Critical Chain Insights

There's a good article on Projects@Work about Critical Chain Project Management, with some insights from the field.

Still, organizations are slow to adopt it. The biggest roadblock is getting management to change their mindset, especially when it regards avoidance of multi-tasking and not focusing on task completion dates.

It's not foolproof, and makes some generic assumptions (i.e. assuming everyone pads their estimates), but certainly there are some valid points of CCPM that should be considered. Even if an organization doesn't buy into all its philosophies, they shouldn't throw the baby out with the bathwater.

Here's the article...

http://www.projectsatwork.com/content/Articles/234283.cfm

Critical Chain fever chart example

This Critical Chain case study link includes some interesting tracking information. Anyone who has suffered as a result of a client’s internal politics and delays will sympathise with the tale of frustration. Assembling and temporarily disbanding the project team – sticking to the dictum ‘No multi-tasking’ – makes this case a more extreme example but very believable. CCPM is credited with being the project management approach that allowed this project to succeed. The fever chart is a graphic representation of how the Safety Buffer was used. A possible shock for people used to finishing a project in the green, the goal here was to finish in the yellow! The rationale of course is that staying in the green means that your estimates are too conservative!

Via Case Study: A Typical Critical Chain (CCPM) Implementation

Theory of Constraints case study

Still on the hunt for examples to illustrate the effectiveness of the Critical Chain approach, I came across this example from South Africa. Petrochemical plant examples are usually 'significant projects' and this one illustrates the point well. Included is the requirement - and challenge - of integrating vendors into the process.
APPLICATION OF CRITICAL CHAIN ON HIGH VALUE PETROCHEMICAL PROJECTS

Critical Chain again

This term's course includes the Critical Chain topic. So I'm looking around for more references and examples to illustrate the principles. This link is interesting for putting the emphasis on estimating, understanding and managing variation. Tony Rizzo, the author, goes on to examine the use of Critical Chain in a multi-project environment.
Another interesting observation is that the mainstream Project Management products do not support the approach.
The Project Management Soap Box: [17] The Critical Chain Model

Elusive IT Project Value: Book Tells How To Achieve It

I've just finished reading an excellent book on achieving value from IT projects, The Information Paradox: Realizing the Business Benefits of Information Technology, by John Thorp and the Fujitsu Consulting's Center for Strategic Leadership.

Thorp and company claim that today's IT projects are evolving more and more from simple automation efforts to complex "information" initiatives, and even further---to complete business transformation initiatives. This calls for a different approach and requires IT and Business collaboration.

As the book points out, the classic "let's buy a product and assume it comes with automatic benefits" approach doesn't work in today's more complex arena (and in fact it probably never did). In a complex business transformation initiative, trying to assume that an IT project in isolation will deliver value is wishful thinking.

The book also points out the four critical dimensions of complexity, which it says are blind spots in traditional thinking:

1) Linkage - to other related initiatives and to business strategy
2) Reach - those areas of organizational structure or supply chain processes that may be impacted by the change, or that need revisiting in order to bring about the benefits
3) People- those affected by the change and/or that need to be engaged (i.e. proactive change leadership and stakeholder analysis)
4) Time - the time it takes to manage the overall initiative, including the above dimensions, to fully realize the benefits (most companies grossly underestimate this)

Unfortunately, many IT projects just focus on on-time and on-budget delivery (resulting in a situation that the book describes as, "the operation was successful but the patient died"). Thorp and company refer to this as "investment myopia."

Instead, a committment to business value, ongoing process improvements, frequent iterations of delivery, and better project selection techniques are key. Most of all, we need to be aware of the blind spots mentioned above.

The book goes on to describe how a system of program management, portfolio management, and governance, with a focus on benefits realization, can bring about results. It also cautions about the dangers of treating selections as a one-time annual event, making selections in isolation (instead of in the context of investment programs), and not looking at all aspects of value (i.e. going beyond simple financial measures).

I highly recommend the book for those struggling with determining the value of IT, or trying to bring about collaborative change in their organizations. If you look at any major successful transformation, it was brought about by a marriage of technology, business process, and organizational change, and with full backing from senior management. This book can go a long way toward helping make this happen.

Project Management Success Stories; Learning from the Past

There's nothing like learning from others who have "been there and done that" to expedite our attempts to try something new. It's sort of like asking for directions versus driving around for hours fruitlessly.

For example, for those considering implementing Critical Chain Project Management (CCPM), here's a list of CCPM Success Stories from the Goldratt Institute.

