The Critical Chain approach to management can solve problems faced daily by senior managers in a multi-project environment.
Critical Chain (CC) project management is attracting attention from senior management searching for a quantum leap in performance. It has been described as the biggest breakthrough in project management since the 1950s and many senior managers within multi-project environments are adopting this approach, including companies such as Intel, Seagate and Lockheed Martin. So what is all the fuss about?
The Challenge
Managing a multi-project environment presents many challenges including some of the most common problems senior management face.
· Lack of visibility across the project portfolio is one of the issues most often raised. Large unwieldy reports and complicated Gantt charts are presented at project review meetings by every project manager and the project statues are clouded by too much emphasis on what has been done, rather than what activities remain.
· Poor resource utilisation is another concern for senior management who are trying to ensure efficient usage.
· Unease in committing new projects into the system. Many times projects are pushed into the pipeline to realise an opportunity. Due to poor visibility, these projects are often accepted without the ability to accurately predict a reliable delivery date and the impact on other projects. This can throw the system into chaos, putting the whole organisation under a great deal of stress.
These problems manifest in many major undesirable outcomes and behaviours. An approach is required to solve these problems, enabling organisation-wide visibility and coordination of programmes and projects. Software is not an answer in itself without a fundamental change in the rules, behaviour and culture. Critical Chain is the basis for these changes.
CC Planning Phase
The CC planning phase has two main components, business planning and project planning. Business planning is concerned with maximising the benefits for the organisation through establishing which projects are launched and in what order.
The projects are initiated at pace of a "drum". The drum resource is normally the most heavily loaded resource or function, which naturally determines the pace of all projects within the portfolio. Acceptance of a drum reduces the amount of live projects in the system. Less resource contention means projects are completed in a significantly shorter time or that more projects can be completed with the same resources. The impact of any new project can be determined quickly and an informed business decision can be made prior to acceptance.
Traditional project planning is focused on constructing a project network and establishing timescales and resource requirements. Critical Chain uses "necessary condition" networks rather than the "flow" networks that are widely used today. Necessary condition networks reveal hidden dependencies, obstacles that will prevent the successful completion of the project. It is essential to identify these obstacles in the early planning phases of the project as they can be devastating if found during the execution phase.
Another key element is the positioning of safety time. Under CC the safety is transferred from the individual task and placed in front of the project completion date and other key integration points. This safety is known as the project buffer and is managed throughout the execution phase of the project. After all, the real aim is to finish the project on time; it is not about whether each individual task finishes "on time". Many project managers have reported benefits from just using these revised project-planning techniques.
CC Execution Phase
As buffers are located at key integration points both within, and at the end of, the project’s Critical Chain, they are in ideal locations to determine the health of the project. Using a process in which resources report the remaining duration1 on their active tasks, the impact on the buffers can be determined, recovery actions identified and their effect predicted and/or monitored.
The key to Critical Chain’s success during the execution phase of a project is Buffer Management (BM). This is the term given to the process of using the buffers to assess the project’s status and assist decision making, which provides management with something they have long been looking for - Visibility and Focus. It is easy to graph the project buffer progress and for senior management to have a Project League Table (PLT) (Download file for diagram at foot). The PLT can be used as an agreed basis for escalation and management intervention.
The buffers are divided into three zones: Watch, Plan & Act; or to use the analogy of traffic lights: Green, Amber, Red. As the task reporting is updated, the impact of delays (or equally, early finishes) are projected into the buffers and hence are related to achieving the project’s due date. BM also has the effect of highlighting which delays are critical to the project’s success and which can be accepted without having to take any disruptive or expensive corrective action.
Better resource utilisation can be achieved through frequent but much shorter (10-15min) BM meetings. To use the example of a product development environment, the meeting would not only include the design team and engineers, but also marketing, purchasing, manufacturing, or other necessary people - including supporting management - as required. The benefits of using short buffer management can also include increased knowledge of project status, more control, visibility, better decision making, team buy-in, focus, less stress, reduced costs, less disruption and increased confidence in meeting delivery promises.
The president of one major flight simulator company stated: "Using CCM (Critical Chain Management) and TOC (Theory of Constraints2), I’m now ready to stake our company’s reputation on the commitments we make."
One concern often raised is that buffer management and holding frequent meetings will be a huge time burden. Where CC has actually been applied this concern has been dispelled.
To quote one product development project manager about his experience, "Originally I had a transmitter team leader and a controller team leader and I was the overall project manager, now I am doing all three jobs AND I have more time!"
Results
Critical Chain has already been used in environments ranging from satellite manufacture, software development and implementation through to the manufacture of wooden conservatories, all with considerable success. It has proven to deliver benefits across all levels of an organisation from senior management to resources on the ground and helps take an organisation towards achieving a world-class culture.
One of the most outstanding being Lucent Technologies which has published results from their Outside Plant Optic Cable Business Unit. They went from delivering 11 product development projects in one year - with only 45 per cent being on time - to delivering 33 product development projects the year after, of which all were on time bar one - all with similar scope and with NO increase in staffing! A quantum leap that makes other senior management teams envious.
The question is not ’Does CC work?’ rather ’Do WE want to make the change?’
Author Profiles
Clive Merrick and Daniel Baker are specialists in Critical Chain Project Management within Goldratt Consulting (Europe) Ltd, based in Maidenhead, Berkshire, UK. The authors and Goldratt have established many Critical Chain implementations across a range of industries in the UK and overseas.
Notes
1. Critical Chain is an application within the Body of Knowledge known as Goldratt’s Theory of Constraints.
2. "Improving T2M" (Time to Market) van Aalst & Powell 2000.
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