CCPM Taiwan

EDITOR'S ' FORWARD
PREFACE................................................................................................................................V CHAPTER1 - FOUNDATION CCPM The TOC solution for improving the management of single projects and the use of the U shape for structuring TOC knowledge and developing TOC logistical applications Oded Cohen 1
Product Development Projects:Guidelines for assessing the potential of new products and the planning of various features in a project Eli Schragenheim 51
CHAPTER2 - IMPLEMENTATION Practical aspects of implementing Critical Chain Project Management CCPM Examplesof implementation procedures Jelena Fedurko 71
CHAPTER3 APPLICATION DEVELOPMENTS Using TOC CCPM S&T Tree to rapidly improve performance of new product developmentprojects:A case study in Taiwan Yunn-Jin Hwang Yu-Min Chang Rong-Kwei Li 95
A strategic projects management solution developed from Theory of Constraints concepts Philip J. Viljoen Exploration of project management to the Machine Tool Industry in Taiwan Frances Su 123 111
CHAPTER4 ACADEMIC CASE STUDIES Critical Chain Project Management theory and practice Roy Stratton Experiences consulting companies in Colombia applying the CCPM Goldratt webcast series Alejandro Fernandez Rivera 173 149
CHAPTER5 TEACHING TOOL Project management systems theory taught through games James R Holt 197
EDITORS
FORWARD
The Theory of Constraints body of knowledge has expanded rapidly over the last three decades. It springs from complex systems theory, multi-dimensional linear programming and a belief that logic can successfully be applied to technical-social human organizations. One of its most exciting applications is in the area of multi-project management known world-wide as Critical Chain Project Management, or CCPM. This books brings to the project manager a succinct overview and some of the major developments, some very recent, in the last 20 years. The eleven authors from seven countries offer useful insights into the CCPM application body of knowledge from the Goldratt Schools perspective.
As with other existing applications of TOC thinking (including Operations, Supply Chain, Marketing, Sales, Accounting, Finance), parts of CCPM are counter-intuitive. We all try to do the best we can. Unfortunately, in large organizations, what is best for one part of the organization is rarely best for the organization as a whole. The term for this is sub-optimization or, more precisely, optimizing at a local level to the detriment of the larger organization. In project management, the result of focusing on individual task performance frequently results in missed due dates, over-run budgets, and inadequate project scope. This generates unhappy customers and, for the organization, lost sales, decreasing profits and poor stock performance on the exchange market.
The nine articles in this book, separated into five chapters, are designed to provide the knowledge and guidance to overcome sub-optimization and produce successful projects beyond most managers wildest dreams.
Chapter 1 presents the foundation knowledge. Oded Cohen explains the complete structure and basis for the CCPM application. The full solution to the multi-project management problem consists of nine injections (actions), one to set the proper mindset, three to do the planning, and five to control the implementation execution. But management is not a static exercise. There are always new project opportunities. Eli Schragenheim addresses, in a very pragmatic way, how mangers can decide whether to accept or reject these new projects. This is an excellent introduction to CCPM at a high-content level.
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Chapter 2 builds on this theoretical foundation with an article by Jelena Fedurko explaining how CCPM can be implemented in a large company. Understanding the management imperative, and based on Goldratt Group experiences, the necessary implementation actions are field-tested, as well as clear and detailed.
Chapter 3s three articles speak to recent developments in CCPM implementations. Addressing two concerns, first that TOC is too theoretical and, second, that CCPM must be able to handle uncertainty. Yunn-Jin Hwang, Yu-Min Chang, and Rong-Kwei Li describe the adaptation and use of CCPM and the Strategy and Tactic tree in Taiwan. They describe successful CCPM implementations in high-tech electronic component manufacturing. Philip Viljoen discusses the use of Strategy and Tactic trees in CCPM with reference to management literature and with a field case study. Frances Su presents an exploration of TOC
applications, to form the holistic approach for the continuous improvement of the machine tool industries.
Chapter 4, recognizing that TOC has moved from the field to the classroom, uses academic case studies to meet the education and training needs. Roy Stratton shares the Goldratt Group experience of implementing CCPM in the Japanese construction industry and evaluates the use of the Strategy and Tactic tree within CCPM. Alejandro Fernandez Rivera reports on several CCPM implementations in Colombia. He then responds to the recognition that multi-project management is indeed the task of most managers and addresses those training needs.
Finally, in Chapter 5, James Holt deals with three counter-intuitive problems by presenting some simple games that have proved effective in teaching CCPM. The first, Job Shop Game, shows the need to choke the release of projects because projects released early do not finish early but instead slow all projects down. The second, Sixes Game, shows how providing safety at the task level extends the time needed for completion of the project. The third, Assembly Game, demonstrates the value of feeder buffers and introduces the concept of a resource bench.
These nine articles cover the CCPM Application body of knowledge from theory and structure through implementations, developments and assessments and, finally, to teaching some difficult material. It is a goldmine of Project Management information. If you are new to
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project management, this book will help you do your job. If you are an experienced project manager and are not already using CCPM, you really need this book.
Alan H. Leader Editor
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EDITOR
Dr. Alan H. Leader received his bachelors and masters degrees from the University of Rochester, and his doctorate in business from Indiana University. In addition to several years of industrial production experience, he has taught Management at Western Michigan University and the University of Guam, earning tenure and the rank of Professor at both. He was appointed Dean of the College of Business and Public Administration at the UoG, and Dean of the School of Business and Economics at Southern Connecticut State University. He left SCSU for Seattle, taught at Seattle University, and consults (as Leader Associates) with businesses, governmental units and universities. Dr. Leader is a Jonahs Jonah with the A.Y.Goldratt Institute (AGI). He has served on international and educational committees of his Rotary Clubs, the Volunteer Services Board of the University of Washington Medical School Hospital, the John Stanford International School, in the National Defense Executive Reserve (FEMA), and as a certified Mediator in the Snohomish, Island and Skagit counties Dispute Resolution Center. Dr. Leader has presented papers and published widely in the areas of organization structure and effectiveness, decision making, strategic planning and continual quality improvement. He was awarded the Order of the Chamorri by the government of Guam, the Award for Teaching Excellence by WMU, the Herman B Wells Leadership Seminar Research Grant by IU, and a Ford Foundation Fellowship. Dr. Leader was named Dean Emeritus by SCSU. He has been involved with the Theory of Constraints since the late 1980s, is a member of the Goldratt Schools faculty, and chairs the Thinking Processes Committee of the TOCICO. His goal is to help people learn and apply rules of logic and common sense to everyday life. He believes that people have the necessary intuition, knowledge and experience to make good judgmental decisions about themselves and their relationships with others. He hopes to assist them to become more effective in their homes and at their places of employment, and to live happier, more fulfilling lives. Alan Leader is married (Louise Bush Leader) with two sons, two daughters-in-law, three granddaughters and a soon-to-be born great granddaughter.
PREFACE
This book contains a collection of articles on the subject of CCPM Critical Chain Project Management written by faculty members of Goldratt Schools. It provides an opportunity to tap into the knowledge and experience of a unique group of leading TOC scholars and practitioners.
The collection contains nine articles in five chapters: foundations, implementation, applications developments, academic case studies and teaching tool.
This collection of articles is relevant for project managers who want to continuously improve their managerial skills and capabilities and to ensure they provide professional delivery of their projects. These articles are also aimed at the executives and top management of organizations, at teachers and at students who one day will be project managers.
TOC the Theory of Constraints was invented over thirty years ago with the solution of DBR Drum Buffer Rope for managing production. Since then, TOC has been continuously developed by Dr. Eli Goldratt and a dedicated team around him. CCPM the TOC solution for project management was developed in 1990 as a natural derivative of the DBR solution.
This publication is within the mandate of Goldratt Schools. Our mission is to make the TOC knowledge readily available for those who want to learn about TOC through teaching. We provide programs covering TOC methodology and the entire spectrum of solutions and applications. We work in conjunction with universities, business schools and training centers, providing them with our training programs and training the trainers.
Thanks, to all my colleagues in Goldratt Schools for writing the articles and contributing from their knowledge and views, to Frances Su who has been the lively spirit behind this initiative to publish this collection of
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articles, properly managed this ambitious project, and brought it on time and within original promises, and, special thanks to Alan Leader for editing all our articles and ensuring its common style and quality.
Oded Cohen International Director Goldratt Schools
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CCPM THE TOC SOLUTION FOR IMPROVING THE MANAGEMENT OF SINGLE PROJECTS AND THE USE OF THEU SHAPE FOR STRUCTURING TOC KNOWLEDGE AND DEVELOPING TOC LOGISTICAL APPLICATIONS
Oded Cohen Goldrat Schools
ABSTRACT For many years the systemic approach to improve systems dealt with three major issues: the problem, the solution and implementation of the solution.
