Critical Chain Project Management

Twice during the last two weeks I found myself trapped in own neighborhood due to traffic snarls. You see I live on a hill right above a major intersection in northern Westchester County NY where Rte 35 the major East West route in the northern section of the county where the Saw Mill River Parkway ends and intersects with Interstate 684.

What happened the other week was a freezing rain caught weekend Christmas shopping traffic and the highway departments off guard . Two accidents on Rte 35 just to the west of me managed to shut down traffic everywhere so I could even get out on to 35 to head the other direction and a week later an accident somewhere to the north out of site to me shutdown north bound traffic on I684 and cars and trucks trying to bypass the stoppage then backed up and clogged traffic on Rte 35 as they tried to skirt over to nearby Rte’s 22 and 100.

This all got me thinking about project management.

I have a saying I often use that is:

"It only takes a day to fall a week behind"

The funny thing is (or maybe it not so funny) I find I can often find circumstances where I can reframe that expression as:

"It only takes and hour to fall a week behind"

Or

"It only takes a day to fall a month behind"

All this reminded me of a kool traffic simulation tool that I discovered back in March of 2008 while reading Grist which I then posted to the Yahoo CMSIG Group I follow.

The java based traffic simulator you can find over here: Dynamic Traffic Simulation

…and the Grist article also had this neat YouTube video from New Scientist Magazine showing a real life experiment conducted by some Japanese researchers showing how some traffic jams can occur for no apparent reason at all.

Lawrence Leach (the author of the excellent book Critcal Chain Project Management) then replied (the emphasis is mine):

Hi, Jerrald

How cool is that! Thanks.

My mind naturally wanders toward using it for learning about
projects. In some ways I think it might be more valuable than dynamic
Monte Carlo simultions; particularly to help thinking about multiple
projects. I have run such simulations, and get a blah response. Maybe
this works better because we can really relate to traffic flow.

I don’t know yet how well this metaphor works, but I naturally
thought of the vehicles as tasks on a project, and the two main lanes
as the critical chains for two projects flowing along. The on-ramp
represents feeding chains of tasks, of course.

One of the first things to catch my eye was how tie-ups flow upstream
against the flow. Its like problems near the end of one project, or
even on projects released to the field, impacting earlier work on
other projects.

I didn’t fool with it, but one apparantly can show the effect of
queueing, and relate that to capacity buffer sizing.

I think there might be much more to learn from this simple dynamic
simulation. Other thoughts on it?

And again a few days later commented again (again the emphasis is mine):

Hi, All

I have been playing a little with the traffic simulation. I already
think there are some great messages one can put across from it.

BTW, I got the English download through the author, If he didn’t put
it on the original site, let me kwow and I will provide another link.

One of the first things I liked with the basic simulation is that it
shows how the traffic jam flows upstream from the merge point. If we
consider the merge the actual constraint, it means "the pile" can be
well upstream of it.

I also found that when you decrease the inflow, it takes a long time
for the jam to clear. The jam clears from the "front end" forward,
which would look like a moving constraint.

If you throttle in inflow, the system is insensitive to ramp flow,
once the ramp is clear and the oncommers can merge, rather than have
to accelerate.

Overall, it shows the power of dynamic simulation to understand
reality, as compared to the TOC over-simplificaition. It shows most
of the TOC statements reflect a subtle pseudo steady-flow assumption.
(OK, I am prepared to hear the screams of "not so!" on this, but its
my impression.)

I think there is much more to show. I am sure it will show the non-
linearity of queuing, for example.

Regards,
Larry Leach

This all has me thinking again about project management as I drive around and run into holiday traffic and grid lock. Thinking what lessons relative to project magement can I learn from this jam I am in sure beats the stress and anger that some people let get their goat.

"Tell me how you’ll measure me, and I’ll tell you how I behave"
—Eliyahu Goldratt

" Tell me how you’ll measure me, and I’ll tell what damn fool things I’ll do to make the measurement look good."
—Tony Rizzo

" No amount of sophistication is going to allay the fact that all your knowledge is about the past and all your decisions are about the future."
—Ian E. Wilson

The achilles heal of project management, especially in product development, are the estimates of time and resources.
—Jerry Groen

The most complex things are the simplest.
—Agni Celeste

Out of intense complexities intense simplicities emerge.
—Winston Churchill

The whole is simpler than the sum of its parts.
—Willard Gibbs

We struggle with the complexities and avoid the simplicities.
—Norman Vincent Peale

Our old views
constrain us. They deprive us from engaging fully with this universe of potentials.
—Margaret J. Wheatley Leadership and the New Science: Discovering Order in a Chaotic World

The pessimist thinks the glass is half empty.
The optimist thinks the glass is half full.
The cost accountant thinks you have twice as much glass as you need.
The throughput accountant thinks you have room for twice as much stuff.
—Rob Newbold

It is a simple task to make things complex, but a complex task to make them simple.
—Meyer’s Law.

