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Critical Chain

Critical Chain. Team 7 David D. Cho Minyoung Kim Bin (Raymond) Xiao Hua Zhang. Chapter 1. The Company: Genemodem Impressive Track Record: Profits growth in 6 consecutive years CEO: Daniel Pullman (fully supported product development project)

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Critical Chain

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  1. Critical Chain Team 7 David D. Cho Minyoung Kim Bin (Raymond) Xiao Hua Zhang

  2. Chapter 1 • The Company:Genemodem • Impressive Track Record: Profits growth in 6 consecutive years • CEO: Daniel Pullman (fully supported product development project) • VP of Engineering: Issac Levy (insisted on hiring a consulting firm to do an in-depth analysis of Genemodem’s product development)

  3. Chapter 1 cont’d (The Problem) • The Challenges: 1. Short product life-span (like a triangle, only six months, continue to shrink) 2. Long product development time (roughly twenty four months) • Resolution: Drastically cut development time

  4. Chapter 1 cont’d (The Project) • Target: Drastically cut development time • Think tank: Mark Kowalski, Ruth Emerson and Fred Romero • Test ground: A226 • Time span: Before A226 is ready (roughly 16 months) • Resources: No budget restrictions • Incentives: 10,000 shares each (current price $62.48, 62.48*10,000=$624,800)

  5. Chapter 1 cont’d (The Think Tank)

  6. Chapter 2 • Place : University (Business school) • Characters : Rick Silver (Associate Professor), Jim Wilson (Full Professor) • Main Event: - Mr. Rick Silver is newly assigned to teach a course in the Executive MBA. - He is recommended by Jim Wilson, due to his unique style of ‘teaching through open discussion’. - Jim Wilson suggests Rick Silver to teach ‘Project Management’ course and also he needs Rick Silver in finishing some interesting research.

  7. Chapter 3 • Place : A dinner event for Universities Presidents • Characters : Ms. BJ von Braun and 4 other presidents • Main Event: - Ms. BJ initiated conversation with other presidents about recent decrease in the number of MBA applicants. - Presidents are sharing about their ideas of that reasons for the decrease could be both ‘over capacity of business schools’ and ‘less demand of MBA degree’. - They also talks about that Ivy leagues are not experiencing any decrease due to their reputation and strong financial ability to attract academic calibers.

  8. Critical Chain Chapters 4-6

  9. What is a project? Textbook definition: “ A set of activities aimed to achieve a specific objective and have a clear start, middle and end”. Professor Silver’s definition: A complex initiative that needs pictures, diagrams, time charts, or showing sequential or parallel steps in order to manage it.

  10. General Project Problems Regardless of industry or project type, there are three common problems to all projects: • Budget overruns • Time overruns • Compromising content

  11. B.J Von Braun - President of University Saturating demand for new MBAs Overextending capacity Large fixed overhead for business program that might potentially decline Christopher Page – Dean of Business School Demand will not taper off Need investments to maintain talent in the business schools Talent will bring increase reputation and increase demand Conflicts - The Meeting

  12. Meeting Adjourns Agreements: • Ability of graduates to get jobs as indicators of demand • Use of survey tool as measurement BJ VonBraun already has the results – she gets Page to agree to the decision-making conditions, then shares results with him.

  13. Class Example – New Production Facility Built in Malaysia • Sacred cow project for CEO • Project is grossly over budget and significantly late • Payback period pushed from 3 to 5 years, which still seems unrealistic • All use uncertainty as reasons for delay - Upper management blames external environment and lower ranks blames internal sources

  14. Conclusions • Most problems in projects are direct or indirect results of uncertainty • Most individuals add a safety margin to any deadline, usually around 80%

  15. Critical Chain Chapter 7-9 IOM580 Project Management Team 6 Leon Tseng, Jasmine Yeh, Troy Yu, Hiroshi Harima

  16. Chapter 7 • Scene 1: Conversation between B.J. and Chris Page We shouldn’t change with such small fluctuation Trim the budget according to the forecast!!

