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Critical Chain Project Management:
Motivation & Overview
Robert Richards, Ph.D.
Project Manager
Stottler Henke Associates, Inc.

Hilbert Robinson
President
Afinitus Group LLC




                                     Used with Permission
Are You A Responsible Person?
Scenario:
   You live in New England and it’s late Winter
   Time to airport varies from 45 minutes to 3 hours depending…
   Most times it takes a little over 65 minutes
   You are joining the President at 9:00 AM at the airport

Questions:

   How early should you leave? __________
   Why?_____________________________




                                                        2
Presentation Outline
Background
    •   Triple Constraints
    •   Murphy’s Law
    •   Complexity
Problem [What to Change]
    •   Localized Risk Management
        -    Task Level Insurance Policy
        -    Student Syndrome
        -    Parkinson’s Law
        -    Multi-tasking
Solution [What to Change to]
    •   Governing Principle - Global Risk Management
        -    Project Level Protection
        -    Systems Perspective
        -    Execution Control




                                                       3
Background
Triple Constraints [Binding Commitments]
    1.   Time [Minimize]
    2.   Capacity / Resource Budget [Minimize]
    3.   Content / Scope / Quality [Maximize]




                                                 4
Background
Murphy’s Law [Disruption Event]
    •   Number of unknowns
    •   Range of possibilities
    •   Frequency of repetition



Complexity [Amplification factor]
    •   Degree of integration required
    •   Number of dimensions to be integrated
    •   Speed of execution




                                                5
Presentation Outline
Background
    •   Governing Principle or Paradigm Shift
    •   Triple Constraints
    •   Complexity
    •   Murphy’s Law
Problem [What to Change]
    • Localized Risk Management
         –   Task Level Insurance Policy
         –   Student Syndrome
         –   Parkinson’s Law
         –   Multi-tasking
Solution [What to Change to]
    • Governing Principle - Global Risk Management
         – Project Level Protection
         – Systems Perspective
         – Execution Control

                                                 6
Problem: Localized Risk
Management Strategy
1.   Task level insurance policy
         See opening scenario – answers?
         And if it was a task in a project??
         ** How safe is safe enough?**

2.   Student Syndrome
         The dog ate my homework

3.   Parkinson's Law
         Self-fulfilling prophecy [good estimating?]

4.   Multi-tasking [absence of priorities]
         Hero or villain?




                                                       7
Problem: Localized Risk Management
One Resource, Four Task, from Four Different Projects




  Multi-tasking causes delays to spread across all projects,
  adding as much as 20% to all projects
                                                8
Presentation Outline
Background
    •   Governing Principle or Paradigm Shift
    •   Triple Constraints
    •   Complexity
    •   Murphy’s Law
Problem [What to Change]
    •   Localized Risk Management
         – Task Level Insurance Policy
         – Student Syndrome
         – Parkinson’s Law
Solution [What to Change to]
    •   Global Risk Management
         – Project Level Protection
         – Systems Perspective
         – Execution Control




                                                9
Solution
Governing Principle Behind CCPM is:

    Aggregation of risk…



Benefits:
    •   Lower overall protection needed
    •   Higher degree of “coverage” achieved
    •   Leading to lower incidence of “failure”




                                                  10
Solution:
Global Approach to Risk Management
1. Planning
   1. Project Level vs. Task Level Protection
   2. Systems Perspective for Multiple Projects
          1. Should load for multiple projects be considered?
          2. Why?
          3. How?


2. Execution Control
    1.   Promote and encourage team culture
    2.   Controlled work queues
    3.   No multi-tasking work rules
    4.   No batch processing work rules
    5.   Task assignment prioritization
    6.   Management by Exception




                                                          11
Critical Chain Planning Process
From Task to Project Protection




  1. Traditional Plan                  144 hours




  2. Safety Excluded                    72 hours




  3. Resource Leveled

  4. Critical Chain Marked              84 hours




                                  12
Critical Chain Planning Process
 From Task to
 Project Protection
                                                                        144 Hours
                  1. Traditional Plan



                                        72 Hours
                                                   2. Safety Excluded




3. Resource Leveled                                               84 Hours

4. Critical Chain Marked in
   Yellow

                                                                                    13
Aggregation Principle
The Concept of Risk Pooling:
  Can someone explain why this works?


Health Care Example:
  Larger pool = Lower cost




                                        .
                                  14
Aggregation Principle
Insurance is designed to work by spreading costs across a large number
of people. Premiums are based on the average costs for the people in
an insured group. This risk-spreading function helps make insurance
reasonably affordable for most people.


http://www.insurance.wa.gov/legislative/factsheets/PoolingRiskReducingCost.asp




                                                                                 15
Critical Chain Planning

                                                 Compared to 144 days
                                                 traditional


