Critical Chain Project Management

1. Critical Chain Project Management Solving the 3 Biggest Problems in Project Management Prepared for PMI Montgomery Chapter April Chapter dinner April 4, 2012 Hilbert Robinson, Senior Program Manager Mike Hannan, VP, Public Sector

2. Common Project Stakeholder Complaints Long lead times De-scoped or cancelled projects Poor due date reliability Missed opportunities Low Organizational productivity Cost/budget overruns Unhappy stakeholders

3. Common Project Management Complaints High stress Low morale Burnout/turnover Frustration Low productivity Frequent “fire drills” Overloaded resources Unpleasant Surprises Scope creep & spec changes Rework Poor coordination More reporting Meetings Severe and chronic multitasking Severe and chronic multitasking Errors Unclear/competing Priorities

4. Operational Gap (1) % Performance Other Other Missing Inputs, Severe Multitasking, Poor Coordination, Many Open Issues, High Rework, Other High Rework High Rework Murphy Many Open Issues Many Open Issues Recoverable losses Poor Coordination Poor Coordination Increased Effective Capacity Future gains from reducing losses Severe Multitasking Severe Multitasking Missing Inputs Missing Inputs Murphy Murphy Unrecoverable losses Current Potential Current Effective Capacity Productive effort Increased Effective Capacity Current Future

5. Old Rule #1 Old Rule Problem Plan each task as a highly reliable commitment. Task variability preventsreliable project commitments. 1

6. Estimate vs. Commitment Set of task-level estimates = 50 days 10 Days 15 Days 10 Days 15 Days 10 Days 15 Days 10 Days 15 Days 10 Days 15 Days Set of task-level commitments = 125 days If we treat task-level estimates as commitments, Task Owners will build in hidden schedule buffers, and then have little incentive to finish early. If we treat task-level estimates as estimates, and pool schedule risk at the project level, we can allocate project-level schedule buffer to those tasks that need it, and only those tasks that need it. 10 Days 10 Days 10 Days 10 Days 10 Days 10 Days 10 Days 10 Days 10 Days 10 Days Project Buffer 2 Days Work : 1 Day Protection

7. New Rule #1 Old Rule Advantage New Rule Problem Highly reliableproject commitment. Plan each task as a highly reliable commitment. Buffer Projects, Not Tasks Task variability preventsreliable project commitments. 1

8. Old Rule #2 Old Rule Advantage New Rule Problem Highly reliableproject commitment. Plan each task as a highly reliable commitment. Buffer Projects, Not Tasks Task variability preventsreliable project commitments. 1 Focusing staff on 1 taskat a time results in low resource utilization, andholds up other projects. Assign staff to multipletasks, and start all projectsas early as possible. 2

9. The Overcommitted / Overloaded Organization Simple Example: Three person team: • A – Designer • B – Builder • C – Tester Three hot projects Seven weeks each  The sooner we start ….

10. The Illusion of Progress Delay Delay Delay Delay High resource utilization

11. Reasons to Multitask • Be responsive to demands/needs of others • Appease customers, stakeholders, PM, boss, etc. • Avoid idle time while waiting for input • Be efficient • Be busy • Impress others with how many projects you can juggle • …and many others.

12. The Hidden Cost of Multitasking Some negative effects of multi-tasking includes: • Loss of focus / more mistakes / rework • More open / unresolved issues / expediting • Disguises other process failures • Destroys the smooth flow of work • Increases need for (burden of) tracking and reporting • Wastes capacity [need for more overtime] • Longer project cycle time/lead time • Increases per unit cost • Fewer completions / higher burnout / lower morale • Dilutes managements attention and focus – Loss of control

13. Simultaneous vs. Staggered Projects Simultaneous Projects Staggered Projects 8 6 4 P4

14. New Rule #2 Old Rule Advantage New Rule Problem Highly reliableproject commitment. Plan each task as a highly reliable commitment. Buffer Projects, Not Tasks Task variability preventsreliable project commitments. 1 Focusing staff on 1 taskat a time results in low resource utilization, andholds up other projects. Assign staff to multipletasks, and start all projectsas early as possible. Maximize project completion rate and resource utilization. Stagger Projects 2

