Week11 slides

Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 1
Session 11
Effort Perspective: Critical Chain
Multi Project Management
Dr. Thomas Lechler Babbio Center 416
Phone: (201) 216-8174 FAX: (201) 216-5385
email: tlechler@stevens.edu

Session 11: Course Pointer
Shareholder
Value
Output
Value
Stakeholder
Value
Effort
Value
Critical
Chain

Session 11: Evidence
1. How to solve resource conflicts in a multi project
environment?
2. What is the leverage to raise the efficiency in a multi project
environment?
3. How to control projects with CC?
4. How to manage risks with CC?

Topics and Objectives
• Analyzing Critical Chain Multi Project Management
• Understanding perceptions of effort which influence
the project portfolio’s value
• Understanding the portfolio as a time-dependent,
throughput-constrained chain of value
• Scheduling effort in a project portfolio as a time-
dependent chain of value
• Integrating changes to effort without destroying the
project portfolio’s structural integrity
• Risk Management with Buffers
• Improving effort value

Session 11: Agenda
• Introduction
• Basic Problems
• Multi-Project Management
• Critical Chain Multi-Project Management
• CC Summary
• CC Buffer Management
• CC Risk Management

Basic Problem: Multi-Project Context
Samples: USA: 172 Projects (112 succ., 50 fail.)
GER: 448 Projects (257 succ., 191 fail.)
Correlation Coefficients Resource Conflicts
Success Criteria GER USA
Efficiency -.20 -.26
Effectiveness -.15 -.19
Customer Satisfaction -.21 -.21
Business Results -.20 -.19
MEANS 4.4 4.1
• Many projects suffer under resource conflicts
• Resource conflicts have negative impact

Basic Problems: Projects Systems
• A collection
– links in isolation
• how tasks and projects
are viewed traditionally
• A system
– Links interacting
• A constraint
– Limits system
performance

Basic Problems: Project Management Practice
• What is the worst thing we can do as a project
manager? As a manager of project managers?
• What causes more harm, more delay, to our
projects than any other project practice? (A
practice so evil our competitors should bribe us
to do it…)

Basic Problem: The “Evils” of Multitasking
Multitasking:
• The practice of assigning one person
concurrently to two or more tasks, and expecting
them to make progress on all of them!
• Resources will be fully utilized!
– Everyone busy all the time
• Is this an effective way to manage projects?
– Is there an alternative?

Multi-Project Mgt.: Typical Environment
2
1
2|01|0
a e hdc
3
0|0
20 daysb f i
a cb
a cb
ed f
ed f
h i
h i
20 days
20 days
g
g
g
j
j
j
•3 projects, 10 tasks, and 3 resources…
•How long will it take?
•When will we get some benefits?

Multi-Project Mgt.: Multitasking
1
2
2|0 4|0 6|01|0 5|0
a e hdc
3
3|00|0
48 days
50 days
52 days
b f i
a cb
a cb
ed f
ed f
h i
h i
g
g
g
j
j
j
• Constraint:
• Limited Resources
• Lead-time of all projects take at least 48 days
• No benefits until when?

Multi-Project Mgt.: No Multitasking
1
2
2|01|0
a e hdc
3
3|00|0
20 days
28 days
36 days
b f i
a cb
a cb
ed f
ed f
h i
h i
g
g
g
j
j
j
4|0
• Constraint:
• Limited Resources
• No Multitasking
• All projects finish sooner
• Benefit stream arrives earlier

Multi-Project Mgt.: The Cost of Multitasking
1
2
2|01|0
a e hdc
3
3|00|0
20 days
28 days
36 days
b f i
a cb
a cb
ed f
ed f
h i
h i
g
g
g
j
j
j
4 44 daysa cb ed f h ig j
4|0 5|0
• Would you rather have three projects,
or five projects — for no additional cost?

Multi-Project Mgt.: Basic Conflict of Multitasking
We have limited
resources
A
Deliver the
maximum value
from projects
B
Start work on a new
project
C
Complete work on my
current project
D'
Don't switch to
new project task
D
Switch to new
project task
To make progress, a
project must have
resources
Interrupting work
causes it to take
longer
Project don't deliver
value until they
finish
"We'll get more
done if we maximize
the amount of work
being done"
"We'll get more
done if we maximize
the rate that work is
finished"
Adding or removing
one person from a
project makes no
apparent difference...
To focus, we have to
prioritize projects...
and postpone some
© 2000 ZULTNER & COMPANY
In order to be
successful
we must...
A resource can
only work on one
task at a time
long-term
short-term

CC: The Required Paradigm Shift
• We must change from
– A local view of productivity
• Any resource working is productive
– “If they aren’t working, get them work to do!”
• The productivity of the organization is just the sum of the
productivity of the resources
• Therefore, ask everyone to work all the time, and judge them
accordingly
– To a global (holistic) view of productivity
• Judge the performance of the system
– How many projects did we deliver this year?