"…It is crazy to give the greatest effort to detail when we know the least about the project…at the beginning. Better (much better) is to add detail no sooner than it is needed (acting at the last responsible moment) taking advantage of what is revealed and learned. AND do this with people who are close to the project…people who actually perform the tasks."
— Hal Macomber Notes on The Underlying Theory of Project Management is Obsolete

Ultimately, the parallels between process and project management give way to a fundamental difference: process management seeks to eliminate variability whereas project management must accept variability because each project is unique.”
— Elton, J. & J. Roe. “Bringing Discipline to Project Management” Harvard Business Review, March-April, 1998.

I’m asked from time to time as to what books I would suggest for a Theory of Constraints – Critical Chain Project Management ‘newbie‘ to read and I think there is a real good one-two-three path for anyone just looking to get started with it.

The Goal: A Process of Ongoing Improvement
by Eliyahu M. Goldratt, Jeff Cox

This is the book that got me started on all this. Years ago I was working on a master bedroom bath project for a fellow who at the time was President of Union Carbide. Each day walking through his home to that master bath it would take me past his home office and I could see a book on a table by his reading chair. One day I say The Goal and it struck a cord because I had read an article about how companies were using it to change the way they work in Success magazine.

It’s written in the form of a novel so it’s a lot like listening to the real life stories that we sometimes hear professional talking about at times. Certainly the problems the characters face are ones we often face too.

Personally I think just the content in Chapters 13 & 14 regarding "the hike" are worth the price of the book alone. That where the lesson of the effects of common cause statistical variation is so well taught.

A kool quote I’ve often seen regarding the book comes from I think Fortune Magazine – " A survey of the reading habits of managers found that though they buy books by the likes of Tom Peters for display purposes, the one management book they have actually read from cover to cover is The Goal ."

The Goal also comes in an unabridged audio version too either CD or Cassettes that I listen to over again probably at least three times a year and also give to my people to learn from who aren’t as avid readers as I am.

Critical Chain
by Eliyahu M. Goldratt

Like The Goal this is written in the form of a novel too which helps make it such very interesting learning experience but it all about The Theory of Constraints as it applies to project management and in addition to introducing us to Critical Chain also introduces us to Drum-Buffer-Rope production technique.

Goldratt also does a good job with this book in explaining a lot of what goes wrong with traditional project management which is incredibly helpful in identifying what going on (or wrong) with our own projects and schedules by using characters that discuss debate and learn why their projects are often behind schedule and over budget.

Critical Chain Project Management, Second Edition
by Lawrence P. Leach

This book takes what is introduced to all of us in Goldratt’s "Critical Chain" novel and puts it into a How-to format. At $69 and no Amazon discounts this book is not cheap at all at but it’s certainly worth every penny.

While The Goal and Critical Chain are where you get the basic understanding of just what t is different about TOC and CCPM this is the book where you go when you need some actual technical explanations of just how to go about applying CCPM.

Here’s a list of great quotes from from The Goal: A Process of Ongoing Improvement that I found via Duke’s Tool Page which is a great starting point for a bunch of web pages full of good tips and ideas on management created by Duke Rohe of the Office of Performance Improvement at the University of Texas M.D. Anderson Cancer Center.

I’ve gone on to start adding to the list with my own picks from Critical Chain as I’m re-read through it.