Theory of constraints (TOC) has taken this approach further with the constant view of providing the managerial and analytical tools for handling the process of improvement. These tools ensure a high impact with a minimal level of effort and provide significant return for the investment in making it happen. TOC also the explicit fourth step in providing an engine for continuous improvement to ensure that systems never rest on their laurels but continue to grow and achieve higher and higher performance relative to their goals.
CCPM Critical Chain Project Management is the TOC solution for better managing projects. It is a knowledge-based approach.
Part 1 of this article outlines the CCPM solution. It covers all the suggested injections the elements of the CCPM solution. The complete solution contains 9 injections: setting the right mindset for managing the TOC way, 3 injections for planning and 5 injections for execution control. This provides the understanding and the terminology of the CCPM solution that other articles refer to in their work. This part also provides a guide for every project manager who wants to deliver assigned projects on time, within budget, and with the promised deliverables.
Part 2 presents the essence of TOC. We can define TOC as a managerial approach that is: Focused Holistic Logical and provides Win/Win.
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The core structure of the TOC methodology the thinking processes is captured in the U-shape. It gives the reader the logical base for the CCPM solution. The basic methodology provides the logical connections between the problems and the solutions. It helps to enhance confidence in the analytical work that contains the understanding of the challenges of managing projects and the solid reasoning of the solution.
This article is focused on the project manager to enhance his or her ability to manage their projects in a challenging environment. Having good and professional project managers will help the organization to handle multiple projects in a synchronized and successful way by utilizing CCPM. This is dealt with by other articles in this issue.
Keywords: TOC Methodology, U-shape for TOC Thinking Processes, CCPM Injections, Managing single projects, Project planning & execution control
1.
Introduction
TOC started years ago with improving production. It was only natural that the knowledge that was developed, and the experience that was gathered, would attract the desire to improve project management.
Like production project management needs good planning and an effective way to manage the execution of the plan. The unfolding reality of the execution differs from the plan due to the statistical fluctuations. The level of uncertainty is significantly higher in projects as many of their planned activities go forward with little prior experience (if any at all).
Management is put in charge of achieving objectives and goals. The way to achieve a goal involves a journey that has its own flow. Management has to manage this flow and continuously improve it to ensure better and better results. The managerial approach has to provide the direction of how to handle the high level of uncertainty in both planning and execution of the plan. Once the direction is provided, the whole mechanics can be developed for detailed practicalities.
The traditional TOC solution for production, the DBR Drum Buffer Rope for planning and
CCPM-The TOC solution for improving the management of single projects and the use of the U shape for structuring TOC logistical applications
the Buffer Management (BM) can be used as a base for the systemic management of projects. We just need to amend and modify the solution to accommodate the high uncertainty in the expected durations of the task. This includes within the project, as well as the high percentage of touch time actual time that the tasks are worked on by the resources relative to the overall lead time of the project.
Before we dive into the explanation of the CCPM solution we need to verify one fundamental question. Projects have been conducted for thousands of years. Some of these projects produced the magnificent wonders of the world. Yet, only in the second part of the 20th
century has the importance of managing projects became so apparent. Time and money started to dominate the requirements that were put on the shoulders of companies and countries. This pressure turned project management into a profession. The official kick-off was the development and the use of P.E.R.T for the construction of the Nautilus the first nuclear submarine in the early 1950s. This high profile project was under pressure to deliver within a given time scale. The PERT method used the concept of a critical path for planning and execution. Thereafter, it became the dominant approach for managing projects. It is amazing that the basic concepts of project management are still the same as 60 years ago even though the vast majority of the projects have not and are not delivered on time, within budget and original specifications.
The problem is not that the method has been here for so many years. The problem is that it does not provide the expected results. Project managers around the globe struggle to deliver within the agreed time, budget and deliverables. So, what are we missing?
Analyzing the reality of project management reveals that in the majority of the projects with commitments to time, money, specifications, going over budget that is the most unpleasant and painful failure. As the project struggles to be completed, there are demands for more and more features. This creates a huge pressure on the executives and the shareholders. In return, a bigger pressure is put on the shoulders of the project managers through the use of financial control.
Tighter financial control has proven to deliver better results in some cases. Still, most of the projects do not meet the three requirements time, budget and specifications. Financial
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control forces the project managers to focus on every single activity and to try to complete it within the estimated time and budget. Given that a project may have many tasks performed at the same time, the managers find themselves incapable of controlling all the open tasks. TOC suggests an alternative way. Rather than trying to complete every single task on time, TOC provides a focus on the on-time completion of the entire project.
CCPM Critical Chain Project Management is the name given to the TOC solution. The name was chosen to denote the departure from the conventional method of critical path. It focuses on completing the whole project on time. It is holistic, as it looks at the project as a whole and not on every single task in isolation. It is logical, as we can provide the conceptual base of the solution using the TOC thinking processes. It is a win-win, as it takes into account and supports the important needs of the key stakeholders.
The move from managing projects through their locals (the tasks) to the global (the project as a whole) demands a change in the mindset of project managers. They have to commit to deliver the project on the promised due date.
Therefore, when we come to design the CCPM solution we have to consider three aspects: Mindset Planning Control of the execution These aspects provide the basic structure for the CCPM Solution:
The objective of CCPM the strategy is: Deliver the project on time, in full and within budget.
The Tactics what is needed to be done to achieve the strategy is: Implement all injections (elements) of CCPM for planning and for controlling the execution. The solution contains 9 injections in three groups.
Figure 1: The general structure of CCPM solution for managing a single project
Part 1 of this article covers all the injections of the solution.
The Body of Knowledge of TOC supporting the CCPM solution can be found in books, videos and self-learning media. The basic structure of the TOC methodology for developing and capturing the knowledge of the solution is covered in Part 2 of this article.
2.
Part 1
IMRPOVING WITH TOC CCPM FOR MANAGING SINGLE PROJECTS
We start with defining the boundaries of the system we want to improve.
In single-project management the boundaries are:
all activities associated with managing a single project from the point the project has been authorized until it comes to its full completion to the satisfaction of the customer (external or internal).
Then we agree on the system performance measurements.
For single projects they are:
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On-time completion (due date performance) Within project budget Meeting project specifications (commitments and promises to the customers)
The full list of injections for the solution is:
Mindset Customers orders are the Prime Driver the Drum 1. Achievement of the delivery commitments is established as a Prime Measurement for managing project environment. Planning injections: 2. Project Planning Diagrams are in place with tasks resourced and estimated for duration (while estimates of durations are challenging but achievable). 3. Critical Chain determination including resolving resource conflicts. 4. Buffers are inserted in strategic points. Execution control injections: 5. Tasks are performed according to the status of their corresponding buffers. 6. Resource Availability is monitored in anticipation of a new planned task. 7. BM for corrective actions (expediting) is in place. 8. Buffer penetration reasons are reviewed periodically for POOGI. 9. Resources are monitored as potential CR Critical Resources.
Implementing TOC CCPM
Implementing TOC CCPM is a project on its own. It contains technical activities as well as communication with the relevant people in the organization. They are the ones who must implement the technical part and the managerial and behavioral facets of the injections.
As such, it is recommended to address each and every injection on its own, according to the sequence suggested by the template for the TOC solution. For every injection we collect and present the necessary knowledge to ensure the understanding of WHAT it is and HOW are we going to implement it.
The WHAT is taken from the U-shape. It covers the essence of the injection itself, the major
UDE(s) it addresses, the DE (the Desired Effects), the positive outcome of the injection in the system, the logic of closing the performance gaps and, eventually, the improved performance.
The HOW contains all the practical aspects of the implementation. It deals with the technical parts, and also suggests ways to overcome obstacles both technical and behavioral. The necessary deliverables (I.O. Intermediate Objectives) are suggested based on experience with implementing injections in reality. The end result of the HOW part is a mini-project that contains the skeleton of the activities and deliverables of the implementation of the injection. The WHAT and the HOW are captured by the full "injection flower".
Injection Flower
What DE
UD E
1 2
The Solution Design
NB R
Inj
How IP
Implementation Plan
The Implementation Plan
Figure 2: The injection flower
The suggestion to deal with one, or only a few, injections at a time constitutes a modular implementation process with a mechanism to capture all relevant knowledge, experience and know-how associated with the injection. Every injection is developed and implemented as a module on its own. This is the base for a databank that can grow and incorporate the experience while the project is in progress.
Lets start with the first group.
Mindset Customers orders are the Prime Driver the Drum
The first group contains just one and very important injection:
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Injection 1 Achievement of the delivery commitments is established as a Prime Measurement for managing project environment
What The essence of the injection:
The injection is manifested through the commitment by all levels of management that meeting the promised delivery date promised to the customer (internal or external) is the most important measurement that projects strive to achieve. The promised delivery date must be displayed and made visible to all the relevant people associated with the project.
