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A Technical Summary
Copyright Chesapeake Consulting, Inc., 1997 All rights reserved. No parts of this document may be copied or reproduced without the express permission of Chesapeake Consulting, Inc.
Introduction
The purpose of this document is to summarize the technical aspects of applying the Theory of Constraints (TOC) to project management as outlined in the book Critical Chain by Eli Goldratt. This document is structured according to the TOC five step focusing process and its two prerequisites. This document assumes the reader has been exposed to the Theory of Constraints and the TOC Measurement System.
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Time Based on this, it can by concluded that a project contributes to the larger systems purpose by completing as early as possible. By combining the key element of project lead time and the stated purpose of the larger business system, the purpose of a project (in a business
Copyright Chesapeake Consulting, Inc., 1997
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system) is to complete as early as possible so that the financial well being and quality of life of all the stakeholders is improved quicker.
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Prerequisite 2 - Determine the Systems Measures Based on the purpose of a project, the method for measuring the success of the project should be based primarily on the ability of the team to meet or beat the schedule (i.e. the sooner completed the better for all the stakeholders). This is not meant to imply that the cost is not important, but it does mean that any decisions in spending should be based on the amount of incremental Net Profit (NP) improvement that would be generated by finishing earlier versus the incremental increase in Investment (I) required to make that happen (ROI = NP/I). This method for measuring is in contrast to the more traditional method of measuring a projects success according to the teams ability to manage cost first and time second.
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The only problem with this conclusion is that there maybe multiple tasks on various noncritical paths which are required to be completed by the same resource. Realistically this resource will work on these various tasks in one of the two following manners at different times until all tasks are complete (also known as multitasking, which is addressed in the subordination step of this process), or in some specified sequence (typically of his/her own choosing), thereby completing a task prior to starting another. In either case, the longest chain, in terms of time, of dependent steps may not be the critical path. Therefore dependencies between steps can be a result of a path and/or a common resource. Since the dependencies between steps is not necessarily a result of a path, then the constraint of a project is not necessarily the critical path. Therefore the
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constraint of a project is the longest chain, in terms of time, of dependent steps (where the dependencies are a result of paths and/or common resources). Goldratt states this as the definition for critical chain. See figure below and note that X identifies tasks performed by a common resource, and the dashed line with an arrowhead defines the critical chain (which is determined to be 75 days long versus the 60 day long critical path).
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3. Dependencies between steps - delays accumulate faster over time than the advances; delays are frequent because of Murphy and the effects of the first two mechanisms, but advances are not taken advantage of because of built in safety in each task in combination with the behaviors in mechanisms 1 and 2. Isnt this traditional methodology counter to the purpose of a project? The answer is yes; because as shown in the answer to first question, the safety and advances are wasted, thereby guaranteeing the project will finish either on time late (if all goes well), or late. The primary cause of this behavior is rooted in how resources are measured. Each resource is measured according to his/her ability to complete their task on budget and in the time scheduled (i.e. local optima) versus being measured on the project being finished on time or early (i.e. the purpose). Project and Feeding Buffers In order to exploit the critical chain according to the purpose 1. strip out from each task time a large percentage of the safety time The task time should be reduced to a level where the resource has a 50% chance of completing on time versus 100% chance of completing on time (as traditionally done). As a result, the traditional methodology for measuring an individual resource according to their ability to finish their task in the allotted time (a local optimum measurement) is no longer valid. A more global measurement system should be used to encourage the behavior of individual resources to be more focused on completing the project early or on time (the purpose of the project). This reduction in task times minimizes the impact of the student syndrome (i.e. resources have less time to complete their specific tasks, therefore they will not wait as long to start), thereby reducing the opportunity to waste safety time. 2. sum the individual safety times on the critical chain and each non-critical chain, reduce the accumulated safety times of each chain by some factor, and locate these new safety times at the end of the critical chain and anyplace where the non-critical chains meet the critical chain The safety time on the end of the critical chain is called the project buffer (this buffer is analogous to the shipping buffer in manufacturing DrumBuffer-Rope implementations). The project buffer protects the project scheduled completion date from Murphy events on the critical chain (and non-critical chains where the feeding buffer is used up and causing time to be lost on the critical chain, feeding buffer is defined in next bullet). By locating the safety time of the critical chain in one location, the safety time will not be wasted by any specific task that plans for it but doesnt use it. The safety times located where non-critical chains meet the critical chain are called feeding buffers (these buffers are analogous to constraint and assembly buffers in manufacturing Drum-Buffer-Rope implementations).
