CCPM Consulting

Critical Chain Project Management

Estimates are Numbers

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An estimate of a task’s duration can be derived from historical data, expert knowledge and even guessing. Most estimates make allowances for “stuff” that often occur. Things going wrong, other things to work on, distractions and …? Historical data may be available for a task that has been done many times.

The estimate is put in project management software which gives it a start and finish date. The estimate becomes a due date, a deadline. People work to meet deadlines. Deadlines make it difficult to get done early.

I used to work to a due date report for my projects. The project durations were based on standards set by the company. Whichever of my projects was nearing its due date got my immediate attention. I almost always finished them on the due date. It was amazing how those standards had such accurate durations.

I suggest that the duration estimate is a number that is useful for planning the project. During project execution, it becomes a deadline.

Critical Chain is Crazy Stuff!

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If Project Management is truly important to you, this will light your fire!

It may seem like Crazy Stuff, but CCPM feels like Cruise Control for Projects. We will show you how to do things you don’t know are possible. We want you to know why you can, so you can take others there.

Project Management should not be difficult. It’s not.

Why Collect Daily Status

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Critical Chain changes the way tasks are managed. Daily status helps to keep people’s attention on one task. Asking the person for remaining duration has them thinking about what they still have to do. It also becomes a subtle commitment for them.

Project status is current and reasonably accurate. Buffer Management identifies the tasks that are most impacting the project due date. The most important tasks get priority and focus to get them done. Problems show up quickly so they can be dealt with. Projects get done fast and the people doing them like it.

Critical Chain Project Management or Drum Buffer Rope Production?

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I think you have only scratched the surface of Critical Chain. Scratching is good!

Critical Chain Project Management (CCPM) is based on the Theory of Constraints (TOC).

TOC was designed first for production with a management method called Drum Buffer Rope (DBR).

These two methods are fundamentally the same, but have different approaches. Both production management and project management apply to resources, tasks, dependencies and deliverables.

I was a manufacturing engineer with Boeing in Seattle for 14 years. Building an airplane could be managed as a project or production. They are one of the world’s top users of TOC. Building an electrical power unit could be considered production or a project.  Beer cans would be production.

To me, the difference is in how you want to pay attention to it, manage it. If it’s valuable, important or time critical, manage it as a project so you know how it’s doing all the time. If it’s repetitive, high volume, or time flexible, manage it as production. Between the two is a huge grey area and choice.

http://ccpmconsulting.com/category/operations/ and http://ccpmconsulting.com/category/project-management/

Production usually has significant queue time between operations. Projects have far less slack between tasks, and none along the Critical Chain/Critical Path. CCPM and DBR both focus attention on the system constraint. The theory is that every system has something that limits it, a constraint. There is usually only one. Find it, help it, and get immediate and significant improvement in output. It is easy to use and decisions become obvious. It’s worth a good look.

Why the Critical Chain must not change?

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Once the Critical Chain (CC) is identified, it becomes the baseline to measure project progress. A stable CC is therefore a requirement.

The Critical Chain is only recalculated or revised if there is very significant new work added to the project.Then progress must be measured to the new CC.

CCPM compares the percentage of Project Buffer consumed to the percentage of the Critical Chain that has been completed. (This is based on the time used versus the work completed.) This ratio is a direct indicator of the project health. If the buffer is consumed faster than the critical chain is being worked, management attention may be needed.

Critical Chain Project Management

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Critical Chain Project Management (CCPM) focuses attention on the few tasks that determine the duration of the project. Projects can be completed 25 to 50% faster, and at less cost. The critical chain is the constraint of a single project. CCPM is most effective in complex environments and with multiple projects that share resources.

Critical Chain Project Management is based on the Theory of Constraints. Drum-Buffer-Rope (DBR) is primarily used to manage production and CCPM is primarily used to manage projects. The distinction between projects and production is blurred. Is building a $200 million aircraft considered production or a project? The only real distinction is how you want to pay attention to the work. DBR monitors the Drum and Buffer, not the process. DBR does not directly track each job or item. CCPM tracks the project as it flows through each resource, so it doesn’t get delayed. High value and importance projects use CCPM to continuously monitor status with confidence.

Critical Chain Project Management (CCPM) uses aggressive task durations with a buffered project commitment. Normal variation in task duration is absorbed by time buffers. Critical Chain focuses attention on the few tasks that impact the actual duration of a project, and it changes behaviors from only meeting due dates to completing tasks quickly. Critical Chain is most effective with complex, multi-project programs that share resources.

The Critical Chain is the longest, task or resource dependent, chain of tasks in a resource loaded and leveled project. Critical Path Method only considers task dependencies. The Critical Path can have parallel tasks requiring the same limited resources.

Critical Path Method

The Critical Path can change during execution. The Critical Chain does not change because it becomes a baseline to measure Critical Chain work completed.

CCPM estimated task durations are based on effort only. No allowances are made for interruptions or distractions of any kind. Each task is considered to have a 50% probability of completing on time. Safety, contingency and allowances for delays (stuff happening) are aggregated at the end of the project (and at the end of feeding chains) in buffers.