Measurements have significant impact on the behavior of people in the organization. Hence, it is important that the way project managers and projects are measured reflects the importance of on-time delivery.
Even though this part deals with managing single projects, each project operates within an environment of many projects. The overall performance of all the completed projects can reflect the overall level of reliability of the project environment. When a project misses the delivery date, it hurts the companys performance by delaying the income or the benefits that are generated by it. There are three ways to measure the lateness:
i.
The number of projects that were delivered on time (or early) versus the total number of projects within time buckets (e.g. month, quarter, year). This is needed in order to measure the Reliability of company. It is measured in percentage (%) and is known as DDP Due Date performance. Murphy hits projects and, therefore, it is impossible to achieve a DDP of 100%. However, aiming to achieve over 95% DDP will set an outstanding performance.
ii.
The amount of money that has been delivered on time or early versus the total value of the projects within time buckets (%). The target should be as close as possible to 100%. However, even one late project that contains a lot of throughput can cause a drop in this measure.
iii.
The financial impact of the late delivery T$D Throughput Dollar Days. This measurement states the amount of money to be received that has been delayed multiplied by the number of days delayed. This is the same terminology that the banks
use when giving you a loan; how much money do you want to borrow and for how long. Interest is paid on money days. The target of T$D is to be zero. The lower the measurement, the less negative impact the lateness has on the company as a whole.
Measuring performance continuously, ideally on a weekly basis, can highlight the trends in improvement or deterioration.
The Current Reality Undesirable Effects (UDEs) To enable the implementation of the new mindset for all levels of management, we need to highlight the current situation. It is unsatisfactory. This is done through recording the UDEs which are the permanent problems that prevent project managers from the successful completion of projects (time, budget and scope).
Typical UDEs in project environment are: There are too many cost overruns against budget Existing projects are disrupted by extra work Many projects take longer than expected We often struggle to hit intermediate deadlines Revisions for late changes to the scope hold us up Top management is under pressure to add more resources
We use the CRS Current Reality Study - to establish that the current situation of the specific area. I must fit the generic environment in which the injections will operate well, as this environment suffers from the above UDEs.
Current Reality Study (questions to be asked about a specific project environment to validate the UDEs)
Current on-time delivery.
How many projects are delivered on time? What
percentage? How many were delivered as per the ORIGINAL date requested by the customer? Damage to the customer. What are the difficulties that were caused to the
customers (internal or external) due to the lateness of the projects?
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Perception of the market How does the market perceive the company in terms of reliability performance? Does the company get new customers and how difficult is it to retain existing customers?
Damage to the company.
Are there any penalties associated with late deliveries?
How much money has the company lost due to late delivery? Expediting How much managerial efforts, negotiations and extra expenses are associated with trying to meet the project due dates? Quality problems. Because of constant pressure to rush the delaying projects, are
there situations which quality or features are compromised?
The first injection is a governing injection. We have yet to make additional checks for the other injections.
The Future reality the DE the positive outcomes of the injection
When the new mindset is adopted, the right measurements are operational, and all the injections are in place, we can expect a significant improvement in the completion of the project commitments time, budget and specifications. When describing the future reality, we portray the vision of how the environment will operate once the injection is fully implemented.
We can expect the following positive outcomes:
Established reliability by on-time delivery of projects. Improved focus due to clear measurements of the magnitude of lateness of projects. Desire for better tools for project planning and execution control driven by a strong desire to know the real status of the project in conjunction with the on-time delivery.
Less need to expedite as early indications of threat to the due date may prompt project managers to take corrective actions when there is still time to recover from the potential lateness.
More stability of the process due to the focus of project manager on the time aspect of the progress of the project.
Potentially more sales
due to increased reliability.
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Injection 1 is successfully implemented when the proper measurements for on-time delivery such as DDP or T$D reports are produced and management (project and top) uses them. Thereafter, we may experience some negative side effects. They should be addressed and handled prior to the commencement of the implementation of the solution through the use of the NBR (Negative Branch Reservation) process.
Potential NBR we have to be careful that the change that is promoted by Injection 1 focusing on the meeting the delivery date of the project does not bring the resources to do a lesser job on the scope and/or to be reckless with budget control.
Suggestion: Listen to the people and record any concern that deals with policies, the way they are measured and the behavior of other people. Carefully examine the formal and the informal communication regarding the performance of the projects. Provide clarity and direction in cases when you can identify that people do not know how to behave and operate under the new mindset.
Re-enforcement of Injection 1 is critical!
HOW The way the injection will operate in reality and the plan to implement the injection.
Once we know the What, the essence of the injection and the relevant knowledge, we need to describe how it will operate in reality in conjunction with all the other entities. When this is clear, we can move to develop a mini implementation plan to build what is necessary for the injection to function.
The injection is integrated into the managerial flows of the project. There are three types of flow in organizations: a) The process flow the progress of the project from one task to the other. b) The information flow the signals from the process flow about the status and progress of the work. This information is aimed at management and/or the workforce. c) The decision flow. Based on the information, decisions are made with the view of maintaining the flow or improving it.
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Figure 3: The typical flows to be managed
Operating the injection includes: Technical procedures and reports. Management needs to get information about the progress of the orders. Some of the injections are activated through technical procedures, usually with the help of IT programs. This part usually deals with the information flow.
T\D Repor t
25,000 23,770 22,257 2,231 2 20,928 19,445 18,278
21,411 20,000
15,000
10,000
5,000
0
3 / 5
4 / 1 2 /
4 / 3
4 / 4
4 / 1
5 / 2
5 / 3
5 / 4
5 / 1
6 / 2
6 / 3
6 / 4
6 / 5
6 / 1
7 / 2
7 / 3
7 / 4
7 / 1
8 / 2
8 / 3
8 / 4
Figure 4: And example of T$D in Yens. Managerial procedures. The managerial procedures establish what decisions and actions should be taken by management in order to ensure on-time delivery. Many times these decisions are carried out through the use of IT programs. This part deals with the decision flow.
On-going procedures are developed as a part of the implementation plan, usually facilitated by a TOC practitioner.
Implementing the Injection
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Implementing an injection is a mini-project in itself (a part of the overall project on implementing the TOC Solution). Therefore, implementing an injection needs a plan which consists of tasks and deliverables. Deliverables are tangible outcomes that are produced or achieved by the processes. Tasks are actions that are performed by the resources. Each task needs one or more resources and has an expected duration for completion.
An example: Designing the integration of the injection into the current system. At the outset of the implementation the current managerial processes are recorded on the deployment chart. The deployment chart describes the synchronization between all the functions that participate in the planning of the project and the control of the execution of the plans.
The new injection contains changes to the way projects are managed within the organization. The changes are reflected in the managerial procedures. To enable management to make decisions according to the new injections some reports must be prepared through technical procedures. The above changes should be reflected on the deployment chart. This calls for several tasks to be performed in the implementation plan. Here is an example of a chunk from an implementation plan that contains three tasks and one major deliverable.
Figure 5: An example of a part of an implementation plan.
So far we have covered Injection 1 that deals with the mindset which is absolutely necessary for implementing CCPM. Lets move to the second group of injections 2-3-4 that deal with Project Planning.
Planning injections:
This group of injections deals with creating a quality project plan.
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Figure 6: CCPM Planning Injections
The criteria for good planning contain three elements. Good planning should: i. Provide financial benefits by the successful completion of the project on time, within budget and according to the promised specification. The project generates Throughput for the contractor of the project. ii. Be realistic the plan does not contain conditions that are known to be unrealistic (such as resource loading over 100% of available capacity). iii. Immunize against disruptions (Murphy and uncertainty).
Financial benefits are achieved by completing the project on time and within the budget. Meeting the specifications is a necessary condition for completing the project and handing it over to the customer. The completion date determines the throughput for the project. Injection 1 covers the requirement for financial benefits by accepting the importance of on-time completion. The purpose of the plan is to ensure that it is possible to complete the project on time while accommodating for potential variations during its execution. Injections 2 and 3 ensure the plan is realistic and Injection 4 protects the plan from Murphy by inserting buffers in strategic points in the project flow.
The quality of the Project Plan: The quality of the project plan is critical for the implementation of the planning phase. In reality, any mistake in the planning is caught at the execution phase. However, the corrective actions may be costly and may have significant impact on the ability to
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complete on time. Therefore, the better the plan, the easier it will be at the execution phase. It is the responsibility of the project manager to ensure that the project plan reflects the full understanding of what the project must accomplish in order to successfully finish on time and within the original promises.
Injection 2 Project Planning Diagrams are in place with tasks resourced and estimated for duration (estimates of durations are challenging but achievable)
What Project plans are being created in a diagrammatic format that clearly show all the important tasks of the project.
The diagram can be bar chart (PERT) or a Gantt chart.