CC: Applying Lean Production
• Lean production uses the same paradigm:
– Choke the release of materials to the floor
– Only work when you have an order
• Otherwise, sit idle
– Do not work to produce inventory, or increase
“efficiencies”
– Concentrate on rapid product throughput
• Now, time to apply the lean paradigm…
in Multi-Project Environments

CC: Maximizing Project Throughput
1
2
2|01|0
a e hdc
3
3|00|0
20 days
28 days
36 days
b f i
a cb
a cb
ed f
ed f
h i
h i
g
g
g
j
j
j
4|0 5|0
wait
wait
16 days
8 days
24 days
32 days
wait
wait
•Projects must WAIT
•Because we have a system…

CC: Drum Buffer Concept
•Five resources, that can work at the rate indicated
– Which resource determines the throughput of the system?
• Which is the constraint?
– How much should the other resources produce?
• Why? You don’t want them to sit idle do you?
14 13 10 15 12
a b c d e
Production chain example:

• In any system, there is a limiting factor: the constraint
• How can we make sure the constraint always has work?
14 13 10 15 12
bottleneck
a b c d e

•If the constraint (limiting resource) is idle,
throughput is lost for the entire system
•All non-constraint resources have excess capacity,
and this excess capacity is required for maximum
throughput: it is protective or sprint capacity
14 13 10 15 12
buffer
bottleneck
a b c d e

CC: The Drum-Buffer-Rope
• In a production system, the maximum throughput is achieved by
managing the constraint
• The Theory of Constraints’ solution for production is “drum-buffer-
rope” (a style of lean production)
14 13 10 15 12
buffergate
rope
a b c d e
bottleneck
drum
Drum-Buffer-Rope

CC: The Drum Resource Schedule
gate
drum
x y z 1
x y z 2
drum buffer
x y z 3
drum buffer
project
queue
project pipeline

CC Summary: How does Critical Chain work?
• 1. Elimination of multi-tasking
– The #1 enemy of productivity causes delays of at
least 15-25% between all projects in an organization
 Critical Chain Multi-project management
• 2. Better management of variation (risk)
– The invisible waste of safety within every project is at
least 15-25%
 Critical Chain Single project management

CC Summary: Critical Chain PM
• Critical Chain Project Management
– Builds upon traditional project management methods
• Builds upon WBS and uses network techniques differently
– Provides a systems approach for managing multiple projects
sharing a set of resources
• Improved system throughput (more projects out in a year without
adding more resources)
– Provides a simple, visible, and powerful way to manage
priorities of multiple projects
• A superior base for solving priority conflicts
– Explicitly takes variation (risk) into account
• Efficiency! (reduces time-to-market)

CC Summary: Critical Chain basic elements
• Project Planning:: rigorous network building
and resource placement
• Project Synchronization: drum schedule and
staggered release of new projects
• Project Scheduling: critical chain and
aggregated buffers (pooled safety)
• Resource Behavior: aggressive task times
and instant starts (relay runner)
• Project Control: buffer management

Causes of Schedule Risk #1 : Multitasking
16
5
A
5
6
FB14
B
7
12
9
FB6
C
PB
8
10
PB
8
5
PB
3
FB5
2|04|06|0 5|0 3|0 1|0 0|0
3
shared
resource
delay!
delay!

CC Summary: Critical Chain PM
• There are two components to implement:
– On an individual project
(independently)
• SINGLE PROJECT implementation
– On the entire set of projects in your organization
(sharing a set of resources)
• MULTI-PROJECT implementation
• You should do both,
as the benefits are additive

CC Summary: Critical Chain Benefits
• You can shorten the duration of all projects in your
portfolio:
– minimum 15-25% reduction
• 15% on small projects, 25% on large projects
– no added resources (and less overtime!), no sacrifice
of value or features, no increase in risk, no cutting of
quality
• And dramatically increase the likelihood of delivery on or
before the committed end date
• And increase your project throughput (deliver more
projects with a given set of resources)

