualization & Definition Planning & Budgeting Termination & Closure Executing & Controlling The product the project is to produce is defined here

10. Presentation by James R. Burns9 Notes on shortening project durations (Most of this must be done in the Planning and Budgeting stage) Crashing Reducing the duration of tasks on the critical path by adding resources Fast-tracking Starting tasks sooner Checking for parallelism opportunities in the schedule Pull as much work off of the critical path as you can Be aware of critical chain issues

11. Presentation by James R. Burns10 More Tips on shortening project durations REUSE, REUSE, REUSE Do it right the first time Eliminate non-value-added work activities Make projects lean Avoid changes to requirements But what if the requirements are unstable??

12. Presentation by James R. Burns11 Knowledge Reuse… Requirements Reuse Classification of projects Mapped/Programmed Projects-- Everything is driven by and proceeds from the requirements Project Plan Functional Specification Design Document Code Tests and Test Documentation ALL OF WHICH CAN BE REUSED

13. Presentation by James R. Burns12 The Quality View on FAST projects: The further down the lifecycle the defects are found, the more expensive and time consuming they are to fix.

14. Presentation by James R. Burns13 The problem of Complexity In the early days of simpler code, it used to take a day or less to fix a bug Now, with greatly increased code complexity, it takes weeks sometimes.

15. Presentation by James R. Burns14 Avoid changes to requirements If possible freeze requirements during execution and control stage Changing requirements greatly increases total time and cost

16. Presentation by James R. Burns15 Lean Project Management Customer-perceived value should drive everything What is the value proposition?? If we were to advertise in the WSJ that we have twice as many walkthroughs as our closest competition, would that garner any additional customers for us? Remove what does not add value

17. Presentation by James R. Burns16 Principles of Lean Concepts Applied to Projects 1. Precisely specify the value of the project 2. Identify the value stream for each project 3. Allow value to flow without interruptions 4. Let the customer pull value from the project team 5. Continuously pursue perfection

18. Presentation by James R. Burns17 Which of the following adds value? Conducting a weekly team coordination Hunting for needed information Presenting Project status to upper management Creating formal project documents Gaining multiple approvals for a project document Waiting in queues for available resources

19. Presentation by James R. Burns18 Time Batching--Another Time Waster Analysis paralysis Approval cycles Formal document release Regularly scheduled meetings Planning cycles Work queues

20. Presentation by James R. Burns19 More techniques for shortening projects Scrub the requirements during or prior to the planning and budgeting stage Remove from the requirements those items that add little or no value Remember the Pareto principle—80% of the value comes from 20% of the functionality REMOVE SAFETY—GOLDRATT Resist multitasking and student syndrome

21. Presentation by James R. Burns20 Safety Extra time placed in an estimated task time Remove safety and put it in a time buffer at the end of the project Safety, when its buried in the tasks of the project, is a bad thing because of…. Multitasking, also a bad thing Student syndrome Task dependencies Can’t be passed along or accumulated

22. Presentation by James R. Burns21 Everybody overestimates the time required to do their task According to Goldratt (This is called SAFETY, as we said) Does anybody want to talk about how much safety they put into their estimates? Is this true in software development? It is if you have an expert doing the estimating, who really knows how long it will take him

23. Presentation by James R. Burns22 What happens after that--a possible scenario The team leader adds safety time to the task to cover his responsibilities The project leader adds more safety time The project manager may add still more safety time

24. Presentation by James R. Burns23 Implication>>> Most of the time we have built into our projects is …..

25. Presentation by James R. Burns24 The project manager must stay focused Or the project will not be finished on time, within budget This means applying the Pareto principle 80% of the benefit comes from 20% of the activities By the time progress reports indicate something is wrong, its usually too late Progress reports tell you that 90% of the project is finished in 90% of the required time. However, another equal period of time is required to complete the remaining “10%,” in many cases

26. Presentation by James R. Burns25 It is hard to stay focused when: There are too many project paths on- going, in parallel There are many critical or near critical paths There are many projects being managed concurrently

27. Presentation by James R. Burns26 Measurements are a major problem with projects Measurements should induce the parts to do what is good for the system as a whole Measurements should direct managers to the point that needs their attention So often it occurs that we measure the wrong thing. The wrong measure leads to wrong behavior Tell me how you measure me and I will show you how I behave

28. Presentation by James R. Burns27 More Measurements

29. Presentation by James R. Burns28 Projects are like chains Each task in sequence is a link in a chain Each link has two things weight, to which cost is analogous strength, to which throughput is analogous

30. Presentation by James R. Burns29 Cost vs Throughput Goldratt maintains that management in the cost world is a mirage efficiency becomes paramount local improvements are necessary to get global ones Goldratt suggests the managers should manage in the throughput world, a totally different paradigm must find the constraint--the weakest link concentrate on that By the way, what is the ultimate constraint???

31. Presentation by James R. Burns30 Remember the five steps of TOC IDENTIFY the project constraint--the critical path Decide how to EXPLOIT that constraint SUBORDINATE everything to that decision ELEVATE the systems’ constraint Go back to step 1, and find another constraint

32. Presentation by James R. Burns31 Safety Safety is however much time is added on to a task beyond its mean time of completion

33. Presentation by James R. Burns32 Probabilistic task durations Late durations tend to accumulate and may increase the length of the project Early durations do not show up This explains why safety disappears

34. Presentation by James R. Burns33 More Measurements

35. Presentation by James R. Burns34 Other problems with safety Is wasted by the “student syndrome” Basically, this is procrastination Is wasted by multitasking (a person who works on several tasks at the same time) With each change of task, a set up is required Is wasted by dependencies between steps These dependencies cause delays to accumulate, but advances are wasted Delays get passed on; advances don’t

36. Presentation by James R. Burns35 Problems other than safety Early start vs. late start Existing measurements are worthless because they are based on a cost world mentality, according to Goldratt Existing measurements (Earned Value Analysis) do not take into consideration the critical path We’re talking about BCWP, BCWS, ACWP, CV, SV, CPI, SPI, BAC, EAC, etc.

