CRITICAL CHAIN

Submitted To: Submitted By:

Prof. Devendra Jaiswal Priyanka Singh
Pratibha Sharma
• It starts with the informal meeting to discuss the business
school’s proposed budget for the next year.

• She told a story of an agricultural school that grew at 10%

after some time the school did not need so many of
graduates but the expenses were remained same.

• The financial burden was high enough to mandate a drastic

cut throughout all the other schools.

• She said that there is an another field that forces people to

go through higher education, the new students enrollments
at their law school are less then half compared to three
years ago
• Daniel Pullman the chairman and the CEO of Gene modem
• Levy the executive vice president of engineering insisted on hiring a consulting
firm to do an in depth analysis of Gene modem’s product development
starting from examining the way they decide on features of a new modem,
through the development process.
• Levy insisted on bringing experts from the outside and everyone supported
him
• Levy looks at the three young managers who are inexperienced for the task.
• Mark an engineer from Kowalski was the group leader his task was to find the
solution to the biggest threat endangering the future of the company.
• Levy explained the product life cycle of a product and said before we finish the
introducing a new modem into the market, we obsolete it by launching an
newer one.
• He also explained that Market price of a share is mainly based on the share
holders’ expectations based on our impressive track records
• He said that their products’ life span is about six months & the development
time is roughly 2 years so we have to launch a new product of our
development.
• In this Rick have been assigned to teach a course in the
executive MBA program he was at the position of semi-
respectable position of associate professors.
• Now He was happy & the next step is to get professorship but
he can not get it if he keep neglecting the need to publish
articles.
• He want something tangible , more connected to the real world ,
real problems.
• He was wondering that teaching managers is not easy because
they are not going to accept everything that he will say
• Jim was trying to cheer up Rick.
• Jim suggested subject project management to teach which he
use to teach to get help in his research
• This is about B.J. vonbraun an excellent manipulator and
university president.
• She ,Bernard Goldsmith and Alistair Franklin they each have large
business schools at their universities.
• Alistair said that the last years were very good for us.
Organizations’ demand for new MBAs grew, but we didn’t have
enough capacity to supply the demand.
• B.J. asked that we don’t have enough applicants because the
capacity of business schools has grown beyond the no. of people
who want to become managers.
• That means we need to encourage people to choose
management as a career path.
• Bernard was not agree to this & said it may be because of
oversupply of demand and slow growth of our business schools.
• They were comparing their schools with others in term of
students, course and the teachers as well.
• This is the class scene he was preparing himself For the class, he asked
Mark about his course and other things & why he has chosen this project
management course and he started his common interaction with the class.
• He explained to the class about the course and its usage .
• He asked others about their project.
• He explained that a project is some block diagram of the various steps that
must be accomplish in order to achieve the objective.
• He further gave an example of project that didn’t finish on time or on
budget.
• He conclude that the problems common to all projects are
• 1 – budget overruns
• 2 – time overruns
• 3 – compromising the content.
• Here, both B.J and Chris were discussing on
triming the business schools budget.
Ideal V/S Real
 What we want to do is:
 Finish projects on time
 Finish projects on budget
 Finish projects on scope
 Shorten project lead
times
 Finish more projects
 What we do is:
 Manage to finish tasks
on time
 Measure resources on
utilisation
 Detailed risk analyses
 Detailed specifications
 General Problems

• Budget overruns

• Time overruns

• Compromising the content

• Financially, overruns are much less important than the

overdue
Sources of Delay

Deadline Effect (Student’s Syndrome)

Multi Tasking
 Synchronizing
 High Set-Up Times
Delays Accumulate, Advances Don’t
End of the month syndrome
Student’s Syndrome
 Projects seem to be longer than necessary
 Parkinson’s Law: work expands to fill the time available
 Tasks seldom finish early
 “Student syndrome” prevails: 2/3 of work done in last 1/3 of
time

Task start
 Critical Path Method
• A critical path for a project is longest chain of dependent
steps.
• The critical path determines the time it will take to finish the
project.
• Delay in critical path  Delay in project completion
Critical Path Method

Build Building Make building

functional
90 30

Install machines
in building
30

Contract vendors Build machines

15 90

Critical path  150 days to prepare the building

• Late start-
– Postpone the investment until necessary
– No time slack
– Any delay on that path  delay in the project
– Focusing not possible

• Early start-
Too many things at a time  tend to lose focus

• Focusing is lost

• Think about it:

“Weigh the savings from postponing an investment against chance
of damage resulting from finishing the project a little late”
 Milestones
• What is been done?
– Reward for starting each path at the earliest possible
time  Encourages project leader to start unfocussed

• Result?
– Progress on one path compensates for the delay on
another
– Difficulties accumulate  Project overruns
 Theory of Constraints

Sub
Iden Expl Elev Iner
ordi
tify oit ate tia
nate
 Buffer
• Uncertainties exist in projects.

• A buffer is additional time to complete a task.

• Murphy’s Law states that if something can go wrong, it will.

• In traditional estimates, people often add a buffer to each task and use the

additional time whether it’s needed or not.

• Time estimates are self fulfilling prophesy.(48)

• Critical chain scheduling removes buffers from individual tasks and instead

creates:

 Project buffer Feeding buffers Resource Buffer

Buffer
Project Buffer
 Between the last task of the aggressive project

schedule critical chain and the committed end date

Feeding Buffers
 Protect the critical chain from being impacted by non-

critical chain
Resource Buffer
 The resource buffer is an information signal to
resources planned to work on the project critical chain
that the project task is coming up for work
Concept of Safety
(Project Buffer)
• Every task has some safety
• The greater the uncertainty and risk of the task, the
greater the safety included in your safe estimate
Cost world Throughput world(90)

Focus to reduce cost Focus to increase

Any local improvement
automatically translates into
an improvement of the org.
Any improvement is
appreciated.
throughput
If one link drops, the
throughput of the company
drops
Improvement of the weakest
link appreciated.

“At the beginning of the month these companies are managed

according to the cost world, at the end of the month according
to the throughput world.”
 Cost Control
• Throughput World The strength of any chain, process or system is dependent

upon its weakest link

• Cost World The only way to achieve good cost performance is through good

local performance everywhere

• If produced more, it will lead to accumulation of unnecessary inventory

Block Diagram Cost Control

Increase Increase Increase

Net Profit ROI Cash Flow

Fundamental operating measurements bridge

Operating
Throughput Inventory
Expenses

Increase Decrease Decrease

Local
Actions
Implementations

 Milestones Removed
 Student Syndrome
 Trimmed the Safety Pad
 Multi Tasking
 Resource Buffer in Place
 Reduced Feeding Buffer
 Reduced Project Buffer
So What’s the Choice

You manage the constraint

Or the constraint manages you

 Learning
This novel gives us the view on production &
marketing management. It has transformed
the thinking and actions of management
throughout the world. This book called “ A
Guru To Industry”, which can change anyones’
thinking about business.
Thank You