Transcript Business IX

Chapter 11
1.
2.
3.
4.
5.
6.
Understand the difference between common cause
and special cause variation in organizations.
Recognize the three ways in which project teams
inflate the amount of safety for all project tasks.
Understand the four ways in which additional
project task safety can be wasted.
Distinguish between critical path and critical chain
project scheduling techniques.
Understand how critical chain resolves project
resource conflicts.
Apply critical chain project management to project
portfolios.
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A constraint limits system output.
The Goal – Goldratt
Critical chain method is a network analysis technique
that modifies the project schedule to account for
limited resources.
TOC Methodology
1.
Identify the system constraint.
2.
Exploit the system constraint (schedule first).
3.
Subordinate everything else to the system constraint
(schedule second).
4.
Elevate the system constraint (remove constraint\add
resources).
5.
New constraint uncovered? Repeat the process.
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Special Cause
Common Cause
Due to a special circumstance Inherent in the system
Managers should
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•
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•
Understand the difference between the two
Do not adjust the process if variation is common cause
Do not include special cause variation in risk estimation
• Causes over estimation of project contingencies
Risk management should be performed on discrete
project risks
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Funnel experiment
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Funnel experiment
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How safety is added to project activities
1. Individual activities are overestimated
2. Project manager’s added safety margin
3. Anticipating expected cuts from
management
25%
50%
80%
90%
Lognormal
(Gaussion Distribution)
time
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1.
The “Student Syndrome”
a. Immediate deadlines
b. Padded estimates
c. High demand
2.
3.
4.
Failure to pass along positive variation
a. Other tasks
b. Overestimation penalty
c. Perfectionism
Multitasking
Path Merging
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People tend to put off task with long
deadlines in favor of working on
immediate deadlines
Demotivated due to knowledge
of padded estimated time
Resources in high demand
juggle multiple activities
which promote “putting
off” task
Parkinson’s Law states –
Work expands so as to fill the time available for its completion.
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Finishing early gives the chance to put work
on hold to act on other projects or
assignments
Fear that future work time estimations may
be penalized if task are finished early
Can be seen as time to refine the initial work
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
Let’s say
each task is
10 days
worth of
work
30 days until all three are done, each task done in 10 days
30 days until all three are done, each task done in 20 days*
*This assumes zero startup time between task changes
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
Even though Path C is done 15 days early, the
successor activity will start 15 days late due
to the merge of work
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
Central Limit Theorem
since   

   n
CLT Example
n
States that any distribution of sample means from a large population
approaches the normal distribution as n increases to infinity.
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Activity durations estimated at 50% level
Buffer reapplied at project level
◦ Goldratt rule of thumb (50%)
◦ Newbold formula
Feeder buffers for non-critical paths
Buffers are non-work scheduled activities to maintain focus
on the planned activity durations
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Original planned time based on a high probability of on-time completion
Shrink planned time to the 50% likelihood level – buffer is transferred
to the project level
Shrink buffer acquired by 50% and reapply potential slack.
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Critical activities
A (10)
B (50)
Non-critical activities
C (20)
E (30)
Slack
D (10)
90 Days
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A (5)
B (25)
E (15)
C (10)
D (5)
45 Days
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.50 x (5+25+15) = 22.5 days
A (5)
B (25)
E (15)
.50 x (10+5) = 7.5 days
C (10)
D (5)
Project Buffer (22.5)
Feeder
Buffer (7.5)
67.5 Days
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Feeder
Buffer
Bob
Bob
Critical Path
Bob
Feeder
Buffer
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Feeder
Buffer
Bob
1st -Bob’s task on the CP – redraw
critical chain network
Feeder
Buffer
Bob
Feeder
Buffer
The Critical Chain is shown as a dotted line
Project
Buffer
Bob
2nd -Bob’s task are prioritized
and worked in order
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
Due dates & milestones are eliminated
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The only firm commitment is at the project level
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Realistic likelihood estimates – 50% level not 90%
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Create a “No blame” culture for missing a date
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Subcontractor deliveries & work scheduled ES
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Non-critical activities are scheduled LS
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Factor the effects of resource contention if necessary
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Critical chain usually not the critical path
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Solve resource conflicts with minimal disruption
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Drum – system-wide constraint that sets the
beat for the firm’s throughput.
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Drum – person, department, policy, resource
Capacity constraint buffer (CCB) – safety
margin separating projects scheduled to use
the same resource
Drum buffer – extra safety margin
immediately before the constraint resource
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1. Identify the resource constraint or drum
2. Exploit the drum
a. Prepare a critical chain schedule for each project
b. Determine priority for the drum
c. Create the drum schedule
3. Subordinate the project schedules
a.
b.
c.
d.
e.
Schedule projects based on drum schedule
Designate critical chain
Insert capacity constraint buffers
Resolve any conflicts
Insert drum buffers so the constraint is not starved for
work
4. Elevate the capacity of the drum
5. Go back to step 2
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Priority: 1. Project A
2. Project B
3. Project C
C
C
Resource Supply
B
B
A
B
A
A
Time
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
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Enough resources for two projects at once
Start with A and B, schedule C when time is
available
Resource Supply
CCB
B
B
A
C
A
B
A
C
Time
A & B start
immediately
Project C
start date
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 Schedule projects based on drum
 Designate critical chain
 Insert capacity constraint buffers
 Resolve any conflicts
 Insert drum buffers so the constraint is not
starved
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1.
2.
3.
4.
5.
For questions 1 and 2, refer to the BAE Systems case earlier in the chapter.
What are the practical implications internally (in terms of team motivation)
and externally (for the customer) of making overly optimistic project
delivery promises?
In considering how to make a big change in organizational operations (as
in the case of switching to CCPM), why is it necessary to go through such a
comprehensive set of steps; that is, why does a shift in project scheduling
require so many other linked changes to occur?
Explain the difference between “common cause” variation and “special
cause” variation. Why are these concepts critical to understanding
successful efforts to improve the quality and reliability of an
organizational system?
What are the three reasons Goldratt argues are used to justify adding
excessive amount of safety to our project duration estimates? In your
project experiences, are these arguments justified?
What are the reasons we routinely waste the excessive safety we acquire
for our project activities? Are some of these reasons more prevalent in
your own experiences than others?
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6.
How does aggregation of project safety allow the project team to
reduce overall safety to a value that is less than the sum of individual
task safeties? How does the insurance industry employ this same
phenomenon?
7. Distinguish between “project buffers” and “feeder buffers.” What are
each of these buffer types used to do?
8. It has been said that a key difference between CCPM safety and
ordinary PERT chart activity slack is that activity slack is determined
after the network has been created, whereas critical chain path safety
is determined in advance. Explain the distinction between these
ideas: How does the project team “find” slack in a PERT chart vs. how
is activity buffer used in critical chain project management?
9. What are the steps that CCPM employs to resolve conflicts on a
project? How does the concept of activity late starts aid this
approach?
10. What are the key steps necessary to employ CCPM as a method for
controlling a firm’s portfolio of projects?
11. What is a “drum resource?” Why is the concept important to
understand in order to better control resource requirements for
project portfolios?
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