  17. Chapter 7 • Scene 2: Conversation between B.J. and Bernard …………… Business schools fail to deliver the markets!! Management is art. It cannot be taught as a science

  18. Chapter 8 • Rick and Jim talk about the research subject: Overdue and Overruns Agree, but…. The budget overruns are not the main reasons for the extended payback period It is caused by the delays in completing projects

  19. Chapter 9 • Rick explains PERT and Gantt techniques to students Critical path is… Make an early start and keep the slack!! Should postpone the investments until really necessary It’s an optimization problem!!

  20. Chapter 9 • Class discussion gets heated The issue must be addressed from management’s point of view, too!! if starting too many things managers would be bound to lose focus Using late starts, we lose slacks and everything becomes important The control mechanism measures the progress of the project. The problem is that by the time the progress report indicates something is wrong, it’s usually too late.

  21. Chapters 10-12 OverviewTeam 8Jake Detels, Tom Martin, Christopher Maynard, John Portwood

  22. Chapter 10 • Early vs. Late Start of Critical Path • A waste of time • Concentration on minor considerations and neglect the major ones • The main thing is for the project manager to focus • Both early and late start jeopardize the ability to focus, even though to different degrees • Measuring Progress of Projects • Measurement should induce the parts to do what is good for the system as a whole • Measurement should direct managers to the point that needs their attention

  23. Chapter 11 • Manage for Cost or Manage for Throughput • Theory of Constraints (TOC) • Only one or two true constraints in system • TOC says that conflict implies a faulty assumption and that must be corrected • Example: The only way to achieve good cost performance is through good local performance everywhere (Sub-Optimization) • Incorrect assumption and root of problems in many organizations • Strengthening the Chain • 1) IDENTIFY, 2) EXPLOIT, 3) SUBORDINATE, 4) ELEVATE

  24. Chapter 12 • Prime Measurement • Again, there is only one (or two) constraints in a system • Identification of the system constraint should drive identification of the Prime Measurement • The main reason for an operational measurement is to induce the departments to do what is good for the company as a whole • “Tell me how you measure me and I’ll tell you how I’ll behave.” • Book examples changes at a steel mill

  25. Critical Chain: Chapters 16 thru 18 Group 3 Katelyn Fang ∙ Sherry Liu ∙ Kevin Nagatori ∙ Adam Terry IOM 580 Dr. Ardavan Asef-Vazir Spring 2009

  26. Chapter 16 • Pitfalls of Managing a Program: • Pad each step’s completion dates. • Pad each step with a lot of safety time • Waste safety time: • Student Syndrome • Multi-Tasking • Delays accumulate and advances do not

  27. Chapter 16 (cont) Bottleneck: a resource with capacity that is not sufficient to produce the quantities that the market demands. Critical Path: the constraint of the project. Feeding Buffer: a buffer used by the non-critical path so that it does not affect the critical path.

  28. Chapter 16 (cont) Before / Most Common Project Plan with buffer at each step After / Best Way Project Plan with buffer at Critical Path and Feeder Buffers for Non-Critical Path

  29. Chapter 17 • Monitoring Progress • Before => Monitor critical path by % complete • After => Adding feeding buffer monitoring • Days consumed on feeding buffer • Days consumed compared with original buffer days • Days left on feeding buffer • Conclusion => Focus on continuous monitoring

  30. Chapter 18 • 2 Types of Projects • Projects done solely by the company • Reduce lead time estimates • Eliminate milestones • Frequent reporting • Projects done by vendors and subcontractors • Talk their language • Pay for vendor responsiveness • Penalty for not finishing a project on time • Cash Flow • Sales • Market Share • Stock Value

  31. The Critical Chain Group 2 Chapters 19-21

  32. Lose-Lose to Win-Win • Student (Ted) looks at the relationship between contractors and owners • Lose-Lose: • Contractor bids low to obtain contract • Contractor makes more money off of changes and delays • Owner pays high price for changes • No incentives for contractor to complete the project on time

  33. Lose-Lose to Win-Win • The Win-Win relationship: • Owner benefits from a project which is completed early • Owner shares this benefit with contractor in incentive bonus for finishing early • Owner punishes contractor for finishing late with heavy penalties • Contractors no longer bid on price but ability to complete project faster

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