And if it's Agile Project Management you're considering, here's a great Agile Project Management success story from Computerworld, which shows how Sabre Holdings Corp. spent $125 million on a failed project to overhaul their reservation system in the late 80's, and then tried another attempt more recently, this time with a more agile approach, and had tremendous success.

All too often, organizations attempt to undertake huge initiatives without learning from others' successes, and more importantly, their failures.

And the past doesn't have to only include the recent past. I've been writing about project management "lessons from history" for years now, and some of the successes and failures of such notables as Caesar, Augustus, Napoleon, and many others bring lessons that are directly applicable today. For instance, Napoleon was using Earned Value before it was "invented" 200 years later.

I am absolutely convinced that the search for the "next big thing" will undoubtedly bear its best fruit through closer examination of the past.

Critical Chain Project Management CCPM: Software Optimizes Aircraft Maintenance Project ...

Lisa Mathews provides update on the use of critical chain project management, CCPM, for aircraft maintenance project optimization. ...

Critical Chain Project Management CCPM: Software Optimizes Aircraft Maintenance Project: Via Black Anthem: C-130 Hercules begins critical chain project management journey ...

... "The critical path is basically the best way we can flow an airplane all the way through the system, he said. Critical chain is the longest chain on each individual aircraft and customizing each aircraft based on its critical chain. The group will use Concerto software to accomplish CCPM. This software will help prioritize where mechanics are sent to work. Concerto was used by the C-5 Production Group last year and has been modified for use by the C-130s this year. " ...

Realization Technologies defies conventional wisdom, both business- and product-wise. Used by over 140 leading organizations throughout the world, its system of execution for projects, based on Critical Chain, breaks old management rules instead of blindly automating them. Unlike traditional project management software that is heavy on planning and tracking, this system changes the rules of execution. Realization also offers fixed price implementations, with 90 percent of its fees tied to improving customers' bottom lines. Realization is headquartered at 2 N. First Street, San Jose, Calif.

The Future of Project Management

PM Forum reported this week that Russ Archibald, one of the founding fathers of modern project management, announced his predictions for where project management will be in the year 2010. He offered these predictions as part of his address to the second annual international conference of the PMI Moscow Chapter.

Some notable predictions included:

• Portfolio management will be used to better integrate project management, operations, and strategic management.
• Project Management lifecycles will include the concept phase and benefits followup.
• Critical Chain will, unfortunately, still not be widely applied.
• Project management capabilities will become a standard requirement for general senior management
  
  Read the full PM Forum report below...
  
  PMFORUM, Connecting the World of Project Management PMFORUM Breaking News: PROJECT MANAGEMENT PIONEER ANNOUNCES PREDICTIONS FOR 2010

Project Risk-Based Cost Management; Is RACM The Next Big Thing?

The Defense industry brought us Earned Value and proved that Critical Chain could work. Now the DoD commissioned the Institute for Defense Analysis (IDA) to test a new cost control theory called RACM (Risk Analysis and Cost Management).

The results of the study showed that RACM can offer significant reduction in project costs and excellent cost performance management. RACM offers a method to determine and manage an appropriate risk reserve level (much like Critical Chain focuses on buffer management for schedule control). It also uses a risk multiplier (called Ps or "Probability of Success") for costs at the WBS element level.

But RACM is not being positioned as a replacement for Earned Value Management. Instead, it can be used to complement EVM.

For more info, see the website for RACM, Inc. They also offer a 60-day Evaluation Beta Model.

RACM Home Page

Critical Chain Project Management (CCPM); The Betamax or DVD of Project Management?

Remember when videotape first came out on the market? Sony had Betamax, but the VHS format took off and got a jump on the market. Betamax actually had better quality, but it didn't matter. Now DVDs have all but eliminated VHS. DVDs look here to stay for a while, although a high definition version will soon take its place.

Now let's look at Critical Chain. No doubt it has been proven to pay back in dividends in those organizations who have tried it. Arguably, it's a more effective method than the traditional critical path approach for improving throughput. But many haven't adopted it, for the same reason they resist disruptive technology. They won't change until they're backed into a corner and have no choice, or until everyone else uses it to achieve better results and they need to change to keep up.

So will Critical Chain become like Betamax and fizzle out, save for the purists that have already adopted it? Or will it slowly become recognized for its results and be adopted by a larger market? Will it become the DVD of project management, or will some totally new methodology that assimilates the best of Critical Chain and Critical Path become the de facto standard?

