Critical Chain Project Management: Motivation & Overview

1. Critical Chain Project Management: Motivation & Overview Robert Richards, Ph.D. Project Manager Stottler Henke Associates, Inc. Hilbert Robinson President Afinitus Group LLC

2. Are You A Responsible Person? Scenario: You live in New England and it’s late Winter Time to airport varies from 45 minutes to 3 hours depending… Most times it takes a little over 65 minutes You are joining the President at 9:00 AM at the airport Questions: How early should you leave? __________ Why?_____________________________

3. Presentation Outline Background • Triple Constraints • Murphy’s Law • Complexity Problem [What to Change] • Localized Risk Management • Task Level Insurance Policy • Student Syndrome • Parkinson’s Law • Multi-tasking Solution [What to Change to] • Governing Principle - Global Risk Management • Project Level Protection • Systems Perspective • Execution Control

4. Background Triple Constraints [Binding Commitments] • Time [Minimize] • Capacity / Resource Budget [Minimize] • Content / Scope / Quality [Maximize]

5. Background Murphy’s Law [Disruption Event] • Number of unknowns • Range of possibilities • Frequency of repetition Complexity [Amplification factor] • Degree of integration required • Number of dimensions to be integrated • Speed of execution

6. Presentation Outline Background • Governing Principle or Paradigm Shift • Triple Constraints • Complexity • Murphy’s Law Problem [What to Change] • Localized Risk Management • Task Level Insurance Policy • Student Syndrome • Parkinson’s Law • Multi-tasking Solution [What to Change to] • Governing Principle - Global Risk Management • Project Level Protection • Systems Perspective • Execution Control

7. Problem: Localized Risk Management Strategy • Task level insurance policy See opening scenario – answers? And if it was a task in a project?? ** How safe is safe enough?** • Student Syndrome The dog ate my homework • Parkinson's Law Self-fulfilling prophecy [good estimating?] • Multi-tasking [absence of priorities] Hero or villain?

8. Problem: Localized Risk Management One Resource, Four Tasks, from Four Different Projects Multi-tasking causes delays to spread across all projects, adding as much as 20% to all projects

9. Presentation Outline Background • Governing Principle or Paradigm Shift • Triple Constraints • Complexity • Murphy’s Law Problem [What to Change] • Localized Risk Management • Task Level Insurance Policy • Student Syndrome • Parkinson’s Law Solution [What to Change to] • Global Risk Management • Project Level Protection • Systems Perspective • Execution Control

10. Solution Governing Principle Behind CCPM is: Aggregation of risk… Benefits: • Lower overall protection needed • Higher degree of “coverage” achieved • Leading to lower incidence of “failure”

11. Solution: Global Approach to Risk Management • Planning • Project Level vs. Task Level Protection • Systems Perspective for Multiple Projects • Should load for multiple projects be considered? • Why? • How? • Execution Control • Promote and encourage team culture • Controlled work queues • No multi-tasking work rules • No batch processing work rules • Task assignment prioritization • Management by Exception

12. Critical Chain Planning Process From Task to Project Protection 1. Traditional Plan 144 hours 2. Safety Excluded 72 hours 3. Resource Leveled 4. Critical Chain Marked 84 hours 12

13. Critical Chain Planning Process From Task to Project Protection 144 Hours 1. Traditional Plan 72 Hours 2. Safety Excluded 3. Resource Leveled 84 Hours 4. Critical Chain Marked in Yellow

14. Aggregation Principle • The Concept of Risk Pooling: • Can someone explain why this works? • Health Care Example: • Larger pool = Lower cost . 14

15. Aggregation Principle Insurance is designed to work by spreading costs across a large number of people. Premiums are based on the average costs for the people in an insured group.  This risk-spreading function helps make insurance reasonably affordable for most people. http://www.insurance.wa.gov/legislative/factsheets/PoolingRiskReducingCost.asp

16. Critical Chain Planning Compared to 144days traditional 132 hours PB = Project Buffer FB = Feeding Buffer • Aggregation Principle [where did some of the safety go?]: • Pooled protection provides more coverage • Location is just as important as amount • Sizing Rule of Thumb  2/3rds to 1/3rd • Buffer is half of preceding chain 16

17. Critical Chain Planning Schedule shown in Aurora 132 hours compared to 144 hours in traditional schedule Proj_Buf = Project Buffer FB = Feeding Buffer 17

18. Critical Chain in Execution Schedule Before Execution Starts 132 hours “AS OF DATE” 132 hours • T8 experienced a 5 day increase in scope or delay • Results in a 2.5 day impact to the project buffer • The rest was absorbed by the Critical Chain gap • 35-32.5=2.5 7% Complete and 14% Buffer Consumed

19. Perspectiveon Buffers Not “rear view mirror watching” Predictive/Preventative/Leading Indicator Mechanism to Promote and encourage Team Work Collaboration / Communication Incentive Mechanism Measuring device – Neutral, Normalized Metrics Real-time Risk Meter Encourages an holistic/goal oriented perspective 19

20. NOTES • * Tipping point also reminded me about what we were taught in psychology and sociology classes. • * Human Behavior is greatly affected by their CONTEXT / environment. • This is not obvious because people are actually very good at controlling their context. • There have been many presentations at this and virtually every other project management related conference, about how team members should perform and how project managers should deal with human relationships to make projects successful. • HOWEVER, most of the time we are trying to change human behavior withOUT changing the context. • * Critical PATH project management creates a CONTEXT for people to perform in • * Critical CHAIN project management creates a very different CONTEXT for people to perform in • * Critical Chain is a context that promotes the type of behaviors that needed for effective teams • E.g., “Avoid Blaming & Complaining” • * Critical Chain  When things go bad, not meeting commitments  team rushes to help NOT blame • So incentive to hide problems, & look for scapegoats is greatly reduced.

21. Critical Chain Priority Metric Project Status Trend Chart or “Fever” Chart 21

22. Critical Chain Priority Metric Project Status Trend Chart or “Fever” Chart 22

23. Multi-Project System Systems Perspective for Multiple Projects • Should load for multiple projects be considered jointly? • Obviously • Why? • Prevent System Overload/Multi-tasking • How? • By taking a Systems Perspective

24. Creating a Multi-Project Schedule Finite Capacity Pipeline Due Dates Are Derived Ingredients: • CC Plans [shorter] • Strategic Pacing Mechanism • Strict Priority Scheme • Rate Limit Policy/Guidelines

25. 1008 1007 1005 1009 1006 1004 1002 1001 1003 0 % Buffer Consumed 100 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | % Critical Chain Completed 0 100 Multi-Project Execution ControlPipeline Status Snap Shot In Execution, Buffer Status Drives Priority Decisions, not Project Importance 1010 By Portfolio of Projects

26. The Upshot… Benefits • Operational Coherence – Stability • 20% Shorter Cycle-Times – Speed • On-time Performance – Reliability • More throughput – Growth Challenges: 1. Simple but not easy to grasp – too simple? • Requires a change in mindset • Takes 120 days for typical 100 person team • We don’t need that much improvement

27. Questions ??? Robert Richards Ph.D., Stottler Henke Associates, Inc. Richards@StottlerHenke.com Hilbert Robinson President Afinitus Group LLC