Critical Chain

The New Evolution in

Project Management
 Undesirable Effects in Projects

• Big hassle at the end

• Estimates are rarely accurate
• Difficult to accurately determine project status (how long to completion)
• Often, there’s no sense of urgency on a project until it’s too late
• Project schedules are often unrealistic
• Hard to see how decisions on one project impact other projects in the
pipeline
• We are constantly in a reactive mode
• Projects are completed late and over-budget
• There are lots of changes
 Today’s Project Environment

• Projects are more complex

– Require coordination of many independent resources
– Project managers rarely control all of the necessary
resources
• Multi-project Environment
– Many projects occurring concurrently
– Competing for the same resources
– Managers have to constantly react to every “bump” in the
road
– Managers have little or no visibility of how problems and
decisions on one project impact other projects
 Is There a Better Way?
• Some organizations have changed how they manage
projects. In doing so, they have seen:

– 30% to 50% reduction in project lead-time

– 50% increase in the amount of projects completed
– Significantly fewer hassles required to manage projects
– Better coordination between independent resources
– An ability to meet 95% of projected project schedules
– Paybacks of more than 100:1 on their improvement efforts

Results achieved in months, not years

 Success With Critical Chain
• Lord Corporation IS Department
– 5 years prior to CC, no project ever completed on-time
– Department accepted only 50% of projects
– Within first 8 months, 2 projects finished early, 5 on-time and only one
late (late one was considered a lesson learned)
– IS now promises exact completion dates, not approximate quarter
estimates
– Cycle time improved 100%
– Project capacity up 60% with no additional resources
• Better On-Line Solutions
– Projects typically took twice as long as estimated
– 1st projected with CC finished 5 months early
– Workers not put under any additional pressure
 Critical Chain and TOC
• Critical Chain is a project management application of the Theory of
Constraints (TOC)
• Unlike most continuous improvement methods, TOC doesn’t focus
on improving individual processes
• TOC takes a macro-approach
– How well its many individual processes work together determine an
organizations ability
– Coordinates decisions to synchronize process behavior for maximum
output and minimum waste
– Removes friction between processes, which is the root cause of waste
in an organization
– Top down (globally) driven approach, not bottom-up (individual
processes)
 Why Does Critical Chain
Produce These Results?
• Variability is the one constant on all projects
• Critical Chain changes how we protect a project from
variability
• How do we establish project schedules?
– Determine project due date
– Estimate task lengths and flow dependencies
• How do we protect a project from variability?
– Safety factor at end of project
• Is this protection enough?
– Is there significant variability at the task level?
– Is there any variability protection at task level?
 Do We Protect Tasks
From Variability?
• Significant pressure to finish task on-time
– It only takes one late task to delay a project
– People are held responsible for finishing tasks on-time
• Do we account for task variability in the task
estimates?
– Do we give task length estimates we have a 50/50
chance of finishing on time?
– Or do we give task length estimates we have a 80%, 90%
or even 95% chance of finishing on time?
– The difference between the two estimates is variability
protection at the task level
 Is The Variability Protection Within
Each Task Helpful?
• The sum of the variability protection at the task level is
much greater than the safety factor protecting the
project as a whole
• Unfortunately, task dynamics ensures that most of the
task protection is lost and unavailable
• When a task doesn’t need protection, the project
cannot recover the unused protection
• Project is now exposed to the impacts of Murphy’s Law
• The smaller project safety factor is almost always
insufficient to counter the impacts of Murphy’s Law
 Why Is The Protection Within Tasks
Lost?
• Project rarely gains from early task finishes
– Resources for the next task are often allocated elsewhere
prior to scheduled task start
– Parkinson’s Law
• Student Syndrome
– As long as there is plenty of time to complete a task,
everything else is more important -- no sense of urgency
• Tasks are often started late
• Task protection has often passed before task performers realize the
protection is needed
• Tasks rarely finish early and are more likely to finish late
• Bad Multi-tasking
 The Impacts of Bad Multi-tasking

• Three tasks (A, B & C), each take 10 days to

complete (with no variability)
Option 1 A=5 B=5 C=5 A=5 B=5 C=5

Option 2 A=10 B=10 C=10

Duration

Day 10 Day 20 Day 25 Day 30

 How Does Critical Chain Protect
Projects Differently?
• Critical Chain removes all protection at the task level
– Each task estimate based on a 50/50 chance of completion
• Critical Chain takes half of the removed protection and
throws it away
• Critical Chain takes the other half of the removed
protection and pools it at the end of the project (in
place of the smaller safety factor)
– Protection used to protect project as a whole
– Protection called “project buffer”
 Comparing Project Schedules

