What is Critical Chain Project Management

What is Critical Chain Project Management?

Last updated on 29th Sep 2020, Artciles, Blog

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Scheduling is the process of sequencing all the project activities by assigning each activity a duration in a way so that they are completed in a timely manner. Critical Path Method (CPM) is the most widely adopted method of scheduling. 

In spite of preparing an optimized schedule and building adequate buffers into activities, it has been very often found that the projects miss their committed schedule. Schedule overruns have become the norm.  As per the latest survey of PMI pulse of the Profession 2017, only 50% of the projects completed on time.

This is when Dr Eliyahu M Goldratt studied the underlying reasons of failing schedule commitments, proposed a different method of scheduling known as Critical Chain Method. 

Dr Goldratt studied deeply the reasons of project failure, specially the failure in scheduling point of view. He found that most of the reasons are due to human behaviour and cultural beliefs of people. Below are some of the reasons for project delays.

  • Over-estimating
  • Overrunning the estimate
  • Not passing on time savings
  • Path convergence
  • Multitasking
  • Loss of focus

1. Causes of Over-Estimating:

  • Estimate criteria not well-defined
    • Level of Accuracy?
    • Probability of completion within estimate?
  • Contingency included?
    • Optimistic?  Pessimistic? Most Likely?
    • Any instructions about “buffer” or “padding”
  • Cultural beliefs
    • “PM wants ‘low risk’ estimate”
  • Organizational policies
    • Rewards for on-time, punishment for late
    • Adjustments to schedules

2. Causes of Overrunning the Estimate:

  • Tendency to wait until activity is urgent to work on it
  • Willingness to accept other high priority work due to belief that contingency is built into estimate
  • Typical work pattern of many people
    • “Student Syndrome” – Goldratt
    • Work expands to fill the time—and “safety time is wasted” (Parkinson’s Law)
  • Failure to provide resources when needed

3. Causes of Not Passing on Time Savings:

  • Little or no reward for finishing early
  • Finish early one time and it’s always expected
  • Finish early, get more to do!
  • Time & Materials Contracts — early finish = less revenue
  • Result:
    • Completion is made a lower priority  
    • Contingency Time that was in the estimate was wasted!
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4. What is Path Convergence?

  • Multiple predecessors merging into a single activity
  • What’s the result of Path Convergence?
    • The longest delay is passed on to the successor activity

5. Causes of Multitasking:

  • Trying to keep everyone busy
    • “While waiting, work on something else”
    • Many companies encourage extensive multitasking
  • Focus on local efficiency could damage overall performance of a system (Sub-optimization)

6.Causes of Loss of Focus:

  • Early Start Schedules
    • Allow all activity pathways to start at same time
    • Can cause PM’s attention to become diffused
  • Changing Critical Path during project performance
  • Trying to exclusively use Earned Value for project control
    • EV does not discriminate between activities of differing importance
  • Using Earned Value Action Thresholds that are too tight
    • Resulting in too many control actions

Critical Chain Method of Scheduling

A Critical Chain is a resource constrained critical path. Scheduling in the new method is done by keeping the above problems in mind and ensuring that we turn them into an advantage. 

In critical chain method, 

  • The team members are encouraged to make optimistic estimates rather than traditional pessimistic estimates 
  • Buffers are not kept with individual activities, rather than the collective buffers are built at the end of each path, in this case known as a chain of activities. 
  • Project Buffer is kept at the end of the Critical Chain (longest chain) and Feeding Buffers are kept at the end of Non-Critical Chains which are feeding into the Critical Chain thus reducing the impact of Path Convergence impacts.
  • Buffers are shown as activities which are under the control of the project manager.
  • This helps in effective use of buffers and eliminating their unnecessary wastage. 
  • Resources are not punished if they miss a deadline of an activity, as there are buffer at the end of the chains
  • Late Start schedules are used rather than traditional Early Start schedules used in Critical Path Method
  • Resources are allocated 100% to avoid multitasking.

A conceptual example of critical chain scheduling using buffers at the end of chain is shown below.

critical- chain -scheduling- using- buffers

The steps followed are as below:

1. Both pessimistic and optimistic estimates are taken from the team members for each task.

2. In above example, tasks A,B and C have pessimistic estimate of 4 weeks each and an optimistic estimate of 2 weeks each.

3. First a low-risk schedule with pessimistic estimates is built. In this case it comes to 12 weeks.

4. Then the critical chain schedule is prepared by taking the optimistic estimates, which comes to 6 weeks. Then the 2 weeks savings from each task is used as a buffer for the whole chain.

5. Fifty per cent of the 6 weeks, which is 3 weeks, is added as buffer at the end of the chain.

6. The total duration of the chain now comes to 9 weeks with a project buffer of 3 weeks.

7. The resources are encouraged to complete the tasks in the optimistic time. In case someone fails, they are not punished. The project buffer, which is now under the control of project manager, can be responsibly used as the cushion.

Critical Path Project Management Defines Three Types of Buffers

1.Project Buffer :The total pooled buffer depicted in the image above is referred to as the project buffer.

2.Feeding Buffer :
In a project network, there are path/s which feed into the critical path. The pooled buffer on each such path represents the feeding buffer to the critical path (depicted in the image below), resulting in providing some slack to the critical path.

3.Resource Buffer :
This is a virtual task inserted just before critical chain tasks that require critical resources. This acts as a trigger point for the resource, indicating when the critical path is about to begin.

Critical- Path- Project -Management

As the progress of the project is reported, the critical chain is recalculated. In fact, monitoring and controlling of the project primarily focused on the utilization of the buffers. As you can see, the critical chain method considers the basic critical path based project network and schedule to derive a completely new schedule.

The critical path project management methodology is very effective in organizations which do not have evolved project management practices.

However, the methodology does not advocate multi-tasking, and in projects with complex schedule networks, the results of implementing the critical path methodology have proven to be a deterrent to the overall project schedule. In addition, there is no standard method for calculating and optimizing the project buffers. The critical path project management methodology has had a fair amount of success in manufacturing; however, it has not achieved any noteworthy success in the IT industry.

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Along similar lines, the event chain methodology of project management focuses on determining the uncertain events and the chain reactions they propagate. It is a method of modeling uncertainties and is based on Monte Carlo analysis, Bayesian Belief Network, and other established simulation methodologies. When they occur, events can cause other events, triggering an event chain, which will effectively alter the course of the project. Events and event chains are identified, and quantitative analysis is performed to determine the extent of the uncertainty and the probable impact of the same on the project. From this exercise, critical event chains are derived, which have the potential to impact the project significantly. Event chain diagrams are visual representations of events, event chains, and their impact.

It is clear that neither the critical path project management methodology nor the event chain methodology can be considered alternatives to the standard methodology for project management as advocated by PMBOK. While the critical path project management methodology can be at best used as a tool for deriving project schedule networks, the event chain methodology for project management can be used as a tool for quantitative risk analysis.

Conclusion:

The Critical Chain Method has practically addressed the challenges in standard scheduling using critical path method. And CCM effectively comes out as a better method and has significantly improved the chances of meeting a schedule deadline. This method is being practiced across organizations, both in projects as well as operation scheduling. 

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