The Critical Chain-Book Review

SYMBIOSIS INSTITUTE
OF
MANAGEMENT STUDIES
(SIMS)
OPERATIONS AND PRODUCTIONS MANAGEMENT
ASSIGNMENT-1
BOOK REVIEW
ON

THE CRITICAL CHAIN

(By DR. ELIYAHU M. GOLDRATT)
th

DATE OF SUBMISSION: 5 October 2010

SUBMITTED BY
EKTA
SINGH
1A
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The Critical Chain-Book Review

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1) ABOUT THE AUTHOR

Eliyahu Moshe Goldratt (born August 15, 1948) is an Israeli physicist who became
a business management guru. He is the originator of the Optimized Production
Technology, the Theory of Constraints (TOC), the Thinking Processes, DrumBuffer-Rope, Critical Chain Project Management (CCPM) and other TOC derived
tools.
He has authored several business novels and non-fiction works, mainly on the
Theory of Constraints.

2) PLOT INTRODUCTION
Critical Chain is written as a novel, not like a project manager's how-to guide. This
book is a story about a professor trying to attain his tenure at a university's
business school. The plot is used to maintain interest in the subject and provide a
real life feel to the book. It provides plenty of real-world examples. The plot of the
novel is fourfold:
1. A professor trying to become tenured,
2. A business school's struggle to improve enrollment,
3. Teaching philosophy,
4. Applying the Theory of Constraints to project management
The goal of the book is the last point, but Goldratt makes it clear that educational
systems must change to better accommodate the quickly changing world of
business.
The book walks the reader through a series of steps to establish the principles for
the discussion. It is written for someone with a modicum of project management
background.

The book starts by pointing out the problems with how time estimates are normally
done on projects. It then provides a primer on the Theory of Constraints and an
example of its implementation in a steel mill. With the foundation set, it proceeds to
show how the Theory of Constraints can be applied to schedule generation,
resources constraints and multiple projects.

3) PLOT SUMMARY
The book provides a range of tools and processes to support Risk Management and
the protection of project value. A common thread them is a forward-looking
approach to the management of projects. Planning with Network Building looks
forward to the objectives of the project before considering the path of activities to
get there. The Critical Chain Schedule looks forward to the final project
deliverables without being distracted by intermediate task due dates that only serve
to sub-optimize schedule performance. Relay race resource behaviors look
forward with fine focus on the making timely handoffs with quality.
Synchronization looks forward to the capabilities of the pipeline. And Buffer
Management eschews percent complete or earned value of completed work as
water over the dam, and instead looks forward to the work remaining, and its
variation and risks.

Management of uncertainty and risk in an effort to deliver promised project value

with certainty is what project management is all about, and risk and uncertainty lie
in the future. Critical Chain Scheduling and Buffer Management is not only a
technique for the development and tracking of project schedules. It is a coherent
and comprehensive approach to project management that encompasses and effects
other processes and practices associated with project management as well. Most
importantly, its implications for looking forward and taking appropriate actions
for accepting, avoiding, and mitigating risk are significant and beneficial.

4) ESTIMATES
Goldratt claims that the current method of generating task time estimates is the
primary reason for increased expense of projects and their inability to finish on
time. The commonly accepted principle is to add safety (aka: pad or slop) to
generate a task time length that will essentially guarantee the step gets completed.
He asserts that estimates for a task are based on individuals providing values that
they feel will give them an 80-90% chance of completing the step, these estimates
are further padded by managers above this person creating a length of time to
complete a task that is excessive - as much as 200% of the actual time required. It is
this excessive padding that has the opposite effect - guaranteeing the task will run
full term or late. As counter intuitive as this seems, he provides examples of why
this is the case. This predisposes the people on the project to consume the time
estimate by:
1. Triggering the "student syndrome" in the resource assigned to the task - they
have more than enough time to do the task, therefore they start the task late
using up all the safety.
2. Encouraging multitasking. The safety is added knowing that the resource will
not be able to focus on the task and hence encouraged to multitask on

multiple projects at a time, which significantly impacts all projects.

3. Not claiming early completion. In order to preserve the safety concept in
future projects, resources do not report tasks completed early. Obviously,
though, there is no way to hide a late completion.

5) THEORY OF CONSTRAINTS PRIMER

The book presents a primer for Theory of Constraints. This is done in the form of a
lecture by a professor who has recently returned from a sabbatical at a large
conglomerate that uses the Theory of Constraints. The discussion focuses on the
current methods of measuring success at a work center (cost and throughput) and
shows how they are contradictory to the success of the production line as a whole.
The book enumerates the five principle steps of the Theory of Constraints:
1. Identify. Identify the bottleneck of the system.
2. Exploit. Exploit this bottleneck, making its throughput efficient by changing
processes, equipment maintenance procedures, training, policies, etc.
3. Subordinate: Subordinate the throughput of all other work centers to this
work center.
4. Elevate. Invest in this work center to increase its throughput - add equipment,
manpower, etc.
5. Inertia. Start the process over on the line to determine the new bottleneck.
This philosophy keeps the cost and throughput models at odds with one another
since the subordination process necessarily decreases efficiency. Hence, evaluation
criteria for properly managing a work center must change to properly reward the
organizations success.

The book points out this conflict with respect to an axiom in the Theory of
Constraints that states that if two concepts are in direct conflict, then there is an
assumption as part of those concepts that is incorrect.