Buffers are sized at 50% of the length of the chains they protect. Buffers do not protect individual tasks. Buffers do not belong to management. Buffers can be used by any task and they exist to protect the project commitment. The Project Buffer belongs to the customer.

Critical Chain Project Management

Aggressive tasks are often estimated at 50% of the normal estimate. The Critical Chain is about half the length of the Critical Path. Add in a Project Buffer of 50% of the Critical Chain and the total committed project length is 75% of the Critical Path committed length. Critical Chain projects, even though shorter, average being on time 95+%. Many of them complete in half the Critical Path time.

During project execution, a number of rules and behaviors must be followed –

  • Tasks and projects must be prioritized.
  • Higher priority tasks have precedence for limited resources.
  • A resource is to work diligently on one task until completed.
  • Resources are to turn in work when completed (task deliverables are available).
  • Tasks must have all inputs available before starting.
  • Task status is to be reported as Remaining Duration (effort only).
  • Status is collected frequently, usually daily.

Project execution decisions are based on Buffer Management. If a task takes longer than its aggressive planned duration, the buffer will be absorbed. If a task completes in less time than planned, the buffer will recover (grow).

For every project, the percent of Buffer Used (%BU) is compared with the percent of Critical Chain Completed (% CCC). The relative buffer impact (% BU / % CCC) is used to prioritize management’s focus where it is most needed. Resource assignments and special assistance are based on this Buffer Management. During execution, these high priority tasks get management attention. Lower priority (less buffer impacting) tasks receive very little management attention.

Task start and due dates are relatively unimportant in CCPM. What is important is completing the most important work quickly, so the project is completed quickly.

Critical Chain is like having Cruise Control for your Projects

Operations Management with TOC

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Theory of Constraints Operations Management
by Skip Reedy

The management concepts of the Theory of Constraints were originally applied to manufacturing. In manufacturing, constraints are usually physical. In project management, the constraint of a single project is the Critical Chain.

Constraints Management

Your system has a constraint. That sounds bad, but it’s good. It is the part of your system you can improve to get significant and nearly immediate results.

The Theory of Constraints focuses attention on the most loaded resource, the system constraint. Increasing the effective capacity of the constraint increases the output through the system. The constraint is also an indicator of the health of the system. If it’s running well, the system is running well. If the constraint is struggling or stopped, so is the system. It’s easier to manage a complex system with only one resource to watch closely.

Production Management

A common manufacturing approach has been to pay attention to everything. Then we try to increase the efficiency of all of the individual system parts expecting to improve the whole. The primary intent seems to be to keep resources busy. Unfortunately, keeping busy is better at making inventory than money.

Other common approaches are based on the idea that improving anything will improve the system, and that pushing work into the system increases output.

Think of a garden hose with a kink in it. (Figure 1) Helping the kink will improve the output of that system. Helping any other part will not. [Well maybe pushing at 500PSI would momentarily help.]

Figure 1: Constricted Garden Hose

Goldratt

In the 1980’s, the Theory of Constraints (TOC) was developed by Dr. Eliyahu M. Goldratt to describe a common characteristic of systems, and he created a methodology using that characteristic to improve performance. Every system has something that limits it, usually just one thing. Identifying and helping this system constraint will improve the output significantly. Improving any other part of the system will not increase throughput. [Throughput is Sales less Totally Variable Expenses.]

Five-Step Process of On-Going Improvement

TOC has a Five Step Process that is repeatable. Each time through the steps, the system capacity and output increase. Costs and inventory often do not go up. It’s good for the bottom line.

1.    Identify the system constraint.
2.    Decide how to exploit the constraint.
3.    Subordinate everything else to the above decision.
4.    Elevate the constraint.
5.    Avoid inertia. Go back to Step 1 and determine if the constraint has moved.

There is a Step 0. that is almost always done first: choke the release of orders to the shop to reduce Work-In-Progress (WIP). This by itself will reduce lead-time dramatically.

Identifying the constraint may be as simple as looking for the biggest pile of work.

Exploiting the constraint looks for ways to improve its performance, such as reducing downtime for lunch and breaks; giving it priority for repair; not having it work on non-priority or possible defective material.

Subordinating requires the rest of the system to be synchronized to the pace of the constraint. This is a paradigm shift for most people, especially managers. For example, it’s okay to be idle if there is no work to be done.

Elevating means obtaining more constraint capacity. This is usually the first point at which money is spent on the system.

Avoid inertia to keep the system improving. Go back to Step 1 to determine if there is a new constraint.

Drum-Buffer-Rope

Typical manufacturing lead times have only 5 to 10% processing time. The rest of the time, orders are waiting in queues.

Drum – The constraint of a manufacturing system is called the Drum resource. It is the most heavily loaded resource. It has the least capacity. Everything else can go faster. Therefore, it should be the drumbeat to set the pace of the system.