Figure 7: An example of a project planning diagram in a PERT structure
Figure 8: An example of a project planning diagram as a Gantt Chart
While developing the project diagram we have to ensure: Data integrity all tasks have to be checked for dependencies. The relationships between two tasks must be clearly defined. Some tasks are not interconnected at all. This means that they can be performed in
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parallel. However, if there is a dependency between two tasks. the relationship between them determines the sequence of performing them. This is very important for the planning and for the execution. The simplest dependency and the most recommended one to use is Finish to Start. This means that a task cannot be started unless the predecessor has been completed. Usually it is because the task needs a tangible deliverable from the previous task as a major input. The relationships of Finish to Start are used to calculate the project timeline and determine the completion date. Any other relationship (that may be used in the critical path software) complicates the work of the CCPM software packages (some of the available packages do not support any of the other relationships). In checking the data, we have to ensure that every task also contains information on the resources that are needed and the time estimated to perform it. Estimation times challenging but achievable. The time estimations have to go through a challenging process. Time estimations are subject to uncertainty and fluctuate statistically. In the process of estimating duration of performing a task, people tend to include safety to cover for the unknown. TOC claims that while the safety is needed, it should not be in the level of the task but in the level of the whole project. Hence, CCPM strongly suggests using as estimation the time duration that is not easy to achieve but still possible. By choosing such estimation some of the safety is cut off the task time. The time that is cut from the task is used for the project buffer to allow for fluctuations in execution. At the same time, using ambitious time estimation will allow positive fluctuations, when tasks are completed in shorter than planned time, to pass their progress to the next tasks and support the on-time completion of the whole project.
It is well known that the statistical distribution of the task duration is skewed. This means that using average time is unrealistic, as sometimes the length of the task can be significantly longer than the average. The following graph is a typical presentation of such statistical pattern.
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Figure 9: The statistical pattern of the task duration time
The TOC recommendation is to use the time estimation called 50/50 (median in statistical terms). This is to denote that there is a 50% chance of completing the task on or before the median time. We still have to remember that there is also 50% probability of completing that task after this time. This is to ensure that customers or management do not turn this estimation into a commitment. Completeness the diagram should reflect the views of the key players participating in the project. This includes the necessary and sufficient actions and deliverables to complete the project on time, within budget, and to the committed specifications.
How Establishing the procedures that will generate the quality Project Planning Diagram. There are three procedures: Procedure to develop a dependency diagram and check its quality. Procedure to agree on and record the resources needed for each task. Procedure to estimate tasks duration times, to challenge them, and agree on challenging but achievable estimates.
Once the structure of the project is available it can be entered into a project planning software package (such as MS-Projects). The rest of the injections will need a CCPM software package (one of several that are available in the market place). It is highly recommended to have a simple and practical project plan. TOC guidelines suggest that the plan should not have more than 300 tasks, and the task duration should be not less than 1% of the total lead time or
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longer than 10%.
Injection 3 Critical Chain is determined through resolving resource conflicts
What Sorting out Resource Contention. In order to ensure that the project plan is realistic, we must identify and address resource contention situations caused which occurs when the plan requires the same resource to perform more than one task simultaneously. The CCPM solution is to sequence the tasks by creating additional dependencies between tasks due to availability of resources this is the Critical Chain approach.
The Critical Chain is the longest chain of dependent events one that takes into consideration ALL dependencies (including task and resource dependencies). Given finite resources for the project, the Critical Chain reflects the minimum time it will take the project to be completed. Under the project structure captured in Injection 2 there is no way to further compress the time. Given that the objective is to finish the project to get the expected throughput, the Critical Chain is a true presentation of the project constraint that determines the performance level of the project.
Lets demonstrate the creation of the Critical Chain on the dependency diagram presented in Figures 7 and 8. Every task contains the following data: task number, the resource for performing this task and the estimated duration in days. The traditional approach looks for the Critical Path the longest chain of content dependent tasks. Path is 56 days. In this example, the Critical
However, if there is only one available resource M (magenta) needed to perform Task 3 and Task 5 that are practically parallel, there is a potential resource contention in the plan. Solving the contention is done by creating dependency between these two tasks that need resource M. There are two options for creating the resource dependency: Task 3 Task 3. Each one of them can resolve the conflict. Task 5 or Task 5
In this example the critical chain tasks are: 4-W16 5-M16 3-M16 6-C20. Total length of the Critical Chain is 68 days. This is more realistic than the 56 days suggested by the Critical
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Path.
Figure 10: Creating the Critical Chain
Please note: If there is no resource contention, then the Critical Chain is identical to the Critical Path. A software program can check several alternatives for Critical Chain and choose one Critical Chain that has the potential to be shorter than the others. None of packages commits or should commit to finding the shortest Critical Chain. The objective is to resolve the resource contention not to optimize. Most software packages provide the feature that enables the user to choose between two potential Critical Chains.
The choice of the name CCPM highlights the departure from the approach of the Critical Path. Yet, the direction of the solution is dictated by the way we address and manage uncertainty. This is done through planning the buffers and using them to manage the execution.
How Injection 3 is technical. Even though determining the Critical Chain can be done manually, it is better performed by the software packages.
Injection 4 Buffers are inserted in strategic points
What The Critical Chain of each project is protected by the placing of sufficient time buffers at strategic points within the flow of tasks:
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Project Completion Buffer (PB) Feeding Buffers (FB)
Figure 11: Critical Chain with buffers
The Project Buffer (PB) is there to protect the project from the fluctuations of the Critical Chain. Every task is subject to statistical fluctuation and so are the tasks of the Critical Chain. There is high probability that the accumulation of all the fluctuations will exceed the time that was planned for the Critical Chain. Therefore, we have to allow some more time to absorb its fluctuation. The additional time is there to protect the completion date of the project and hence it is called a Buffer.
There are two immediate questions that should pop up: i. What should be the size of the buffer? The recommendation is to use a simple formula of ensuring that the Project Buffer will be calculated as 50% of the time duration of the Critical Chain. As in our example, the Critical Chain is 68 days, the Project Buffer is planned to be 34 days. ii. How do we ensure that the buffer does not elongate the overall duration of the project? The answer to that was established in Injection 2. While challenging the estimation of the task duration, the suggestion was to choose the 50/50 time estimation. Even after handling the resource contention through constructing the Critical Chain, the overall duration is shorter than the one that would have been used by the Critical Path method. Theoretically, about 50% of the project lead time was cut by challenging the duration estimation and only half of this cut time is brought back into the buffer.
The Feeding Buffer (FB) is to protect the Critical Chain from fluctuations in the feeding leg. We may say that tasks 1 and 2 are likely to take longer than planned. Each task has 50% probability to be completed on time and the chance that the two of them will be completed on time is 25%. That means that there is a 75% chance that the leg will take longer than the
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planned 20 days (task 1 10 days and task 2 10 days). When this happens, a delay is caused to the Critical Chain. Therefore, we put the Feeding Buffer at the integration point when the feeder enters into the Critical Chain.
The suggested size of the Feeding Buffer is 50% of the duration of the feeding leg. We remember that in the planning phase the duration of the tasks on the feeding leg were already challenging with the individual safety removed from them.
After inserting the buffers, positioning of tasks and legs of the project can be changed. However, we do not revisit the Critical Chain for any alterations after the insertion of the buffers. After inserting the buffers you may see some situations that may worry you. Here are two typical concerns: i. A feeding leg is longer than the critical chain. This does NOT make it now into a new critical chain. It is just a feeder that has to protect the Critical Chain. Start this leg earlier than the Critical Chain. It is OK for a feeding leg to start before the first task of the CC. The entire duration of the project can be calculated as Critical Chain plus Project Buffer plus the length of the longest feeding leg until the start of the first Critical Chain task. If the beginning of the feeding task crosses current time into the past, based on realistic starting date of the first task of the project, then the whole plan is pushed into the future. ii. Because of resource contention, or due to dependencies between a feeding leg and the Critical Chain, holes can be detected in the Critical Chain. This is legitimate. As long as the total duration of the project is acceptable we can live with some time breaks in the Critical Chain.
How all CCPM software packages have the feature to calculate and insert the buffers. Technically the process of inserting the buffers is simple. After inserting the buffers, we get a predicted date for completing the project. This date may differ from the date that the project customer wants. If this date is later than requested or promised to the customer, we have to go through another iteration of performing injections 2,3 and 4 to review the Critical Chain and check for ideas on how to break some dependencies. This can be done through performing
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tasks, or parts of tasks, in parallel rather than in a consecutive way. This means by breaking the task dependencies, adding more resources, or offloading tasks from a resource under contention to more available resources (even if they are less skilled and take longer to perform).
All the above changes have to be introduced into the project diagram (Injection 2) and then continued to Injections 3 and 4. This should improve the situation and bring the projected completion date close to the desired one.