CC Planning vs. Execution
A major break from the past:
– Traditionally, the way you plan a project is also
how you execute and control the project: by the
schedule
– In Critical Chain, you plan the project with a
resource-constrained critical chain with buffers,
according to a drum schedule
– But the execution and control is done with
buffer management

CC Buffer Management
How do we monitor and control Critical Chain
projects?
• Buffer Management
– Buffers revisited
– Using the buffers
– Buffer status

CC Buffer Management: How are we doing?
At points 1, 2, and 3, will we make our deadline?
5 16START
2|04|06|07|0 5|0 3|0 1|0 0|0
Copyright ?2000 by Richard Zultner
5 5 5 5 5 5 5 5 5
14
11
9
8 tasks
to go 5 5 5 5 5 5 5
5 5 5 5 5
5 5 5
5 tasks
3 tasks
5
2
1
3

CC Buffer Management: What about 3 Zones?
Can we divide the original buffer into thirds, and use
the red, yellow, and green zones to help?
5 16START
2|04|06|07|0 5|0 3|0 1|0 0|0
Copyright ?2000 by Richard Zultner
5 5 5 5 5 5 5 5 5
14
11
9
8 tasks
to go 5 5 5 5 5 5 5
5 5 5 5 5
5 5 5
5 tasks
3 tasks
5
2
1
3

CC Buffer Management: Do 3 Zones work?
The last task, in two
cases:
– 10 days is required,
far more than 2/3s
• False OK signal
– 1 day is required, far
less than 1/3
• False danger
signal
So when does the 3 Zone
rule fail?
10 10.5
10 10.0
10 two-day tasks
project
start
project buffer
1 111111111
1 twenty-
day task
10 10.5
10 two-day
tasks project buffer
1 111111111
1 twenty-day task
1
last task
last task
project
start
A
B
1
2|04|0 3|0 1|0 0|0

CC Buffer Management: Goldratt’s Measures
• Judging the status of the project
– Percent of the critical chain complete
• “60% on critical chain completed”
– Ratio of the critical chain completed
to the consumption of the completion buffer
• “60% of CC complete, 30% of buffer consumed”
– Rate of consumption of the buffer
• “We did 21 days of work this month, and only
consumed 6 days of the buffer”
• What do each of these tell you?

CC Buffer Management: Buffers Status directly?
• How much do we have?
• How much do we need?
• What if your project [re-]started now?
• What buffer would you calculate you need?
2|03|0 1|0 0|0
95 5 5
-1 day
buffer
deposits/
withdrawls
6 5 85
3 105 +2 days
510 -5 days
finished!
2
1
3
2|03|0 1|0 0|0
8.6
7.1
5.0
5 5 5
55
5
3 tasks
2 tasks
1 task

CC Buffer Management: Minimum Buffer Size
5 15.810
tasks
2|04|06|07|0 5|0 3|0 1|0 0|0
5 5 5 5 5 5 5 5 5
59 tasks 5 5 5 5 5 5 5 5 15.0
14.1
13.2
12.2
11.2
10.0
8.6
7.1
5.0
8 tasks 5 5 5 5 5 5 5
7 tasks 5 5 5 5 5 5
6 tasks 5 5 5 5 5
5 5 5 5 5
5 5 5 5
5 5 5
55
5
5 tasks
4 tasks
3 tasks
2 tasks
1 task
5
5
5
The buffer you
need for where
you are now, to
the end, is your
minimum buffer
required

CC Buffer Management: The Voice of the Buffer
13
17
12
16
7 tasks
left
3 tasks
left 30 days
30 days
32 days
6 tasks
left
4 tasks
left
35 days 6
15
18
18
actual
MBR
2
1
3
4
If we have more than we need, we are more likely to
make the deadline than when we started the project…
If we have less than we need, we know how many
days we would like to regain…

CC Buffer Management: Buffer Reporting
2|02|5 1|0 |0
9
5 5 5
-1 day
minimum buffer required
?2000 ZULTNER & COMPANY
6 5 8
5
3 10
5
+2 days
5
10
-5 days
finished!
2
1
3
1|5 |53|0
8.6
7.1
5.0
actual buffer
+1 buffer-days
+5 buffer-days
+5 buffer-days
BUFFER STATUS
So…
– How many
buffer-days
are you “plus”
what is your
need?
Or “minus”?
– How can we
manufacture
that amount
of good luck?