Buffer – In order for the Drum to always have work, a Buffer of work is maintained in front of the Drum to protect it from starving. If the Drum stops working, the system throughput is stopped. An hour of downtime for the Drum is an hour of lost throughput to the system forever. Watch this drum resource carefully. Protect it.

Rope – The mechanism to release new work into the system is called the Rope. As the Drum completes work, the Rope allows new orders to be released.

If the Drum (constraint) capacity is increased, the system capacity is immediately increased. If the Drum capacity is raised above the next most loaded resource, that resource becomes the Drum.

The Five Steps in action

A very simplistic example will clarify how and why the constraint moves. The system shown in Figure 2 has five resources in sequence, with capacities of A=200/hour, B=180/hour, C=150/hour, D=170/hour and E=190/hour. It could be a production line, or any process. What is the maximum amount this system can yield in an hour?

C, with a capacity of 150 per hour, is the Constraint

Constraint Capacity 150 pieces per hour

 Figure 2: Production sequence with different production rates

Increasing the capacity of B to 200/hour will not increase the system output because the capacity of C is limiting the system. All the other machines can keep up with C. Therefore, C is used as the drumbeat of the system. All the work-in-progress (WIP), after Raw Material and before the Constraint, is considered Buffer. (Figure 3) The Rope is a device, a method, to monitor the Buffer and advise Raw Material to
release more work to refill the Buffer.

If A produces 200 per hour, work will pile up in front of B, and B’s work will pile up in front of C. Both A and B must be subordinated to the constraint C, so they keep C supplied with work, yet don’t bury it. They maintain C’s Buffer in a predetermined range. If A or B breaks down, they have the extra capacity to refill the Buffer when they restart. If C, the constraint, breaks down, A and B sit idle until the constraint is back on line.

The Drum, the Buffer and the Rope

Figure 3: The sequence showing Drum, Rope and Buffer

 Figure 3 shows the relationship of the Buffer and Rope to the Drum. Every machine can work at its capacity when it has work. When it does not have work, it doesn’t work. If B stops working, C will continue working, using the Buffer. The Buffer is sized to accommodate reasonable variation in the system.

Improving production at little cost

Increasing the capacity of constraint C to 165/hour will increase the system throughput by 10%, probably at no cost. C would still be the constraint. Since excess WIP was removed in Step 0, the increased throughput will appear very quickly. The 10% increase in Throughput is probably free! See Figure 4.

Constraint C is increased to 165/hour

Constraint Capacity 165 pieces per hour

Figure 4: System with element C throughput increased by 10%

Constraint C is increased to 210/hour. D becomes the new constraint with 170/hour.

Constraint Capacity 170 pieces per hour

Figure 5: Effect of increasing element C to 210 pc/hour

Increasing C from 165 to 210/hour will move the constraint to D as shown in Figure 5. D’s capacity is 170 versus C’s 210. That is only a 3% throughput gain for the system, even though C’s capacity increased 27% (45/hour). That is not much benefit provided by the increase in C. A smaller increase in C may be more cost effective.

The system is now limited to 170/hour, the rate of D, the new constraint.

Increase D to 185/hour and the constraint moves to B with 180/hour.

Constraint Capacity 180 pieces per hour

Figure 6: Effect of now increasing capacity of D

Increasing the capacity of D to 185/hour will move the constraint to B, 180/hour as shown in Figure 6. At some point, an improvement will require purchasing additional constraint capacity to increase throughput further. Up until that point, the improvements have been essentially free. No new resources were purchased and probably less overtime is required.

Always watch the constraint. Don’t let it starve or get buried in unneeded work. It’s the heartbeat of the system. If the constraint breaks down, it is the highest priority to be repaired.

Buffer Management

The return on investment with the Theory of Constraints is powerful. It is usually straightforward to get a 50% increase in throughput very quickly. Repeat the Five Focusing Steps for further improvements. The most important changes are in the way the system is managed. Pay attention to the constraint. If any other part of the system struggles, the Buffer of work will be affected, indicating management attention
may be needed. Moderate fluctuations in the size of the Buffer are normal responses to system variation while the constraint continues working.

Theory of Constraints is simple. TOC does not aim for perfection. Good enough is perfect for now, until the next simple improvement. Just focus on the constraint. TOC is so simple that many people find it hard to believe.

One step at a time increases Throughput again and again. Each time, it’s easy to tell what will happen.

Typical Results

The following table shows examples of some typical results achieved by applying Theory of Constraints as described earlier:

Feature                                                         Gain
Measurable results
Lead-Times are short and predictable    Mean Reduction 69%
Cycle-Times                                                  Mean Reduction 66%
Due-Date-Performance                              Mean Improvement of 60%, @ 95+%
Inventory Levels                                          Mean Reduction 50%
Revenue/Throughput                                 Mean Increase 68%
Intangible benefits
Quality improves
Fixed costs are very slow to increase
Profits increase dramatically
Quality of life for employees improves
Overtime decreases
Demand on management attention is reduced