The managerial procedures for Injection 4 should clearly define: The acceptance process of a predicted delivery date; The escalation process, when the project manager cannot find an agreed way to meet the delivery date as required by the customer; and A clear process to finalize the delivery date without compromising on the planning requirements (such as cutting project buffers or forcing totally unrealistic task durations).
By the end of this group of injections, 2, 3 and 4, we have a tangible deliverable: a good project plan which is realistic, buffered against fluctuations, and with a projected date that is accepted by the customer. Now we can move to execution control.
Execution Control
Every project has an official starting date. It is usually called, a project kick-off. This indicates the point in which tasks can start to be performed. It gives permission to withdraw materials and funds from the project budget. After the kick-off, the project moves from the planning mode into the execution mode.
The reality of the project execution is Delays!
Delays are caused primarily by tasks that take longer than planned and tasks that cannot start when they should. The delays are legitimate as they are natural consequences of the inherent nature of performing tasks in an uncertain environment. TOC handles the uncertainty though the use of buffers in the planning phase and in the control of the execution phase.
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The CCPM solution mechanism to compensate for the delays is by protecting them with time from the corresponding buffer. Any delay in the Critical Chain consumes time from the PB, Project Completion Buffer. Any delay on the feeders consumes time from the FB, Feeding Buffer, of the specific feeder (every feeder has its own FB). Penetration of the Project
Completion Buffer prevents the expected completion of the whole project, assuming that the rest of the tasks on the Critical Chain will behave precisely according to the estimated time. The role of the Feeding Buffer is to protect the Critical Chain from fluctuations of the feeding tasks. However, when the accumulative fluctuations consume all the FB, further fluctuations will be passed to the Critical Chain and will cause penetration of the PB.
The number of days consumed from the buffer and, thus, the number of extra days that the project may need after the original planned completion date is the penetration. Penetration of the planned buffer is presented as a percentage. The higher the level of penetration, the less remaining protection the completion date has. The Project Completion Buffer is the amount of protective time that the project has. It is used to compensate for the fluctuations. This is like a reservoir helping the project manager secure the on-time delivery. The project manager needs to know, at every given point in time, the amount of protection left. That is achieved through knowing the buffer penetration. The level of penetration determines the buffer status.
Managing projects the TOC way means manage through the buffers!
The penetration of the buffer states the amount of days consumed from the buffer. At the kick-off, the buffers are full (zero consumption). As the project progresses, some tasks tend to take longer than planned (since in the planning phase we took the 50/50 time estimation). Every deviation from the planned time is compensated by time from the buffer. That consumes the buffer. The level of consumption of the buffer is called the Buffer Status.
The level of consumption of the buffer signals to the manager the risk to the on-time completion of the project. TOC uses the color system to prompt management attention and action. Green means the project is moving OK do not interfere. When it is Yellow it signals get ready to take extra actions to ensure that the project will be on time because the situation is becoming risky. When it is on the RED managers must interfere and take
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corrective actions to restore the level of protection the project needs. As the buffer status is based on a predication of the penetration to the buffer, it is possible to restore some of the buffer. Any activity that causes the remainder of the Critical Chain to be shorter than planned adds time to the project buffer and, therefore, will reduce the level of penetration. This in effect restores the buffer.
The color Black usually denotes that the project is already past the due date. Most CCPM software packages do not use the black buffer status.
Buffer status colors: As I wrote before the Buffer is split into three zones green, yellow, and red. Traditionally each zone shall be 1/3 of the buffer size, green being the first zone, followed by yellow and red.
Figure 12: Traditional buffer penetration colors
However, there is a potential NBR is assigning the colors to thirds of the buffers. There is a danger that the early tasks of the project will consume a disproportional part of the Project Buffer just because management will not recognize that there is a significant delay until the project status color changes to yellow. By then one third of the entire project buffer has been consumed.
This is why the colors should be tilted. They should be assigned according to the progress of the project. At the beginning of the project most of the buffer is colored red even if the buffer is still full, and a bit is colored yellow. The green is introduced as the project progresses. This is done to have a better control over the initial phase of the project. Most of the CCPM software packages support this feature.
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Figure 13: Buffer status in relation to the progress of the project
Buffer status is used for self-expediting, assigning priority of resources, and for prompting management actions and decisions.
Buffer Penetration example: The following project plan contains 36 days of Critical Chain and 18 days of project buffer (PB).
Figure 14: Example of a project plan with buffers
Tasks 4 that was planned for 8 days reports that the task will take 13 days. This causes a variation of additional 5 days in the task duration. The extra time is given from the buffer. So buffer penetration is 5 days.
Figure 15: Buffer penetration after reporting an expected delay in task completion
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The penetration is happening as if the tasks reporting the variation push the other tasks and force them into the buffer. In this case the buffer penetration is 5/18 and is equal to 28%. However, as it is at the beginning of the project, the buffer status is already RED.
The buffer status should be reported frequently (ideally daily). The following chart presents the progression of the project through the recorded buffer status and presents the health of the project and the effectiveness of management interventions (when needed).
Figure 16: Buffer penetration report for a given project.
Execution Control Injections:
The next 5 injections provide management with the ability to effectively manage the execution.
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Figure 17: CCPM injection for Execution Control
Injection 5 Tasks are performed according to the status of their corresponding buffers
What Due to the DELAYS management experience demands resources to perform different tasks within the same project or on different projects within the same period of time. Management has to make the important decisions of allocating resources to tasks. Injection 5 provides a simple and practical mechanism. Every task that is about to be performed is Colored with the same color as the Buffer it belongs to. The color and the level of penetration give the tasks priority in getting the needed resources. Priority: Black (past due date) is higher in priority than red, red than yellow, yellow than green. Internal priority within the same color is shown according to the percentage of penetration into the Buffers.
Reporting task progress
In order to estimate the level of penetration into the buffers, there In
is a need to get frequent (daily) report from the task performers or their direct managers.
the reporting method used in conventional projects, people are asked to report how much of the task have they completed. Usually, the report is about the percentage of the task completed. CCPM calls for a different progress report. It asks the task performer to estimate the remaining duration. Once the work on a task has started, daily reporting on the amount of time that is predicted to be needed to complete the task is expected. At this point, the
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performer of the task has a better idea about the real time required. buffer penetration is calculated.
Based on this report, the
How
An example of the technical & managerial procedures for injection 5:
a. By the end of the working day, the task performers or task managers (a manager that is responsible for the performance of several tasks on behalf of the resource manager) reports the estimated remaining days for completing all of the tasks which are in progress. b. At a given time, the CCPM software is run to update the buffers and create the buffer status for all the open projects. All the tasks in WIP, and the tasks waiting for a resource to be performed, are marked with the relevant color as per their corresponding buffers. They are sorted out by colors and within the colors by the percentage of penetration. c. In the morning, the task managers or the resource managers review the queues of tasks for the resources and allocate tasks to available resources according to the sequence suggested by the program. There should be only one set of priorities according to the buffer penetration. d. As a general rule, tasks should not be stopped while being performed as this creates bad multi-tasking. Yet, in rare cases when this is absolutely necessary for the sake of a recovery action, management can decide to stop another task and move the resource(s) to participate in recovery actions for a RED project. For such rare cases a clear procedure at the right level of management to make such decision should allow the interruption. e. Most software packages can highlight tasks that have not reported their progress. It is highly recommended that all levels of management should firmly endorse and promote the need for daily reporting.
Injection 6: Resource Availability is monitored in anticipation of a new planned task
What The project manager keeps track of the progress of the project. Special attention is paid to the Critical Chain. When a task on the Critical Chain is about to be completed, the project manager (or the task manager) is prompted to check the current status of the resource needed for the next task and its level of readiness. The same applies to tasks on feeders.
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How
This procedure can be called Resource wake-up call.
The new procedure signals to the project leader/task manager, or to the project control room, that a resource will soon be needed for the next task. If necessary, actions have to be taken to guarantee their availability, especially for the tasks on the Critical Chain. The wake-up call alerts the next resource on the critical chain of the imminent date for the passing on of the task. The estimated completion date is updated every day. The procedure
has to calculate the time for the wake-up call by subtracting the wake-up time from the estimated completion date. The objective of the procedure is to ensure that the resource for the next task is aware of the updated situation with the current task and the anticipated time of starting the next task.
An analogy a scheduled flight. The airport of destination has a general schedule for all flights and they prepare the necessary resources to accommodate and service all the coming flights. The specific flight has an ETA Estimated Time of Arrival.
Figure 18: An analogy planned arrival of a scheduled flight
The ETA is updated according to the progress of the flight, if it is delayed in the take-off, or if it experiencing unexpected weather conditions on the route. The destination airport is continuously updated with the new estimated ETA (and so are the passengers on board who can watch on their screens details from the flight computer). It is expected that when the aeroplane lands there will be a full team to service it receive it at the gate, baggage people to offload the plane etc. All the relevant resources are updated and getting themselves ready according to the last ETA they get.