CC Buffer Management: Monitoring Buffers
FB
C
2 no delay
8
10 15
10
delay!
early!
FB2
Feeding Buffers protect the critical chain
– Monitor the consumption of all feeding buffers:
is there sufficient protection left?
– Which task is causing the consumption?
– Project completion buffers have priority

CC Buffer Management: Monitoring Resources
Relay Runner resources
– Are activities starting as
soon as possible—
not when the schedule
says?
• Are the resource
buffers too big? Too
small?
– What does the resource
need to start? To
prepare?
• Can we reduce this?
3
10
A
B
Resource
Buffer
7
start!
10
current task next task
3
10
2
1
three days to go
two days to go
one day to go
good luck strikes—early finish
the plan

CC Buffer Management: Traditional artifacts
• Traditional schedule-based methods may need
revising. What about:
– Milestones?
– stage gates?
– phase-end reviews?
– Earned Value?

CC Buffer Management: Milestones
13.9
4|08|0 6|0 2|0 0|0
462
1 milestone
A
B
C
44444444444
8.0472
3 milestones
44444444444
5.7484
6 milestones
44444444444
8.0 8.0
5.75.75.75.75.7
1|00
buffer
buffer
buffer
Milestones delay projects!

Summary: Project Status
With Critical Chain and buffer management project
status reporting is:
• More accurate
– We know better when we will deliver, despite Murphy,
and how the project stands
• Simpler
– Less time is spent reporting, so more time can be
spent constructively on problems
• Enables shorter projects with no trade-offs
– Schedule-based approaches force local safety

Summary: Revisions
• Float milestones, do not tie to dates
– Do not judge project progress by intermediate dates
– Use buffer management to judge progress
• Educate customers at Customer Reviews
– Leverage your superiority in project management
– Seek better customers
• Earned Value Analysis
– Can they accept EVA-like reporting? It is possible to
report in an EVA-like way…

• Plan for variation (and the real world)
– Project tasks will vary from any plan, so
• do not give task-dates-with-certainty,
• give task-windows
– Do not track progress against the calendar
(scheduled dates)
• look at what remains to be done
• look at the status of the buffer(s)
– Will we still make our deadline?
Summary: Project Status

Project Risk Management: Quantifying Risks
• Most risks are judged in terms of impact on the project
schedule
– “Big” risk, big impact
• Not all risks are task related
– Only task-related risks included in task estimates
– How to accommodate the rest? Simply?

Project Risk Management: Traditional Risk PM
Methods of identifying risks
• Objective Sources:
– Recorded experience from the past projects and the
current project as it proceeds:
– Lessons learned files
– Program documentation evaluations
– Current performance data
• Subjective sources: Experiences based upon
– knowledgeable experts:
– Interviews and other data from subject matter experts
– Expert Judgment, Brainstorming

Project Risk Management: Traditional Monitoring
Kerzner, 2001, pp.937
• Methods for monitoring risks:
– Earned value method
– Program metrics
– Schedule performance monitoring
– Technical performance measurement
• The monitoring process systematically tracks
and evaluates the effectiveness of risk handling
actions against established metrics.

Project Risk Management: Traditional Risk PM
• Why are existing risk management methods not used in
your organization?
– Ignorance? (Why?)
– No time (They ADD more time to a project that is
already TOO LONG!)
• But with Critical Chain, we have time
– To do risk management, and any other “we know we
should do that, but we do not have time” methods…

Traditional Risk Management: Traditional PM
• Why are existing risk management methods not used in
your organization?
– Ignorance? (Why?)
– No time (They ADD more time to a project that is
already TOO LONG!)
• But with Critical Chain, we have time
– To do risk management, and any other “we know we
should do that, but we do not have time” methods…

Project Risk Management: Causes of Risks
• Identify non-task related risks (project risks)
– Can they be prevented? Where?
• Add effort
– Can they be detected early? Where?
• Add checks (inspections)
– Can they be minimized by a rapid response?
• What response? How much effort?
• Add into project completion buffer
• Filling the gap between the 1/3 rule of thumb and the
calculated minimum buffer required

CC Risk Management: Extending the Buffer
565
1|02|03|0 2|5 1|5 |5 0|0
duration
8.66
50% 90%
variation
extra-
task risk
intra-task risk
2 3
prevention actions protection time
project buffer
Risk Management
• After risk identification the project could be protected by
extending the buffer size.

CC Risk Management: Avoiding Multitasking
• De-implementing multitasking is hard work
– Not everyone will buy in right away
– All our reporting systems support it
– We have gotten accustomed to doing it
• And some of us like the excitement…
– It is a habit (“we do it without thinking”)
• Hard work and constant vigilance is needed

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