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PM Essence

Basics of Critical Chain Project Management & Theory of Constraints

Lt Col (Retd) L. Shri Harsha, PgMP, PMP

As I sat through the talk on “Theory of Constraints – Applicability in Critical Chain Project Management and Agile” during the Footprints session on 19 Jul 2012, two thoughts crossed my mind. One, linking two topics which need indepth explanation to the “generalists” of today is not a wise approach for a talk with a limited time period, something which I hope future speakers at Footprints will keep in mind. Second, that I should make an attempt to simplify the subject for better assimilation, which I am trying now and hope that I succeed.

Though the speaker did his best to clarify doubts, to the best of his ability within the constraints of time and words which he could muster to explain, I guessed many left the venue with a hope that they could have understood the concepts better.
Critical Chain Project Management

Most of us are conversant with the Critical Path Method (CPM). Just to recapitulate, as part of time management, we identify activities, sequence them, estimate resources and durations, and finally develop the schedule, which we then analyse by using CPM. At the end of this process, we will have the schedule data in a form, something similar to this.

In this method, based on the risks at activity levels we estimate the additional time required to complete the activity and keep it as a reserve.

Though the reserve is not to be considered while developing the schedule, invariably it gets merged with the duration estimates and the activity duration defined is inclusive of the reserve. As a result, at a work package level buffers disproportionate to the actual requirements have been created inadvertently. During execution, the execution team is unaware of these buffers, consumes the time and it becomes very difficult to track these buffers at every activity level.

As a process improvement, when the CPM was analyzed, it was identified that buffers were actually getting consumed at activity levels, irrespective of whether the risk events occurred or not, and monitoring was not effective. This deficiency in the CPM technique gave rise to the “Critical Chain Project Management” method of developing schedules. The only change that was done over the CPM method was to combine all the time reserves and group them separately under the Work package. The data will now look like this:-
The last two columns change position. This ensures that for the project team, the activity duration is what they are entitled to execute the activity. This grouping of activities of a Work package is called a “Chain” since they are interdependent and one weak link, i.e. delays in execution, delays the complete chain of activities. This technique is called the “Critical Chain Project Management”.
Based on the risks identified, which may or may not occur, the complete chain of activities will be affected.

As project managers we should be aware that the delay in execution of one activity will delay completion of only that particular activity, and only impact the start and finish of succeeding activities to the extent of the delay that has occurred without magnifying.

Therefore, it calls for effective management of the chain for restoring the situation to the original plan. This will doubly ensure that the delay is not carried forward to all activities in the future and facilitate corrections at every stage of the project. The advantages of this approach are:-

• Reserves, which are needed only in case of risk events occurring, are segregated from activity duration; thereby ensuring that realistic time estimates are communicated to the team.

• Ensures that time reserves are consumed only on occurrence of risk events, not as a routine, and easily identifiable for effective tracking.

• Identification of reserve utilization facilitates better root cause analysis of risk events and improvement of processes, which may also include reassessment of planning parameters.

• In case risk events did not occur up to a particular point of time, there is no necessity of these reserves in the future, which earlier was inadvertently carried forward in the system. Hence, forecasts made during periodic reviews dropped these buffers and were realistic.

• Consumption of reserves up to the completion of a particular work package would caution the team that there are no more reserves for future activities in the chain and that belts have to be tightened to ensure that the rest of the activities go as per plan.

• Monitoring and controlling is more effective and proactive. On a personal note, I have found this technique to be definitely better than the CPM technique. Though it involves some minimal additional work during the planning stage, it simplifies life to a great extent during the execution stage.