In the following example the Critical Chain is the sequence of the following tasks: 4-W8 5-M8 3-M8 6-C10
A wake-up call is set to be 4 days in advance of the estimated time the resource will be needed to perform the next task on the Critical Chain.
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Figure 19: An example of wake-up calls as per Injection 6
Please note that the procedures of Injection 6 may differ from the current practice in the organization. Working with standard software such as MS-Projects, the task performers or their bosses tend to have a look ahead to the planned start date of the tasks. As per the new reporting method of Injection 5, they can get daily changes to the expected starting point of their task. Injection 6 ensures that they are getting an advance warning of when the next task is expected to start. As we deal with a task on the Critical Chain it is of utmost importance to minimize any delay to the chain due to lack of availability of the resource.
If the importance of the Critical Chain to the project is understood, it is more likely that the manager will use Injection 6 and ensure availability of the resource.
Injection 6 provides a major contribution to the opportunity of gaining from a positive variation caused by early completion of the some tasks on the Critical Chain. In the planning phase the time estimation that was taken is 50/50. This means that sometimes it can be that the task duration will actually be less than planned. If the resource for the next task on the Critical Chain is available to start immediately after the completion of the current task then the early completion will reduce the existing buffer penetration created by earlier tasks and thus will increase the probability of completing the project on time.
Injection 7 Buffer Management (BM) for corrective actions (expediting) is in place
What Based on the frequent reporting of the task managers (or the task performers), the project manager knows the status of the task completion with the most updated estimation of
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the remaining duration for this task. Through the mechanics of Injection 5, the new completion date is calculated and, with it, the Project Completion Buffer penetration.
The amount of time that the new date of completing the Critical Chain exceeds the initially planned date of its completion (without the buffer) determines the amount of time penetration into the project completion buffer.
When the penetration gets into the red, it indicates that on-time completion of the whole project is at risk. When the penetration is deep, there is a need to assess the risk and, if necessary, take special actions beyond just the immediate allocation of resources, to recover the loss of buffer.
It is expected that the key people will come with suggestions for actions that will cut the time for the rest of the critical chain. Not every penetration to the red demands immediate reaction. It is recommended that a review meeting is conducted and project managers report on the progress of the projects in Red. When the situation is recognized as too risky, a resolution is made to take special corrective actions. Please note that any structural change to the project design and, especially, tampering with the Critical Chain may cause disruption and instability. The tangible deliverable of such actions is the reduction in buffer penetration.
How
Taking recovery actions. After establishing the buffer status through the buffer
penetration, the color system presents management with signals that prompt management attention and action.
When the buffer status is Yellow, management is expected to observe and investigate the situation and to consider actions, ensure that the buffer is not further depleted, and even to regain some of the buffer. Usually however, at this point no action should be taken (why?).
When considering recovery actions we need the experience and knowledge of key relevant people contributing ideas that can shrink the elapsed time of tasks on the Critical Chain. Please note that assigning resources is not a recovery action. This is a regular action that is done nearly automatically as per Injection 5. Also, there is no point in pushing the resources that perform the existing task. Assisting the current tasks, especially those which are in Red
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status, is a regular responsibility of the task manager or resource manager. Top management may be called upon to pave the way by taking actions to assist the resources by removing obstacles blocking their ability to perform the task.
Injection 7 is under the responsibility and the leadership of the project managers. They are expected to come with ideas such as off-loading to non critical resources, parallel processing, etc. Any idea that will reduce the level of penetration is welcome. The organization is expected to capture the collective knowledge and ideas of corrective actions for the benefit of all future projects.
Injection 8 Buffer penetration reasons are reviewed periodically for POOGI Process of Ongoing Improvement
What There is a value in analysing the reasons for buffer penetrations on an on-going base. Some of the delays and deviations are specific to the project, but some are more permanent.
Dr. Deming stated that quality is not about finding the defective part but about correcting the process that creates the defective part. We want to employ the same concept in the project environment.
Through the use of buffer management statistics, the management can find areas that need an improvement initiative under the heading of continuous improvement (POOGI). Even though that improvement will not necessarily impact the performance of the current project, the initiative will help the organization to improve as a whole and create better grounds for the projects to come.
Injection 8 covers: collecting the reasons for buffer penetration from buffer management, systematically analyzing them, and suggesting improvement initiatives to eliminate or reduce the causes.
When a buffer penetration is identified, a check is made to know which task is causing the penetration and the reason. Usually, penetration happens when the task is waiting for some input or resource, but it also can be that there are some unexpected difficulties or new
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demands. Even in such cases, we can identify that the task is waiting for some missing input or decision in order to carry on.
How
Buffer Management meetings. Frequent (weekly) meetings are held to review the
statistics of the reasons for buffer penetrations and to act upon them. As such, Injection 8 calls for technical procedures of recording relevant data related to buffer penetration, timing for recording and the causes. In recording the causes, it is important to point out what is delaying the waiting task.
In preparation for the meeting, an analysis (histogram) of the causes of the penetration should be produced and disseminated to all participants of the meeting ahead of time.
The meeting should follow an agreed managerial process such as: Buffer penetration statistics across several CCPM projects are presented. A decision is made to initiate improvement in a certain area. A review of the open improvement initiatives is conducted.
It is likely that the analysis will reveal issues with human behavior patterns and relationships between people and functions within the organization. In such cases, it may be beneficial to use the TOC TP (thinking processes) to address the conflicts and develop and implement win/win solutions.
There are also potential dilemmas in which the resources may be caught. The nature of the projects is that the resources are needed only in certain tasks and not for the whole duration of the project. They may be involved in other activities outside the project e.g. day jobs or servicing other projects. They may be in a dilemma about which job to do first. This can turn into a conflict when the resource finds him/herself between the project manager and the functional manager who put conflicting demands on the resources time and attention. In these cases, there is a need to solve the functional conflict as well as to upgrade the managerial procedures of integrating projects into the regular work flow of the organization.
Injection 9 Resources are monitored as potential CR Critical Resources
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What
It may be revealed Through the buffer management statistic that some (few)
resources tend to lack capacity and cannot satisfy the work content required within the planned time. The critical resource may be needed in several tasks within the project and across several projects. This may cause project managers to fight for securing the resource for their project.
The purpose of Injection 9 is to identify a possible critical resource and mange it in a way that the potential damage to the project and to the entire system is reduced.
Please note that in reality there is a pressure to dedicate resources to projects. This stems from the demand for resources to be available when needed (as per the evolution of the original plan). Nevertheless, resources can be used in more than one leg of the project and can
become critical. Even though the Critical Chain mechanism ensures that there are no resource conflicts and contentions in the plan, the unfolding reality can cause resource contention, and highly utilized resources can cause delays and penetrations to the buffer.
Another potential candidate for critical resource is a resource that participates in more than one project. Even though this article deals with single projects, we cannot ignore the fact that the reality of project environments calls for shared resources. The resource contention can be also caused by the resource having day-to-day responsibilities such as services to completed projects, rework, support etc.
Injection 9 provides the natural bridge from single project to a multi-project environment. We recommend some intermediate steps that can provide a temporary solution until a proper move is done to the TOC solution for multi-project environment.
The major bridge to multi-project environment is the directive to stop bad multi-tasking. The project manager can adopt this directive in a single project to minimize and even stop any jump of a resource from one unfinished task to another. When the resource participates in more than one project, it is more difficult (if not impossible) for the project manager to prevent bad multi tasking. Usually, it is the resource manager who is under immense pressure to shift the resources from one project to another before even completing the open tasks.
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Bad multi-tasking happens when a task is interrupted before completion and the resource is moved to another task. In the following example the same resource is planned to perform three different tasks for projects A, B and C. Interruptions occur. The interruptions occur because the project manager of B is putting a lot of pressure on the resource manager to start performing task B. Yielding to the pressure, the resource manager instructs the resource to move from task A to task B (before completing A). The same situation can happen when the project manager of C pressures the resource managers to perform his task C. The resource is moved to perform C. The next step is that the project manager of A raises his voice and gets the resource to continue and complete task A. This is known as the system of the one who shouts louder gets the resource.
When the resource after some time returns to perform the interrupted task, some amount of time is required to get back into the state and the thinking needed for performing the task. Thus, the overall time for every task grows dramatically, and every project suffers from the delays. In the example, the total duration of every task is more than doubled. This means that no real gain was achieved by the multi-tasking.
Figure 20: An example of bad multi-tasking
Injection 9 is under the ownership and the responsibility of top management. The decision to release projects is done by top management. Many times top management decides to start more projects while using the existing resources. This is under the assumptions that not all the resources are busy all the time and that there is some excess capacity to perform more projects. However, some of the shared resources may not be able to cope with the increased load and will be subject to the fight of project managers to secure the resources to perform their projects. This leads to delays in several projects due to non-availability of resources.