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The feeding buffers protect the critical chain from the impact of Murphy on non-critical chains. In the example, assume 20% of the estimated times are safety. Reduce all times by 20%, then locate a project buffer at the end of the critical chain equivalent to the accumulated safety time on the critical chain reduced by 20% (follow same procedure for feeding buffers on non-critical chains). As shown in the example, an estimated time of 15 days becomes 12, therefore yielding 3 days of safety time to be used for the project buffer. Note after the defined calculations are completed a project buffer of approximately 10 days is created and located at the end of the critical chain (signified by the P.B. notation). The length of the critical chain now becomes 70 days, but in approaching the completion of tasks in this manner, it is possible for the project to be completed as early as 60 days. The feeding buffers are designated by the F.B. notation. 8 X 4 X 8 8 2 F.B.
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The project team should frequently notify the resource of the progress of the scheduled tasks, so that the resource will be prepared when the tasks are available to be started. This notification should begin no later than the scheduled start date of the resource buffer. The resource can continue to work on other tasks until the scheduled task appears at which time the resource immediately starts the scheduled task and completes it before continuing to perform other work. Now that there is an executable project plan in accordance with the purpose, a methodology to monitor the project and identify problems which may impact completing the project as planned must be developed. Buffer Management Remember, the project buffer was established to protect the project planned completion date. Therefore as the project buffer decreases (which is caused by falling behind schedule on the critical chain), the risk of not completing the project early or on time increases (which is counter to the purpose). The opposite is true as well, if the project buffer increases (which is caused by completing tasks on the critical chain ahead of schedule) the possibility of completing early is increased (which is the purpose). The project buffer decreases by the amount of time equivalent to the current date minus the current critical chain tasks scheduled completion date, if the current date is later than the scheduled date. Note, that the calculation for decreasing the project buffer is based on the fact that time lost on the critical chain is lost forever. The project buffer increases by the amount of time equivalent to the current tasks scheduled completion date minus the current tasks actual completion date, if the actual completion date is earlier than the scheduled completion date. This calculation uses actual completion date instead of current date, because the gain is not realized until the task is actually completed. The feeding buffers can be increased and decreased in the same manner. These buffers provide a focused method for identifying and working only the issues that are causing or may cause time to be lost on the critical chain. If the project buffer is decreasing, then the project team can identify the cause, define and implement solutions. The project team should also monitor feeding buffers and make adjustments before a noncritical chain causes problems on the critical chain. The buffers can be divided into two or three areas, each identifying a level of concern and awareness, and used in prioritizing work. As a history of projects is created using the critical chain methodology, a review of the buffers before and after would be beneficial. If the buffers are consistently larger at the end, then you may want to reduce the buffer sizes at the beginning of future projects. If the buffers are consistently smaller at the end, then you may want to increase the buffer
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sizes. Also, information relating to causes of buffers decreasing can be used to focus improvement efforts, which should reduce the critical chain of future projects.
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Step 5: Do not allow Inertia to become the systems constraint. If in the previous steps the constraint is broken, go back to Step 1.
Elevating the constraint during an active project could cause the critical chain to move. It is important to be careful to consider the following: incremental improvement in Net profit versus the incremental Investment required to get that profit (ROI = NP/I) ability of the new non-critical chain tasks and resources to subordinate to the new critical chain risks associated with disrupting the project
If after elevating the critical chain moves, return to step one and follow the process. Be sure a critical chain is not made longer because of invalid policies, rules or assumptions. If the constraint is not broken and a satisfactory project plan is developed, implement the plan. As the plan is executing, utilize the various rules (such as starting tasks on critical chain as soon as possible and no multitasking), measurements (emphasis on time and overall project completion versus cost and individual task completion), and buffer management techniques to manage the project. In the case where elevation is directed at future projects (especially companies who are project dependent), it must be emphasized - be sure future critical chains are not made longer because of invalid policies, rules or assumptions.
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