• Traditional Project Schedule

C1=8 C2=14 D1=7

• Critical Chain
C1=5
Schedule
C2=8 D1=4 Project
Buffer = 6
 Different Variability
Protection Mentality
• Shift from protecting tasks to protecting project as a
whole
• Project Buffer allocated to tasks that need it, not
allocated to tasks that don’t need it
• 50/50 estimates eliminate student syndrome
• Less protection lost due to early finishes and Parkinson’s
law
• Different mentality when judging those responsible for
completing tasks
– Half of the tasks will be late with 50/50 estimates
– Tasks can be late and the project can still finish early
 Impact of Resource Contention

• Critical Path -- longest chain of dependent events

• Why is the Critical Path important to know and
protect?
– Shows minimum time required to complete project
– Based on task lengths and flow dependencies
– Tells project managers where to focus
– Delays in Critical Path delay project completion
• How often does the Critical Path shift on projects?
• This is because we determine the Critical Path
incorrectly.
 Determining Critical Path

• Critical Chain - longest chain of dependent events

– Flow dependencies
– Resource dependencies

A1=6 A2=12 D1=7

B1=3 B2=4 B3=11

C1=8 C2=14
• Critical Path length = 29 days (C1-C2-D1)
• What if tasks A2 and B3 are performed by the same
resource?
• Can the project be completed in 29 days?
 Impact of Resource Contention

• Critical Chain = Critical Path with both flow and resource

contention dependencies
A1=6 A2=12

B1=3 B2=4 B3=11

C1=8 C2=14 D1=7

• Critical Chain length = 36 days (A1-A2-B3-D1)
– Microsoft Project’s Level Loading feature lengthens the
schedule to alleviate resource contention
– But it doesn’t change the Critical Path (new schedule with C1-
C2-C1 Critical Path)
 Impact of Miscalculating
Critical Path
• Project manager focuses in the wrong places
– Problems that seem serious are often minor
– Problems that seem minor are often significant
– Project manager allocates resources to deal with
minor problems and ignores significant problems
until its too late and the Critical Path shifts
• Project manager often commits to unrealistic
time estimates
 Putting Critical Chain and Better
Variability Protection Together
• Project can be delayed in two ways:
– Delay on Critical Chain
• Project Buffer protects Critical Chain
– Delay on a path that feeds the Critical Chain
• Feeding Buffers protect these paths
A1=3 A2=7
• Same concept as Project Buffer
B1=2 B2=3 FB=1 B3=6

C1=4 C2=8 FB=5 D1=4 PB = 8

 Buffer Management

• Buffers indicate how much spare (protection)

time is available
• Buffer Management compares the
penetration of a buffer to the progress on the
path that buffer protects
• This tells project manager where to focus
• Non-Critical Chain tasks started as late as
possible
 Determining a Project’s Status

• Have you ever been 90% finished with a project only to

find the last 10% took as much time as the first 90%?
• How do you currently measure a project’s status?
– % of tasks completed
– % of critical path completed
• What do we need to know the status of a project?
– When project is due
– How much progress has been made
– How much spare time remains in the project
 Why We Never Know the
True Project Status
• Traditional Project Management only
accurately tells us when a project is due
• Critical Chain Project Management measures
progress against the Critical Chain
• The Project Buffer tells how much spare time
is truly available
 Multi-Project Environment
• In multi-project environment, projects are
interdependent -- they share many of the same
resources
• Projects traditionally scheduled as if they are
independent
– Impossible to foresee how delays in one project impact
other projects in the pipeline
– managers must constantly react to each “bump in the
road”
• Critical Chain integrates each project schedule into the
project pipeline
 Critical Chain Scheduling

• Determine the most loaded resource --

resource constraint (drum)
• Stagger the flow of projects based on the rate
the drum processes projects
– Against the assumption that to finish as soon as
possible, the project must start as soon as possible
– Staggering the flow of projects reduces the
amount of bad-multi-tasking
 Benefits of Critical Chain

• For Business Managers

– Compare load of drum resource to demand -- tells how a new project
will impact project pipeline
– Better project status information allows managers to set clearer
priorities
– Portfolio management
• For Resource Managers
– Buffer management helps resource managers to allocate resources to
those projects most in need
• For Project Managers
– Better focus, better information, etc.