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Top management has a critical role in setting the number of open projects, their priorities, and in addressing shared critical resources.They should have a snapshot view of the status of all the open projects. This can be presented on a project portfolio status like the one in the following figure. Every dot on the graph presents the status of a project. It shows the consumption of the project buffer versus the progress in the completion of the critical chain.
Figure 21: A portfolio status diagram
Conclusion of Part 1
By now we have covered in details all the injections of the CCPM solution for managing a single project. Project managers who want to improve their ability to manage projects, to increase the probability of completing projects on time within budget and to the original specifications, should consider implementing these injections in their reality. They should make their own experiments and prove to themselves that the injections do produce the expected results. Injections 2-4 cover the planning processes and injections 5-9 cover the suggested way of managing the execution of the project plan.
The most important is Injection 1 having the right mindset. This is a reflection of the determination to be a professional project manager. It lays the foundation for career progression by becoming a reliable project manager who demonstrates the commitment to deliver promises. The CCPM provides managers with the way to achieve that.
The next part of this article is aimed at the readers who want to know about the TOC methodology that was used to capture and organize the relevant knowledge of CCPM.
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3.
Part 2
THE U SHAPE STRUCTURING THE TOC KNOWLEDGE AND DEVELOPING TOC LOGISTICAL APPLICATIONS
CCPM emerged as an application of TOC for managing projects. It was developed as a solution to address and manage the constraint of the system in project environment. The constraint of the single project is TIME. It is the elapsed time from starting the project until it is finished and has delivered the results as promised, the specifications.
After the CCPM solution was developed, it became apparent that there was a need to organize the knowledge. The purpose of the organizer is to enable capturing the knowledge, retrieving it for learning and communicating, providing a platform for continuous upgrading, and capturing further expansion in understanding enhancing assistance for the practicalities of implementing the solution.
TOC has a base methodology known as the thinking processes. The base methodology provides tools to capture the analysis of the problem, the development of the solution and the construction of the practical implementation plan.
The U-shape is the organizer that provides the platform for the above requirements. It connects all the elements of the solution. CCPM is a solution. What makes it powerful is the amount and magnitude of the problems that it solves in the area of managing projects.
The U-shape helps management to deal with each of the four continuous improvement questions: What to change? What is the core problem? What to change to? What is the simple and practical solution? How to cause the change? How to engage the proper people and secure their support? How to propel continuous improvement?
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The collection of the answers to the above questions creates the knowledge base for the TOC solution. This is recorded on the U-shape. Once the knowledge is recorded it provides direct access for any person who wants to more fully know any TOC solution.
Part 1 of this article presented the CCPM solution. The solution includes 9 injections. Each injection has been covered in detail to convey the knowledge of what it is, how it functions and how to implement it. The U-shape captures the logic of how the solution was constructed and how the collection of the injections will lead, once implemented, to the objective of completing projects on time, within budget and to the agreed specifications.
In this part,
the structure of the U-shape will be described and the way that all the relevant
data and knowledge of the TOC solution are interconnected and related to each other in a systematic and logical way.
The U-shape presents the TOC methodology. It has two major uses: i. To capture the knowledge of a developed TOC solution (such as CCPM and other logistical TOC solutions) ii. To provide the platform for developing solutions for improving the performance of systems. The U-shape provides the platform for the whole design and development of the solution for the problems leading to the improved performance.
The name U-shape was given to reflect the graphical representation of the thinking processes on a comprehensive logical diagram.
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Figure 22: The general structure of the U-shape
The left side of the U-shape is the Current Reality. It follows the structure of the CRT (the Current Reality Tree). The bottom of the tree reflects the core problem, the middle of the tree the major problems the UDEs (Undesirable Effects) and their logical connections, and on the top of the tree the negative impact that the UDEs have on the overall performance of the system at the top.
The right side is the Future Reality. It follows the structure of the FRT (Future Reality Tree). At the bottom there is the direction of the solution, in the middle the injections and the supporting logic that connects them to the desired effects leading to the improved performance.
The central part of the U is the connection between the two sides of the shape. This is the Pivot. It describes the core of the change. It is like changing the course of a huge ship. It explains the different mindset that is about to be employed to the extent that it will drive the new desired reality.
We strongly believe that the structure of the U-shape also can be used to explain other managerial approaches that provide answers to continuous improvement questions. What will be unique to every managerial approach is the recognition of the core problem, the pivot of the approach, and the direction of the solution.
The TOC pivot provides the suggested TOC Change. It comes under the heading of "Management the TOC Way".
What is unique about Managing the TOC Way?
The TOC Way is based on the realization that the performance of every system is governed by a very few of its constraints. The constraint blocks the system from achieving higher performance relative to its goal and at the same time provides the manager with the direction to grow ("lift") the system and to improve its performance. The constraints are the factors or elements that determine how much the system can achieve.
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TOC claims that every system has very few constraints and they are the key for managing it. The term constraint is so significant in TOC that it gives its name to the entire approach.
Figure 23: The constraint and its impact of the performance of the system
Once managers identify the constraints, they can manage their systems through those constraints. There are few types of constraints: Capacity, Lead-time and Market (customer orders). These constraints are 'things' that are in shortage in the current reality. Capacity constraint states that there is not enough capacity of the specific resource in order to fulfill all the demand that is imposed on it. Lead-time constraint means that the time to complete a full project is too long versus the competitors or versus the real needs of the market. Market constraint means not enough customers orders. When managers realize the critical impact of the constraint on the performance of their system, it has a profound impact on their mode of management. After identifying what the constraint is, managers should make a conscious effort to squeeze the most out of the constraints while not wasting them and, thereafter, to bring more to elevate the constraint. These steps are knows as the five steps of focusing for managing through the constraints.
The project as a stand-alone system has one major constraint time to completion. Only when the project is completed and the agreed specifications have been delivered does the project generates value. The shorter the project duration, the quicker the benefits arrive. Therefore, it is extremely critical to complete the project on time (without compromising on budget and specifications).
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For a company that sells projects; engineering, IT, construction etc. , reliability can create a decisive competitive edge when all the other providers hardly deliver to the agreed promises. Hence, CCPM becomes a major way to exploit the market constraint and elevating it.
The knowledge of the TOC solution is captured on the U-shape by recording the problem on the left side and the detailed solution on the right side.
What to change What is the problem?
We know that systems can perform better. This is the major drive guiding managers on continuous improvement. Managers also experience sporadic situations in which their systems perform better; but they find it difficult to repeat these experiences. These experiences set higher level of performances that managers strive to achieve.
The starting point is the performance of the system. The system was built for a purpose. The performance measurements have been developed in order to measure how well the system performs versus its objectives. The expectations are that systems continuously improve their performances.
When a practitioner is called upon to improve a system, it is because the performance measurements are "low" according to the owners or managers views. There is no criticism of the efforts and achievements up to this point. The call for professional assistance is an outcome of a strong conviction that the system can do better.
The difference between the level at which the system can perform and the current level of performance is the GAP. Even though gaps may cause frustration to the managers of the system they also provide the impetus to strive for improvements. Once we recognize that there are gaps we can ask the question, why do they exist, what prevents us from closing the gaps?
The reasons that are given for the existence of the gaps are called Undesirable Effects (UDEs in the TOC terminology). These are facets of reality that are undesirable as they cause the system to perform at a lower level. The UDEs are like symptoms in the medical analogy. They
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indicate that the system is not well. The practitioner conducts an investigation and, through cause and effect logic, reveals the Core problem. This is the reason for the existence of several gaps and UDEs. This analysis is called CRT (Current Reality Tree), and appears on the U-shape as a gap analysis or diagram connecting the UDEs.
The core problem can be verbalized in three ways: An erroneous assumption that is used extensively by the managers of the system in managerial decision making A conflict between two types of conflicting tactics A core cloud presenting the core conflict The left side of the U-shape deals with the question, "What to Change?" It shows the gaps in the current level of performance measurements, the undesirable effects (UDEs), the gap analysis through the Current Reality logical analysis (CRT) and the Core Problem.
U-Shape What to change?

Low Performance Measurements UDE UDE UDE UDE
UDE UDE
D B A
D D C
Figure 24: The left side of the U-shape What to change?
The TOC Solution
As stated above, the Pivot describes the essence of the change (moving to managing systems
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the TOC way). As managers of a system we are interested to know the details of the solution suggested by TOC, and the logic explaining the reasons why they are going to work and provide significant results.
The solution starts with the direction of the solution for the system understudy. We can look on every U-shape as a system on its own. If the pivot is managing the TOC way, then the direction of the solution is Managing the (specific) system the TOC Way. In the direction of the solution we choose the dominant constraint for the system and we supply a new method, approach or paradigm how to manage this constraint.