Hard to tell. It's a good sign that PMI recognizes Critical Chain as a legitimate project management alternative to Critical Path. Or maybe some PMThink reader will be inspired to devise something new that replaces both! The goal is to keep evolving and not remain stagnant. We all need to keep thinking.

Project Management Gridlock; With Cost Focus, Throughput and Value Suffer.

For some reason, despite numerous case studies indicating the astonishing results of those who have implemented Critical Chain Project Management (CCPM), organizations are still resisting it. Perhaps they're not ready for speed, and are still stuck in their lumbering bureacracy. Perhaps they don't believe that psychology can play a role in getting people to focus on throughput. Perhaps they're so focused on cost-cutting and cost-monitoring, that they don't realize that improving throughput can give them the cost results they're chasing.

Or perhaps they don't realize that traditional waterfall approaches and bureacratic methodologies could be standing in the way of throughput and thus value (after all, time is money).

An organization either follows a throughput model or a cost model, and never the twain shall meet. The statistics are all in favor of the throughput model. For information on how Critical Chain Project Management can improve throughput and deliver true customer value, see this report from the Cutter Consortium. Be sure to click on the PDF link at the top for best readibility.

Critical Chain Project Management: Coming to a Radar Screen Near You!

Project Management: Accelerate New Product Design in Semicon Industry ...

Project Management: Accelerate New Product Design in Semicon Industry: Via MatrixOne: MatrixOne and Leading Analyst Firm to Discuss How to Accelerate Chip Design Through Better Project Management ...

MatrixOne and AMR Research join forces in webcast to explore acceleration of project management for designing and delivering new products to the marketplace in the semicon industry. Eric Karofsky has published recent research on accelerating innovation ("Reach Innovation Utopia With Project Management Tools") ...

... "MatrixOne, Inc. (NASDAQ: MONEE), a leading provider of collaborative product lifecycle management (PLM) solutions for the value chain , announced that it will present a webcast aimed at helping project managers in semiconductor companies learn how they can use better project planning, execution and tracking solutions to better meet today's chip design challenges and deliver new products faster. The webcast will feature a presentation by Eric Karofsky, senior research analyst for AMR Research, who will discuss the latest industry trends and best practices for speeding product development. The live webcast will take place on Thursday, September 29, 2005 at 1:00 pm ET. " ...

AMR Research provides world class research and actionable advice for executives tasked with delivering enhanced business process performance and cost savings with the aid of technology. Five thousand leaders in the Global 1000 put their trust in AMR Research's integrity, depth of industry expertise, and passion for customer service to support their most critical business initiatives, including supply chain transformation; new product introduction, customer profitability, compliance and governance, and IT benefit realization.

MatrixOne, Inc. (NASDAQ: MONEE), a leading global provider of collaborative product lifecycle management (PLM) software and services, enables companies to accelerate product innovation to achieve top line revenue growth and improve bottom line profitability. With world-class PLM solutions and a commitment to customer success, MatrixOne is focused on helping companies across the automotive, aerospace & defense, consumer, machinery, medical device, semiconductor and high-tech industries solve their most challenging new product development and introduction problems. More than 800 companies use MatrixOne's solutions to drive business value and gain a competitive advantage, including industry leaders such as BAE Systems, Bosch, Comau, General Electric, Honda, Johnson Controls, Linde AG, NCR, Nokia, Philips, Porsche, Procter & Gamble, Sony Ericsson, STMicroelectronics and Toshiba. MatrixOne is headquartered in Westford, Massachusetts, with locations throughout North America, Europe and Asia-Pacific.

MultiProject Critical Chain System ...

MultiProject Critical Chain System: Via Realization Technologies: Leading Organizations Share How They Are Doing More Projects Faster Using Critical Chain Project Management: Realization Technologies’ Execution System is Key to Outstanding Successes

Execution using Goldratt’s theory of constraints / critical chain methods enables doing more projects faster ...

... "He (Dr. Ajai Kapoor) also stressed that customers in the process of implementing should follow eight easy steps to mirror the fast implementation times and results of successful organizations.

1. Analyze and create management consensus on business needs.
2. Get buy-in on the improvement potential.
3. Get buy-in on the 3 Rules and set ambitious targets.
4. Design the solution (project architecture, processes and policies).
5. Create a pipeline plan and validate it.
6. Establish task management.
7. Establish surrounding processes.
8. Continue improving using the Theory of Constraints and Lean. " ...