37. Presentation by James R. Burns36 Early Start vs. Late Start

38. Presentation by James R. Burns37 How much Safety is there likely to be? Will project professionals admit how much safety they are putting into their estimates? What happens when these professionals are asked to cut their durations by 10%, next time? These professionals want to be 100% sure of getting finished on time Therefore, the durations are likely to be twice as long as they should be So CUT THEM IN HALF

39. Presentation by James R. Burns38 Solutions Take the safety out of the individual tasks and put it at the end of the critical path in the time buffer, called a project buffer This means making the tasks roughly 50-60% as long as they would otherwise be.

40. Presentation by James R. Burns39 More solutions At the point where each feeding path intersects with the critical path, place another time buffer, called a feeding buffer. The feeding buffer protects the critical path from delays occurring in the corresponding non-critical paths. When resources are needed on the critical path, these resources are advised ahead of time exactly when they must make themselves available. When that time comes, they must drop everything else and do the required critical tasks.

41. Presentation by James R. Burns40 Measurement solutions Measure progress only on the critical path; what percent of the critical path we have already completed. This is all we care about!! Have a project leader measure progress on a non critical path in terms of unused buffer days

42. Presentation by James R. Burns41 Shrinking the task time: Effects There is less procrastination There is much more focus There is less multitasking

43. Presentation by James R. Burns42 More Suggestions Put your “BEST” people on the critical path Watch out for critical chains—tasks performed by people working both on and off the critical path

44. Presentation by James R. Burns43 What are the ramifications of a delayed software product, intended for commercial sale? Less market share Less profit; maybe no profit Lower analyst profit expectations Declining share price Out of business? How many firms has Microsoft driven out of business? Ask Philippe Khan (founder of Borland) what the implications of getting a product late to the marketplace are

45. 9–44 Reducing Project Duration to Reduce Project Cost Compute total costs for specific durations and compare to benefits of reducing project time. Search critical activities for lowest direct-cost activities to shorten project duration. Identifying direct costs to reduce project time Gather information about direct and indirect costs of specific project durations.

46. What about getting products late to the market? Presentation by James R. Burns45 1.If the product is 6 months late, it is assumed to have missed 35% of market share 2.Tech firms usually assume that profits lost from reduced market share will more than justify any additional costs entailed in reducing time to market 1.Indeed, this is assumed without any formal analysis

47. What is the deal with indirect costs?? Presentation by James R. Burns46 1.They can be 45% to 90% of total costs, where total costs = indirect costs + direct costs 2.Indirect costs = overhead costs 1.TTU’s overhead rate is 50% of total costs 3.Direct costs = labor and material costs that are a function of the number of products or services rendered 4.Whenever your crash costs per day are less than your indirect costs per day, you should be saving money, in addition to time

48. 9–47 Project Cost–Duration Graph FIGURE 9.1

49. 9–48 Constructing a Project Cost– Duration Graph Find total direct costs for selected project durations. Find total indirect costs for selected project durations. Sum direct and indirect costs for these selected project durations. Compare additional cost alternatives for benefits.

50. 9–49 Constructing a Project Cost– Duration Graph Determining Activities to Shorten Shorten the activities with the smallest increase in cost per unit of time. Assumptions: The cost relationship is linear. Normal time assumes low-cost, efficient methods to complete the activity. Crash time represents a limit—the greatest time reduction possible under realistic conditions. Slope represents a constant cost per unit of time. All accelerations must occur within the normal and crash times.

51. 9–50 Activity Graph FIGURE 9.2

52. 9–51 Cost–Duration Trade-off Example FIGURE 9.3

53. 9–52 Cost–Duration Trade-off Example (cont’d) FIGURE 9.3 (cont’d)

54. 9–53 Cost–Duration Trade-off Example (cont’d) FIGURE 9.4

55. 9–54 Cost–Duration Trade-off Example (cont’d) FIGURE 9.4 (cont’d)

56. 9–55 Summary Costs by Duration FIGURE 9.5

57. 9–56 Project Cost–Duration Graph FIGURE 9.6

58. 9–57 Practical Considerations Using the Project Cost–Duration Graph Crash Times Linearity Assumption Choice of Activities to Crash Revisited Time Reduction Decisions and Sensitivity

59. 9–58 What if Cost, Not Time Is the Issue? Commonly Used Options for Cutting Costs Reduce project scope Have owner take on more responsibility Outsourcing project activities or even the entire project Brainstorming cost savings options

60. 9–59 Key Terms Crashing Crash point Crash time Direct costs Fast-tracking Indirect costs Outsourcing Project cost–duration graph

61. 9–60 Project Priority Matrix: Whitbread Project FIGURE 9.6

62. Presentation by James R. Burns61 What about Procurement Most firms enter into LOSE/LOSE Strategies A fixed-price lowest bidder contract is LOSE/LOSE Strategy This forces Contractors to under bid their costs, hoping to make it back on the changes to the requirements that the customer will have to pay for Instead, Contractors should be induced to deliver product on time, with as much functionality as possible How would you do this?