1. If you are like nearly everyone else in this world, you have accepted so many things without question that you’re not thinking at all.
2. Every action that does not bring the company closer to its goal is not productive.
3. Productivity is meaningless unless you know what your goal is.
4. Your problems are you don’t know what your goal is.
5. You company’s goal is to make money or it’s not in business.
6. If quality was your goal, then how come Rolls Royce nearly went bankrupt?
7. Can we assume that people not working and making money are the same thing?
8. The best way to be shut down is to make money AND leave the competitors in the dust.
9. It is possible for a company to show net profit and a good ROI and go bankrupt. Bad cash flow is what kills most industries.
10. We need to increase net profits AND return on investment AND cash flow.
11. Throughput is the rate at which the system generates money through sales.
12. Inventory is the money that the system has invested in purchasing things it intends to sell.
13. Operational expense is the money the system spends to turn inventory into throughput.
14. Most people haven’t been managing according to the goal.
15. We are too busy turning process time into piles of inventory.
16. Investment is the same thing as inventory.
17. Knowledge:
    • Which gives a new manufacturing process that turns inventory into throughput is operational expense.
    • Which we intend to sell is inventory.
    • Which is used to build the system is investment.
18. Just pay me for the value of what you learn from me.
19. What’s more important to your management, efficiencies or money? (Better be money)
20. Do you realize the only way you can create excess inventory is by having excess manpower?
21. The goal is not to improve one measurement in isolation. The goal is to reduce operational expenses AND reduce inventories and increase throughput simultaneously.
22. Whatever lets us turn inventory into throughput is operational expense.
23. Bowl and match game is awesome to understand the accumulation of inventory and its effect on the throughput. Pg 106.
24. A bottleneck is any resource whose capacity to or less than the demand placed upon it.
25. You should not balance capacity with demand. Instead, balance flow of product through the plant with demand.
26. Does excess capacity equals waste. Yes and no. Yes if its products are stockpiling big time behind it. No if the fluctuations in the process behind it are starved for more inventory.
27. You have to learn how to run your plant by its constraints.
28. Most manufacturing plants don’t have bottlenecks. They have enormous excess capacities.
29. Most manufacturers have capacity hidden from us because our thinking is incorrect.
30. Loss in throughput is loss on the bottom line.
31. Whatever the bottleneck produces in an hour is equivalent to what the plant produces. Every hour lost at a bottleneck is an hour lost in the entire system.
32. A bottlenecks time is wasted when:
    1. Its product is sitting idle during a lunch break
    2. It is processing part that are defective
    3. It is producing parts that are not needed
33. Do all the parts have to be processed at the bottleneck or shifted to a non-bottleneck for processing?
34. We need specific fluctuation-reducing procedures for bottleneck-routed parts and processes.
35. The level of utilization of a non-bottleneck process is not determined by its own potential, but by some other constraint in the system.
36. A system of local optimums is not an optimum system at all.
37. Four elements of time:
    1. Setup where part spends time waiting for a resource.
    2. Process time where part modified into a new more valuable form.
    3. Queue where part spend time in line waiting while a resource is busy working on something ahead of it.
    4. Wait where waits for another part so it can be assembled.
38. Setup and Process are small in comparison of queue and wait. Queue is the dominant portion.
39. An hour saved at a non-bottleneck is a mirage.
40. Balance flow of a system, not capacity.
41. Incentives we usually offer are based on the assumption that the utilization of any worker is determined by his own potential. Faulty.
42. An hour saved at a non-bottleneck is worthless.
43. Good way to teach: How to persuade other people, how to peel away the layers of common practice, how to overcome the resistance to change.
44. Inventory is definitely a liability.
45. Process of optimizing throughput:
    1. Identify the system’s bottleneck.
    2. Decide how to exploit bottlenecks
    3. Subordinate everything else to the bottlenecks
    4. Elevate the systems bottlenecks
    5. Fix the next bottleneck
    6. Warning! do not let inertia to cause a system constraint
46. Eliminating priorities improve throughput.
47. If your system has excess capacity? You can produce product at the cost of the materials.
48. There are times when non-bottlenecks must have more capacity than the bottlenecks. If the upstream resources don’t have spare capacity, when this doesn’t happen, we are starving the bottleneck.
49. The more complex the organization the more interdependencies between the various links and the smaller the number of independent chains it composed of.
50. Policies can be a constraint of a system and it follows the same five steps to optimizing to.
51. Major obstacles to putting principles of the Goal in practice:
    1. Lack of ability to propagate the message throughout the company.
    2. Lack of ability to translate the books learning to the company’s procedure.
    3. Lack of ability to persuade decision makers to change some measures.

From Critical Chain

1. We all know that focusing is important" Johnny speaks softly "A manager who does know how to focus will not succeed in controlling cost and will not protect throughput. But what is focusing for us? We have come to know it as the Pareato Principle. Focus on solving twenty percent of the important problems, and you’ll reap eighty percent of the benefits. This is a statistical rule. But those who teach statistic know that the twenty-eighty rule applies only to systems composed of independent variables; it applies only to the cost world where each link is managed individually. (pg 91)
2. In the throughput world, focusing and process of on-going improvement are not two different things, they are one in the same (pg 95)
3. 
   The higher the uncertainty the longer the tail of the distribution.
4. "The difference between the median of the probability distribution and the actual estimate is the safety we put in" (pg 46)
5. "What you claim is that the major, negative financial ramification does not stem from spending too much money"
6. "Financially , the overruns are much less important that the overdue"