Successful delivery of projects lays foundation for executing any organizational strategy. So, an organization that focuses on improving its project delivery capability can achieve excellence. Critical Chain by Dr. Eliyahu Goldratt is a 240 page business novel that introduces the idea of Critical chain. It is a method to plan and manage projects by focusing on resources required to execute the project. This critical chain idea introduced in the book is different from the concept of critical path. Critical path specifies on project activities that add up to give the longest duration. Critical chain on the other hand is the longest chain of dependent tasks. It might not be same as the critical path. The critical chain method or Theory of Constraints (TOC) focuses on dependencies related to resources, constraints etc.
The author builds the concepts of critical chain to solve the questions below:
Why are projects late? Are externalities really the reason that people usually complain, or the internal issues are also to blame?
The activities in the project are typically built using safety time estimates. Even with all the safety, why are projects late and why is the safety wasted?
The traditional method of generating time estimates is shown as the culprit for the increased budget and inability of projects to complete on time. Goldratt points that that the original 80-90% probability of completing the activities would spike the probability of completion to 200% when safety time is added by managers. However, this excessive safety padding is having an opposite result. Some of the reasons discussed in book include:
Student syndrome- One starts the task late after using all the safety because they know that there is plenty of time.
Multitasking - Since safety is known, it encourages managers to multitask or focus on multiple projects at a time that will impact the projects.
Dependencies - Delays accumulate faster as time advances because of Murphy effect.
Key takeaways
Identify system constraints - A project is identified as a system. It has interdependent activities that must be completed on a specified time or budget. One must understand the project purpose and take decisions accordingly. Constraints are the bottlenecks of the system or the weakest link which must be strengthened. As mentioned, the critical path may not be the critical chain always. Constraint, however, is the longest chain of dependent steps or common resources. Goldratt calls this as the critical chain.
Exploit the system constraints - Any delay on constraint will result in project delay. It is important to gain time on constraints (critical chain) as it increases the chances of completing project early. Hence, these constraints must be exploited to gain advantage of completing project on time.
• To exploit critical chain, one must begin by reducing the safety padding in the activity time by large percentage. This will reduce the impact of student syndrome described earlier.
• The safety time in both critical chain and non-critical chains must be added and reduced. A fraction of this reduced safety time must be positioned at the end of critical chain (project buffers) or positioned where noncritical chains meet critical chains (feeding buffers).
Subordinate to maintain or improve critical chain schedule - As soon as one activity is completed on critical chain, one should immediately start the next task to prevent student syndrome and Murphy effect from impacting the project. Subordination to critical chain schedule is possible by keeping an eye on resource buffers. When the actual resource is working on something else and is not available, it will cause delay for the activity to begin. It is therefore important to make sure that the safety time should ensure at least 50% probability for the resource to complete activity. This safety time is called resource buffer. The monitoring or management of these buffers is crucial. The time lost in critical chain is lost forever.
Elevate system constraint - The next step is to elevating system constraint or reduce the critical chain length by reducing dependencies or the time to complete activities. One should consider impact of investments made.
Inertia should not become a system constraint - After a critical chain is strengthened, it is no longer a constraint. One should not let inertia dictate but, move back to step one and follow the process again without assumptions.
Critical Chain Method in Real-world?
In real world, managers cannot make a solid estimation of the tradeoffs to recover from a late schedule. As a result, they become conservative in managing costs by avoiding large costs to deal with later in the project. On the contrary, they can also become too aggressive because of pressure to meet deadlines and overspend on resources. I see this happening every day at work. If critical resources are not identified, it can cause delays as managers spend elsewhere instead of those needed. It is true that people tend to give a worst-case time estimate to reduce the risk of being punished. The downside is since activities are interconnected in a project, there can be bloated cost and time estimates for a project. Since, it is obvious that project managers will not get real time estimates, they can incorporate project buffers to reduce accumulated safety time of the uncertainties. Project managers can get latest estimated finish times after each activity is completed by subtracting the fraction of buffer.
Although, I personally don’t have any project management experience, I recognize that there can be uncertainties such as changes in project scope, repeating an activity due to quality issues, technology or resource issues etc. to name a few. Using critical method, these challenges can be minimized, and project control becomes easier. Buffer statuses can be monitored and when they contract too much, they work as warning signs and manager’s action is required.
The book talks about how the resource buffers can be an excellent means but in real world, does management allow project managers to spend more on resource buffers? I have seen situations in large organizations such as Pfizer (my previous employer), where the management is concerned about profits/ end results but won’t allow managers to spend on resources. If they pinch pennies and not spend on resource buffers, they might delay project by few days which can be more than the amount they would have spent on resource buffers. This is particularly true where I work currently (IDOT) or in government agencies in general where budget is a strict constraint. The opposite is also possible. So, financial benefits of finishing on time or ahead of planned schedule must be weighed before spending on resource buffers. I also wonder if it is possible for managers to adequately size buffer for activities in project. Since the status will be monitored at each level in critical path method, it might be possible to adjust buffer size to an extent based on the uncertainty of the activity.
Policy constraints are hard to overcome where I work (or any governmental agencies) and any organizations in general. Laws and regulations are usually the bottlenecks in many situations that hinder projects. There could be policies on how to manage resources in a project but, the policy may sometimes limit the capacity of a resource or how managers manage a resource. Although the critical chain book talks about constraints in general, it doesn’t specify on how to deal with governmental/organizational policy constraints that are unreasonable and hinder the project.
There are similarities between theory of constraints and lean. Both the methods are used for improving processes. Lean emphasizes on removing “wastes” while TOC focuses on “constraints”. Successful application of both these methods results in reduced costs and improved capacity/productivity but however, there are significant differences between them. May be companies must use lean tools to identify bottlenecks/constraints in the process. While CPM/PERT deal with only the technical aspects of project, TOC on the other hand accounts for constraints and human behavior consequences as well (student syndrome, multitasking, Murphy effect etc.)
Conclusion
I enjoyed the book and the authors unconventional writing style. The concept of business novel is new to me and Goldratt’s strategy to discuss TOC in a format that is far from academic way is surprisingly engaging! It is true that one tends to remember the concepts better, when they are told as stories. This is probably the reason why Goldratt used a novel style to convey the idea of TOC to the world. The use of many interesting characters and parallel stories made the book very fascinating. I really adore Rick Silver’s character in the book as a passionate professor with an admirable teaching style. As an MBA student myself, I was able to relate to certain student characters in the book and resonate TOC applications in real-world. I loved Ruth’s character, as a smart independent woman who is not afraid to voice her opinions openly. However, in an attempt to build the story, the concept of critical chain was not introduced until chapter 11. Overall, I would recommend this book because one could actually learn project management lessons even if they read it like a novel.
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