Realization Technologies defies conventional wisdom, both business- and product-wise. Used by over 135 leading organizations throughout the world, its Multi-Project Critical Chain system, based on Critical Chain and Lean principles, breaks old management rules instead of blindly automating them. Unlike traditional project management software that is heavy on planning and tracking, this system changes the rules of execution. Realization also offers fixed price implementations, with 90 percent of its fees tied to improving customers' bottom lines. Realization is headquartered at 2 N. First Street, San Jose, Calif. 95113.

Project Management Approaches; Not One Size Fits All

While seemingly basic, this project management Wikipedia section from Answers.com is surprisingly robust, with good explanations of critical chain, WBS development, Earned Value, etc.

Best of all, it explores various approaches one can take to managing a project, including "extreme project management."

The best project management metholodogies do not take a "one size fits all" approach, but instead offer multiple approaches, depending on the nature of the project, and the circumstances. This site is a good place to start for those exploring alternative approaches.

project management: Information From Answers.com

PMO Best Practices - Research Results

Although it's from 2003, I suspect that this CIO research report on PMO best practices is still valid today.

As an example, the study reports that key PMO challenges reported were as follows:

52% Unreasonable workloads
43% Lack of PMO authority to carry out objectives
42% Support from business unit management
34% Conflicts over project management ownership
30% Support from senior executives
18% Temporary nature of PMO undermining its effectiveness

The high listing for "unreasonable workloads" suggests that development of demand management and governance processes should be a key initiative for PMO startups. It also suggests that a Critical Chain approach should be considered, as it has been proven to increase project throughput while recognizing constrained resources.

An alternative that some organizations are considering is staff augmentation for project management, as the demand reaches certain peaks. Just be sure it's only for peaks and not the norm. The bottom line is that the key is finding the right balance between supply and demand, just like any organization.

For the full report, check out the link below:

Best Practices for Project Management Offices - Research Reports - CIO - Research - CIO

Critical Chain and P2M - A Case Study

From the folks at PM Forum, here's a great case study illustrating the power of P2M (Japan's standard for project and program management) and Critical Chain. It includes an excellent, easy to understand summary of Critical Chain concepts and underscores the importance of recognizing the all-important human element of project management.

PMFORUM, Connecting the World of Project Management - Case Studies

Project Resource Planning can benefit from Economy of Force

For organizations trying to achieve enterprise resource planning for projects and other work, there can be no greater place to turn to than the proven military concept of Economy of Force.

Created by Carl Von Clausewitz, and inspired by the methods of Napoleon, Economy of Force consists in using all available resources and giving preference to primary objectives. Of course, too many resources can cause problems too, so the trick is to find the right balance. The secret is to allocate the maximum effective amount of resources on primary strategic objectives (i.e. major projects) and the minimum effective amount of resources on supporting objectives (i.e. enhancements and "run the engine" type work).

To a great degree, Eliyahu Goldratt's Critical Chain Project Management (CCPM) supports this model (and indeed may have been inspired by it).

For more info on the use of Economy of Force, read on...

Reader's Companion to Military History - - Economy of Force

Project Risk Management: Critical Chain

Project Risk Management: Critical Chain: Via ACC: Acquisition Community Connection: Buffering Against Risk – Critical Chain and Risk Management ...

Article discusses project risk management techniques that link scope and time management with risk management using critical chain techniques ...

... "Network Building: Risk Identification, Avoidance and Mitigation: The usual Critical Chain approach to developing a WBS and project network emphasizes identification of dependencies. This helps to avoid risks of missing interactions of different parts of the project. Clarity and completeness of prerequisites for tasks clearly defined as dependencies helps to assure that the risk of missing necessary inputs is minimized. Definition of the deliverables of tasks from the view of the receiver and user goes a long way to make sure that the availability of those inputs is assured. " ...

Need a project management crystal ball? Watch the Aerospace & Defense Industry

The Aerospace and Defense industry was the first to use PERT, Earned Value, Critical Chain, and now Earned Schedule. It was also the first to use IDEF for process modelling. In fact, mostly every advanced project management method and technique originated from the defense industry.

To stay in touch with the latest news on industry best practices, check out the PMI's Aerospace and Defense Specific Interest Group. I did, for that very reason, and now serve on their Board of Directors.

PMI Aerospace & Defense Specific Interest Group

Critical Chain Project Management (CCPM) - The Goldratt advantage

Organizations that have embraced Critical Chain Project Management (CCPM), developed by Eliyahu Goldratt, have doubled the throughput of their projects. For more on this rapidly growing methodology, see this great list of FAQs from Focused Performance.

Critical Chain FAQ