Project Management - Critical Chain Challenged! I

A response to a recent article in the GPM (The German Association for Project Management) contain the following reservations in relation to Critical Chain:

1. "Critical Chain proponents claim that projects are shortened by an average of 25% and that the project throughput is significantly increased. By my understanding of the logic of project management both methods will have about the same Throughput." (I guess the author of the response means the critical path and the critical chain methods result in the same throughput.)
   
2. "The author of the blog entry claims that many Critical Chain users are unwilling to report their success - since it represents a competitive advantage. How can the effectiveness of a method be proven if users are unwilling to report and describe their successes. Or is it simply so that Critical Chain des not have any success?"

Does Critical Chain Shorten Projects?

There are 2 ways to convince yourself of the likelihood that Critical Chain does actually cause projects to be significantly shorter than other methods.

1. Perform a thought experiment. Test the logic of Critical Chain in your mind. Based on what you know about single and multi- project environments build up the logic that either disproves or proves whether or not the Critical Chain method will be successful. If you choose this method you will have to build the cause and effect logic that leads to the correct conclusion. To ensure a correct conclusion every step in the cause and effect chain(s) must be checked using the categories of legitimate reservations. Not that difficult a task, but one that you must validate with colleagues, both those familiar with project management and others that are not.
2. You can evaluate the simple Critical Chain solutions that are supposed to achieve the spectacular results claimed - they are risk free since the actual work does not change; just the organization of that work.
   • Critical Chain cuts task times in half and places half of what was cut at the end as a project buffer. So the plan is 75% of what you started with - which proves nothing about project execution. The action places an aggregated project buffer at the end of the Critical Chain instead of spreading it over all the tasks (Side paths are handled in the same way but do NOT add to the project buffer.) The actual work we need to do is not reduced. What we have is a buffer at the end of the project plan that is to be used to give us early warning that trouble is brewing in the project - if buffer consumption is greater than the rate of project completion we are heading for trouble.
     
     Why can we cut task times in half and the live with only half the buffer aggregated at the end?
     
     The assumption Goldratt made was that we all include a significant amount of safety in every task - because every resource in a project wants to be seen as reliable. Since the time a task will take does not follow a normal (Gaussian) distribution - the distribution is skewed significantly to the right (statistics of repetitive actual projects show this well). The amount of safety for say 90% certainty of completing a task on time is very high - probably even more than the amount cut using Goldratt's rules. According to Goldratt's assumption we have plenty of safety, but we find ways to waste it. Putting the buffer at the end puts that safety under the control of the project manager so that any gains made in one task can help another in trouble. (Delays are still passed on, but task time gains are now also passed on - in very many of current and historical cases you  know about most tasks were finished on time - but rarely early (more than half should be early). If tasks are rarely delivered early, then we must be wasting time by delivering on time instead of when we actually finished our task … early. (If we make task time efforts that are relatively certain to finish on time (before implementing Critical Chain), then it follows that more than 50% of the time a task should finish early. The fact the many tasks do not helps prove that time allotted to tasks is often wasted.
     
     Try it … not much can go wrong and your information about the project is improved because of monitoring the buffer. Think about the risk is zero … at worst the project will take the same time as before.
   • When Critical Chain is introduced in an environment one of the first actions is to freeze at least 25% of all projects - stop all work on these projects. The impact of this action is to seemingly delay some projects in favour of others - so a good prioritization is essential. The further impact will be that resources will  focus their efforts better - they will no longer be pushed to switch tasks as often. Multi-tasking will reduce significantly and the flow of projects will increase. This is not so easy to prove, but professor John D. Little (of MIT) did just that. His proof  known as Little's Law. You can find his proof on the internet … but for most of us understanding the math it is not easy.
     
     Another way to show the impact of freezing 25% or more projects is to use simulations. There are several that could be used including the bead simulation,  the confetti factory and the columns of numbers. At least some of these simulations are explained somewhere on the web. Simulations are a simplification of reality, nevertheless they may convince you enough to at least try the freeze tactic.
     
     What is the risk with freeze? Customers whose projects have been frozen for a time may complain initially. However, after doing the simulations you may well realize that even if a client must wait now, he will still get his project earlier than otherwise. Projects will complete much sooner (those not frozen) and the frozen ones have an excellent chance of finishing earlier than they otherwise would. Time lost due to multi-tasking is recuperated and ensures even the frozen projects complete earlier than they otherwise would. Risk is low, but you must explain to clients what  you are doing and why!
     
     (As projects complete, you can defrost a corresponding amount. Workload on resources should remain about constant … or be lowered further if multitasking is still very high.)
3. Get references from successful implementations. I am certain you can find these in several place - Critical Chain software suppliers, Critical Chain consultants, Academia and the TOCICO. However, every project environment will be different from yours so even when you find the success stories you will still need to check the logic, check your paradigms and in the end check out the methodology on real projects.

When we were young … Baie Comeau, Quebec, 1953.
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Yield (or Scrap) Targets

To improve yield or reduce scrap is on the face of it a good thing. But what could be the consequences?

Corporate Policy

The corporation, a multi-billion corporation, requested their internal consultants to calculate what yield (or scrap) was costing the company. A 1 billion€ corporation with materials costs of 50% of turnover and a 85% materials yield could save 75m€ if 100% yield were achieved. Every %age point yield improvement would add 5m€ to the bottom line and increase return on sales  .5%. Not a bad result if profits are at about 10% of sales.

So, the corporation decides that all factories should improve their yield by 4 per cent in the next forecast period (next year).

Polymer Factory

The polymer factory of this corporation received the dictate from corporate and wondered how they would be able to meet the targets set by management. It turns out that the majority of polymer produced by this factory is one of 3 colours – white, black or natural. These 3 products already have very high yield or low scrap rates – not much was possible here. However a sizeable part of production was for polymer pigmented in many of the colours of the rainbow. Each of these colours was produced in small quantities and therefore had correspondingly low yields and high scrap rates. Maybe the solution lies here – improving the yield of all these small volume products would allow this factory to achieve their target. But how could it be done?

The machines of the factory are all sized for the three high volume products. These machines, while used to produce colours are not suited for that job. Set-up losses are simply too high. What the factory needed was small machines for small production runs. However because funds for investment were not available the factory could not invest in such machines.

Factory management was in a real bind – with the available equipment and given the product mix they had to produce yield improvements were impossible. At the same time not to achieve improvements was also not an option.

The Factory’s Solution

The factory’s purchasing people had already developed a series of suppliers; as a safety valve should demand exceed capability. The solution was therefore simple. Since these potential suppliers all had smaller equipment production of colours was outsourced to them. The yield targets were achieved, BUT… The added outsourcing cost outweighed the yield savings by about 1m€/year.

The factory could not reduce their operating expenses so their operators were standing idle more often – when colours would have been produced. The suppliers charged for their work – since a small machine takes as many operators as a large one, and since these suppliers want to make money the price for the outsourced production was high – therefore the negative impact.

What are the ugly policies at work here?

When I was young!!!

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