Steel Mill Example

To illustrate, the book uses an example of a steel mill with significant production
problems, excess inventory and cost issues. It methodically assigns all the issues of
the plant to the method in which success of a work center is measured. The errant
assumption is efficiency being measured by tons of steel per hour. The flaw in the
measurement is that not all material takes the same length of time to produce and
not all work centers have the same throughput. It concludes the sources of the
problems for the steel mill are:
Issue Causes
Yard inventory
Over producing product to minimize set-up impact,
Producing excess high-throughput material
Instead of sitting idle, produce unneeded product. Raw
material shortage
Over consumption of material to produce material in inventory
After subordination, the key is to maintain a small buffer of material in front of the
bottleneck to ensure it never stops producing due to lack of material.

6) BASIC PRINCIPLES
After laying this groundwork, the book turns to applying this to Project
Management. After declaring the constraint to be the schedule's critical path, the
book maps out a set of terms. The result is:

 Production term
Work center
Product

Project term
Task
Time
Pre-work center inventory
Work
buffer from the feeding tasks of the critical
path
Bottleneck work center
Bottleneck resource
It proposes a method of schedule generation where all tasks are estimated at a
reasonable time for completion. This would be a time estimate that would give the
resource a 50%-60% chance of completing the task on time. The theory being that
one task may take less than its estimated time but another may take more - on the
average evening out. Since there is no safety, the conditions above that cause
misuse of time on the task do not exist.
Safety is not added to individual tasks. Safety is added to the project as a whole (at
the end) or to the end of a sequence of tasks feeding the critical path.

7) RESOURCES INFLUENCES
Using numerous analogies and examples, the concept of a resource buffer is
introduced. This concept claims that one must ensure the resource bottleneck on
the critical path is always busy and stays focused. They should be:
Kept on task. In other words, minimize multitasking
Be ready for the assignment; even if it means they are idle waiting for
dependencies to complete.
The book introduces increasingly complex situations to remove the non-practical
classroom approach until it reaches two common project situations:
A bottleneck resource on the critical path and non-critical paths,

 Multiple projects contending for constrained resources,

The book emphasizes that the project manager has to understand that he or she is
not working with absolutes. Resolution of these issues are not absolute. The time
estimates are just that - estimates - they cannot be treated as absolute times. This is
essential for the following two points.

8) RESOURCE CONSTRAINTS
A project example is given with a single bottlenecked resource on multiple paths.
Since this resource is over utilized on multiple paths its tasks need to be considered
when determining the project duration. This results in the introduction of the term
critical chain - the aggregate of the critical path and the constrained resource
leveled tasks.

9) MULTIPLE PROJECTS
Projects are going to use common resources. Organizations need to accommodate
parallel projects while staying inside the Theory of Constraints concepts. This
requires developing a prioritization scheme for the resource to determine the
correct order to do work (i.e. due date of the project). As before, once the scheme
has been developed, the resource needs to be focused (not multitasking) on
completing the task by the due date.

10)

COST OF MONEY

The book closes by introducing a concept for a method for determining which
projects should be selected for execution. It is based on looking at the investment in
each project in terms of money-days. Money-days is the product of the investment
in the project and its duration.

REVIEW
As mentioned in the introduction the book is written as a novel with a lot of
discussion. This form makes it very pleasant to read. The topics of the book are
presented to the reader through the conversations and the discussion professor
Silver has with his students, colleagues and people from business Also the
discussions concern a lot of examples and analogies which makes it easy for the
reader to see the application of the theories. The parallel stories make the story
more enjoyable and they do not disturb the real story. As also mentioned in the
introduction that it was few figures. The figures that are there are vital, but on
some occasions I think there should have been some more figures.

Concerning the content of the book it is I think, good to have some knowledge
about project management and critical chain theory before reading it. By that I
mean that the background from the Project management course was enough to
understand the problems and enjoy the book. Through the classes of professor
Silver and the problems of the students the reader is introduced to the TOC,
critical path and critical chain. Different topics are explained through the answers
to questions that the students address. Other concepts such as the Triple
Constraint of project management are covered.

In the lectures the class identifies the problems their projects are having, and from
that the theory is developed. The classes usually ends with some consensus about
the problems often stated as professor Silvers summary of the lecture. These
statements I think are conceptual errors that occur in project management and
may work as warnings or helpful tips within ones own project if one bears them in
mind. An example is:

There is no way to achieve good throughput performance through good local

performance

By that one means that one must optimize the system as a whole, which implies
identifying the bottleneck.The book will not function as a reference book, because
of the form of the book, but it serves its purpose as an inspiration and introduction
to the problems and solutions (at least according to this theory).

How will this affect my work? Well what I can say that it was very inspiring to read
after dealing with the topic in our classes and I look forward to learning more in
our coming lectures. The method appears effective and with the additional tools we
have learned about on how to discover when the project is eating into the buffer,
it appears even more suitable. At least I will be able to structure my work in such
a way that I identify the necessary tasks to reach it. Hopefully I will also be able
to use this when I start my career in the future.

What I also found very interesting was the teaching method of professor Silver in
the book.This discussion forum appealed to me, in the way he was able to include
his students into the lecture. I should be able to use as a tool in presentations.

11)

CONCLUSION

Critical Chain is a well written book by Eliyahu M. Goldratt useful for project
managers, senior managers and definitely potential managers like us dealing with,
or who would be dealing in future with, one of the most difficult challenges of
developing highly innovative new products. In fact not just managers but all those
who havent read are missing a wonderful opportunity for professional and
personal development.

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