                                                               132 hours
   PB = Project Buffer   FB = Feeding Buffer




Aggregation Principle [where did some of the safety go?]:
    1. Pooled protection provides more coverage
    2. Location is just as important as amount
    3. Sizing Rule of Thumb  2/3rds to 1/3rd
       Buffer is half of preceding chain


                                                                           16
                                                          16
Critical Chain Planning
             Schedule shown in Aurora




                                                 132 hours compared to
                                                 144 hours in traditional
                                                 schedule




       Proj_Buf = Project Buffer   FB = Feeding Buffer

                                                                            17
                                                  17
Critical Chain in Execution
                        Schedule Before Execution Starts




                                                                132 hours


                          “AS OF DATE”




                                                                132 hours


1. T8 experienced a 5 day increase in scope or delay
2. Results in a 2.5 day impact to the project buffer
3. The rest was absorbed by the Critical Chain gap
4. 35-32.5=2.5 7% Complete and 14% Buffer Consumed
                                                           18
Perspective on Buffers
Not “rear view mirror watching”
Predictive/Preventative/Leading Indicator
Mechanism to Promote and encourage Team Work
Collaboration / Communication Incentive Mechanism
Measuring device – Neutral, Normalized Metrics
Real-time Risk Meter
Encourages an holistic/goal oriented perspective




                                            19
Critical Chain Priority Metric




     Project Status Trend Chart or “Fever” Chart


                                          20
Critical Chain Priority Metric
     Project Status Trend Chart or “Fever” Chart




                                          21
Multi-Project System
                    Systems Perspective for Multiple Projects

       1. Should load for multiple projects be considered jointly?
           –   Obviously
       2. Why?
           –   Prevent System Overload/Multi-tasking
       3. How?
           –   By taking a Systems Perspective




22
Creating a Multi-Project Schedule
                     Finite Capacity Pipeline

                                                Due Dates Are Derived




Ingredients:

1. CC Plans [shorter]
2. Strategic Pacing Mechanism
3. Strict Priority Scheme
4. Rate Limit Policy/Guidelines

                                                                        23
Multi-Project Execution Control
Pipeline Status Snap Shot


      100
      % Buffer Consumed




                                                  In Execution, Buffer Status Drives Priority
                                                  Decisions, not Project Importance
      0




                          | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
                          0 | | |
                          |                  % Critical Chain                              10
                                             Completed                                     0


                                       By Portfolio of Projects
                                                                                            24
The Upshot…

     Benefits
     1.   Operational Coherence – Stability
     2.   20% Shorter Cycle-Times – Speed
     3.   On-time Performance – Reliability
     4.   More throughput – Growth



     Challenges:
     1.   Simple but not easy to grasp – too simple?
     2.   Requires a change in mindset
     3.   Takes 120 days for typical 100 person team
     4.   We don’t need that much improvement