15. Old Rule #3 Old Rule Advantage New Rule Problem Highly reliableproject commitment. Plan each task as a highly reliable commitment. Buffer Projects, Not Tasks Task variability preventsreliable project commitments. 1 Focusing staff on 1 taskat a time results in low resource utilization, andholds up other projects. Assign staff to multipletasks, and start all projectsas early as possible. Maximize project completion rate and resource utilization. Stagger Projects 2 Priorities across projectsshift, resulting in persistent conflicts over resources. Each PM lobbies the PMOfor critical resources. 3

16. To Which Project Should I Assign the Critical Staff Resource? Today Project A 10 Days 25 Days 15 Days 10 Days 25 Days 15 Days Two identical tasks, only one person with the required skill Project B 10 Days 25 Days 15 Days 10 Days 25 Days 15 Days 10 Days 25 Days 15 Days

17. Respond to Whomever Shouts the Loudest? Urgent Field Problem versus a New Design Regulators Engineering Congress Irate Customer Project Manager Golf Partner Executive Sponsor

18. To Which Project Should I Assign the Critical Staff Resource? Today To Project B, because it is further from completion than Project A, and because it has less project buffer remaining. Project A Project Buffer 10 Days 25 Days 15 Days 10 Days 25 Days 15 Days Two identical tasks, only one person with the required skill Project B 10 Days 25 Days 15 Days 10 Days 25 Days 15 Days 10 Days 25 Days 15 Days Project Buffer

19. BPI Based Prioritization Metric D C All projects and tasks are prioritized according to their current BPI

20. Single Project Buffer Trend Chart Recover Plan Watch

21. Portfolio Dashboard Real Time Organization-wide Prioritization All decisions are evaluated according to their predicted impact on BPI Recover Plan Watch

22. New Rule #3 Old Rule Advantage New Rule Problem Highly reliableproject commitment. Plan each task as a highly reliable commitment. Buffer Projects, Not Tasks Task variability preventsreliable project commitments. 1 Focusing staff on 1 taskat a time results in low resource utilization, andholds up other projects. Assign staff to multipletasks, and start all projectsas early as possible. Maximize project completion rate and resource utilization. Stagger Projects 2 Priorities across projectsshift, resulting in persistent conflicts over resources. Each PM lobbies the PMOfor critical resources. Clarity, commonly agreedpriorities, strongercooperation among PMs Protect ProjectBuffers ThatNeed It Most 3

23. The Whole is Greater… Performance Other Other Missing Inputs, Severe Multitasking, Poor Coordination, Many Open Issues, High Rework, Other More Effective Teamwork, Reduced Learning Curve, etc. High Rework High Rework Many Open Issues Many Open Issues Recoverable losses Poor Coordination Poor Coordination Gains from reducing losses Severe Multitasking Severe Multitasking Missing Inputs Missing Inputs Future Potential Murphy Murphy Unrecoverable losses Current Potential Productive effort Current Future

24. Expected Stakeholder Benefits Strong Foundation for Growth More stable scope fewer cancelled projects Shorter lead times Long lead times De-scoped or cancelled projects Much higher organizational productivity Poor due date reliability Highly reliable due dates Missed opportunities Fewer missed opportunities Low Organizational Productivity Happier / satisfied stakeholders Cost/budget overruns Effective cost/budget controls Unhappy stakeholders

25. Documented Benefits of Critical Chain

26. Sample Results Sometimes Speed and Reliability Are Mission Critical. • 18 months vs. 60 months, • IT department first then drug development – CEO: “100% due date performance” • Warner Robbins – Iraq War – Expanded C-5 air lift capacity by 8 million ton-miles • Iraq War – One extra submarine in steaming days • Satellite Division – Turned around the business • Engine Division – partially funded Northwest acquisition • Software delivered 5 months early, 33% cost reduction

27. What if We’re Not an Advanced Project Management Organization? • CCPM is simple in concept—it turns common sense into common practice. • Introducing CCPM will help any project right away, regardless of how sophisticated and disciplined your project-management practices are (or aren’t). • Some “high-discipline” PM organizations take longer to realize CCPM benefits, because they have a harder time letting go of the “Old Rules.” • Many “low-discipline” PM organizations have an easier time adopting CCPM, because the “Old Rules” are not as deeply embedded.