25
Questions ???
Robert Richards Ph.D.,
  Stottler Henke Associates, Inc.
  Richards@StottlerHenke.com

Hilbert Robinson
   President
   Afinitus Group LLC




                                    26

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Richards.robert

  • 1. Critical Chain Project Management: Motivation & Overview Robert Richards, Ph.D. Project Manager Stottler Henke Associates, Inc. Hilbert Robinson President Afinitus Group LLC Used with Permission
  • 2. Are You A Responsible Person? Scenario: You live in New England and it’s late Winter Time to airport varies from 45 minutes to 3 hours depending… Most times it takes a little over 65 minutes You are joining the President at 9:00 AM at the airport Questions: How early should you leave? __________ Why?_____________________________ 2
  • 3. Presentation Outline Background • Triple Constraints • Murphy’s Law • Complexity Problem [What to Change] • Localized Risk Management - Task Level Insurance Policy - Student Syndrome - Parkinson’s Law - Multi-tasking Solution [What to Change to] • Governing Principle - Global Risk Management - Project Level Protection - Systems Perspective - Execution Control 3
  • 4. Background Triple Constraints [Binding Commitments] 1. Time [Minimize] 2. Capacity / Resource Budget [Minimize] 3. Content / Scope / Quality [Maximize] 4
  • 5. Background Murphy’s Law [Disruption Event] • Number of unknowns • Range of possibilities • Frequency of repetition Complexity [Amplification factor] • Degree of integration required • Number of dimensions to be integrated • Speed of execution 5
  • 6. Presentation Outline Background • Governing Principle or Paradigm Shift • Triple Constraints • Complexity • Murphy’s Law Problem [What to Change] • Localized Risk Management – Task Level Insurance Policy – Student Syndrome – Parkinson’s Law – Multi-tasking Solution [What to Change to] • Governing Principle - Global Risk Management – Project Level Protection – Systems Perspective – Execution Control 6
  • 7. Problem: Localized Risk Management Strategy 1. Task level insurance policy See opening scenario – answers? And if it was a task in a project?? ** How safe is safe enough?** 2. Student Syndrome The dog ate my homework 3. Parkinson's Law Self-fulfilling prophecy [good estimating?] 4. Multi-tasking [absence of priorities] Hero or villain? 7
  • 8. Problem: Localized Risk Management One Resource, Four Task, from Four Different Projects Multi-tasking causes delays to spread across all projects, adding as much as 20% to all projects 8
  • 9. Presentation Outline Background • Governing Principle or Paradigm Shift • Triple Constraints • Complexity • Murphy’s Law Problem [What to Change] • Localized Risk Management – Task Level Insurance Policy – Student Syndrome – Parkinson’s Law Solution [What to Change to] • Global Risk Management – Project Level Protection – Systems Perspective – Execution Control 9
  • 10. Solution Governing Principle Behind CCPM is: Aggregation of risk… Benefits: • Lower overall protection needed • Higher degree of “coverage” achieved • Leading to lower incidence of “failure” 10
  • 11. Solution: Global Approach to Risk Management 1. Planning 1. Project Level vs. Task Level Protection 2. Systems Perspective for Multiple Projects 1. Should load for multiple projects be considered? 2. Why? 3. How? 2. Execution Control 1. Promote and encourage team culture 2. Controlled work queues 3. No multi-tasking work rules 4. No batch processing work rules 5. Task assignment prioritization 6. Management by Exception 11
  • 12. Critical Chain Planning Process From Task to Project Protection 1. Traditional Plan 144 hours 2. Safety Excluded 72 hours 3. Resource Leveled 4. Critical Chain Marked 84 hours 12
  • 13. Critical Chain Planning Process From Task to Project Protection 144 Hours 1. Traditional Plan 72 Hours 2. Safety Excluded 3. Resource Leveled 84 Hours 4. Critical Chain Marked in Yellow 13
  • 14. Aggregation Principle The Concept of Risk Pooling: Can someone explain why this works? Health Care Example: Larger pool = Lower cost . 14
  • 15. Aggregation Principle Insurance is designed to work by spreading costs across a large number of people. Premiums are based on the average costs for the people in an insured group. This risk-spreading function helps make insurance reasonably affordable for most people. http://www.insurance.wa.gov/legislative/factsheets/PoolingRiskReducingCost.asp 15
  • 16. Critical Chain Planning Compared to 144 days traditional 132 hours PB = Project Buffer FB = Feeding Buffer Aggregation Principle [where did some of the safety go?]: 1. Pooled protection provides more coverage 2. Location is just as important as amount 3. Sizing Rule of Thumb  2/3rds to 1/3rd Buffer is half of preceding chain 16 16
  • 17. Critical Chain Planning Schedule shown in Aurora 132 hours compared to 144 hours in traditional schedule Proj_Buf = Project Buffer FB = Feeding Buffer 17 17
  • 18. Critical Chain in Execution Schedule Before Execution Starts 132 hours “AS OF DATE” 132 hours 1. T8 experienced a 5 day increase in scope or delay 2. Results in a 2.5 day impact to the project buffer 3. The rest was absorbed by the Critical Chain gap 4. 35-32.5=2.5 7% Complete and 14% Buffer Consumed 18
  • 19. Perspective on Buffers Not “rear view mirror watching” Predictive/Preventative/Leading Indicator Mechanism to Promote and encourage Team Work Collaboration / Communication Incentive Mechanism Measuring device – Neutral, Normalized Metrics Real-time Risk Meter Encourages an holistic/goal oriented perspective 19
  • 20. Critical Chain Priority Metric Project Status Trend Chart or “Fever” Chart 20
  • 21. Critical Chain Priority Metric Project Status Trend Chart or “Fever” Chart 21
  • 22. Multi-Project System Systems Perspective for Multiple Projects 1. Should load for multiple projects be considered jointly? – Obviously 2. Why? – Prevent System Overload/Multi-tasking 3. How? – By taking a Systems Perspective 22
  • 23. Creating a Multi-Project Schedule Finite Capacity Pipeline Due Dates Are Derived Ingredients: 1. CC Plans [shorter] 2. Strategic Pacing Mechanism 3. Strict Priority Scheme 4. Rate Limit Policy/Guidelines 23
  • 24. Multi-Project Execution Control Pipeline Status Snap Shot 100 % Buffer Consumed In Execution, Buffer Status Drives Priority Decisions, not Project Importance 0 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 0 | | | | % Critical Chain 10 Completed 0 By Portfolio of Projects 24
  • 25. The Upshot… Benefits 1. Operational Coherence – Stability 2. 20% Shorter Cycle-Times – Speed 3. On-time Performance – Reliability 4. More throughput – Growth Challenges: 1. Simple but not easy to grasp – too simple? 2. Requires a change in mindset 3. Takes 120 days for typical 100 person team 4. We don’t need that much improvement 25
  • 26. Questions ??? Robert Richards Ph.D., Stottler Henke Associates, Inc. Richards@StottlerHenke.com Hilbert Robinson President Afinitus Group LLC 26