For project management the direction is: project management the TOC way, CCPM (Critical Chain Project Management). The chosen constraint is the project lead-time. The traditional way of managing projects is called CPM, the critical path method. TOC suggests that the lead-time of a project is dominated by a combination of dependent activities and availability of resources. This is the Critical Chain (CC). The Critical Chain determines the lead time of the project as it is the longest series of activities (tasks) that have to be performed sequentially. So long as the time for performing every task is fixed, and the capacity and availability of resources needed to perform the tasks are given, the time to complete the project cannot be reduced!
The complete solution has several elements. In the TOC terminology, they are called Injections. The injections are the real breakthrough that the TOC solutions inject into the reality. They are new elements that are brought into the system. They are considered as breakthrough because they have never been a part of the system. Once implemented in reality, the injections provide permanent and continuous "new blood" to the system and directly contribute to the improved performance.
Even though many systems implementations provide the experience and the confidence that the TOC Solution works, it is important to provide the logic of the solution explaining why it works. Through cause and effect relationships that are proven to exist in reality, the logical connection is built between the elements of the solution and the desired outcome. This is a part of the TOC body of knowledge (TOC BOK) that is so crucial for the design of the solution. Yet again, this knowledge is based on the thorough understanding of systems and the
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way they operate.
The desired outcomes of the TOC Injections are connected by cause & effect relationships to the improved performance supporting the claim that the injections, once correctly implemented, will lead to better performance of the system.
With that we have covered the backbone of the right hand side of the U-shape that deals with the question What to Change to? What is the solution?
U-Shape What to change to

High Performance Measurements
DE DE DE DE DE NBRs TOC Injections TOC direction of solution DE
Figure 25: The right side of the U-shape What to change to?
Based on this logic every TOC practitioner, a TOC scholar also is committed to improve systems, has to know and demonstrate the link between every injection and its corresponding DE (Desired Effect). This is the positive outcome that stems from this injection.
At the same time, we have to be aware of the fact that every new injection to reality, every change, contains a potential danger of side effects. It is like in medicine, pharmaceutical companies invest billions in developing cures for known illnesses. Even when they have a solution they are not allowed to sell it unless they conduct thorough experiments and tests to ensure that the medicines do not contain any negative side effects. The same is correct with improvement initiatives. The recent history of improvements in manufacturing companies has
Future Reality
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shown that in many cases these initiatives have caused lay-offs of employees without any opportunity to be reemployed. This is an example of a Negative Outcome, known in the TOC terminology as a Negative Branch Reservation (NBR).
It is the responsibility of the designer of a solution to think about the potential negative outcomes even though the intention of the solution is to produce good outcomes for the benefits of the system. As such there is a need to develop more elements for the solution to prevent the negative outcomes. These elements will join the "package" of the solution the group of the injections for the improved performance.
Negative Branch Reservation (NBR) is sometimes a confusing concept of TOC. The official definition of the NBR is negative outcomes that may appear due to the injection AFTER the successful implementation of the injection. If the negative situation occurs while implementing the injection and blocks the implementation of the injection it is an obstacle and not an NBR.
Figure 26: The timeline of implementation of an injection
The injections, the new entities into the system, provide the answers to the question of "What to change to?" What do we have to do in order to improve the performance of the system? The solution is the response to the problems preventing the systems form achieving higher performance.
Now we have finished describing the full U-shape. The left side deals with the current reality, the right side deals with the future reality that emerges after the successful implementation of all the injections of the solution. In the center of the U, the pivot, Management the TOC Way.
At this point, every practitioner can arrange the TOC knowledge in a U-shape. Using that, one can master the knowledge and be prepared for questions on any issue regarding the problem and the solution. The U-shape is valid for one problem as well as for the entire system.
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Traditionally, in teaching TOC for specific areas such as operations, distribution, project management etc., the material is organized according to the U-shape but in big "bulks". This is like production processing in large batches. We used to cover first all the typical UDEs, go through the CRT, the FRT and end up with list of injections. However in preparation for the implementation, there is a need to deal with every injection on its own. The U-shape provides us the platform to organize the knowledge and use it for the implementation.
Every Injection that is a part of the solution is directly linked to one or more gaps and undesirable effects (UDEs). The U-shape helps us to establish these links. There is a need to conduct a Current Reality Study (CRS) to investigate and find evidences in the system to indicate the existence of the gaps and the UDEs. Once the UDEs and their implications have been established, the practitioner can proceed to plan for the implementation.
Low Performance Measurements UDE UDE UDE UDE UDE
High Performance Measurements DE DE DE DE DE DE
UDE
D B A
D D C
PIVOT
TOC Injections
TOC
TOC direction of solution
Figure 27: The full U-shape with the connections between injections and UDEs
In preparation for the implementation we consolidate all the relevant knowledge that is needed for the injection. It includes: What is it what is its essence? What UDE does it address? What is the positive outcome of implementing it?
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What is a potential negative outcome and how to prevent it from happening? The above knowledge provides us with the understanding of What is the injection and all the supporting logic explaining why is it needed and what value it will bring. All of this is captured in the U-shape.
In the move to the implementation we need to describe and convey the know-how about the How. The How covers the practical aspects of integrating the injection into the managerial processes and flows. The How also covers the way to make the necessary changes in reality to accommodate the injections and to pave the way for making them a part of reality.
The How is of utmost importance. It is not enough to logically accept the solution. There is a need to work with it and to continuously demonstrate that it is beneficial to have these changes, the injections, in reality. Capturing the How helps people who want to implement the solution to gain from the experience of the TOC community. It clarifies and implements a solution that makes sense but is different from the way most systems currently work. This is a departure from current traditional practice.
Conclusion
The U-shape provides the reader with the basic understanding of how all the components of the solution come together and how a logical explanation of why when they are implemented in reality they should combine for improved performance. It also provides you with the ability to develop your own solution, once you practice and master the techniques and the thinking processes.
Embarking on TOC is a personal choice. My view is that you must do TOC seriously or you not do it at all. The strength of TOC is its knowledge and the methodology for understanding and developing new knowledge. The processes suggested in this article are quite demanding in terms of the amount of personal preparatory work that the TOC practitioner is expected to do.
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I hope that the U-shape helps you to arrange the relevant knowledge on any subject you want to deal with, and for every level of depth you elect to go. The modular approach suggesting the development of the entire project plan, one injection after another, has potential to ease the work with the implementation team. Our recent experience shows that, through the modular approach, we can focus the attention of the internal project team throughout the workshop for developing the implementation plan and transfer the ownership to them. We can cover 2-3 injections per day (in 4-5 hour session per day) and use the last day for consolidating the mini-project into a full project plan, with assigned responsibilities and agreed upon task durations.
Finally, this structure can accumulate knowledge, know-how, and experience of the TOC practitioners implementing the injections in reality. I will welcome any feedback, suggestions and expansion to this article and I will incorporate them in my next revisions or next articles. Please write to me on oded.cohen@goldrattgroup.com.
The real joy in working with TOC is in Making it Happen. It comes when you can see that the injection is alive and kicking in the system and the people are happy to testify that the injection has brought them real benefits proving the Future Reality Tree (FRT) is valid!
AUTHOR Oded Cohen is one of the worlds well known names in Theory of Constrains (TOC). He has 30 years of experience in developing, teaching and implementing TOC methodology, solutions and implementation processes working directly with Dr. Goldratt all over the world. Among the countries to which Oded brings his expertise are the USA, Canada, Japan, India, China, the UK, Poland, Russia, Ukraine, Columbia, Chile, Peru and many others.
Oded is an Industrial engineer with MSc. in Operations Research from the Israeli Institute of Technology in Haifa, Israel. He was one of the developers of OPT the logistical software for production scheduling, the TOC thinking
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processes and the TOC management skills.
Oded has brought his expertise to educating a whole generation of TOC practitioners and implementers. He is known for his passion for working with people who love TOC. Since 2001 Oded has been a part of Goldratt Group as the International Director for Goldratt Schools the organization that is committed to ensure that the TOC knowledge is readily available for everyone who wants to learn TOC from a teacher. Goldratt Schools plays a major role in developing and supporting TOC Application Experts and TOC Consultants who are given the knowledge and the practical know-how for implementing TOC solutions.
Oded co-authored the book Deming & Goldratt:
The Theory of Constraints and the
System of Profound Knowledge - The Decalogue; and is the author of the recently published book Ever Improve A Guide to Managing Production the TOC Way.
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PRODUCT DEVELOPMENT PROJECTS: GUIDELINES FOR ASSESSING THE POTENTIAL OF NEW PRODUCTS AND THE PLANNING OF VARIOUS FEATURES IN A PROJECT
Eli Schragenheim Goldratt Schools
ABSTRACT There are three problematic decision-areas in project management where TOC should have a major influence: 1. How to choose a project? 2. How to choose the specific features for a given project. 3. How to manage the project timeline and execution? Currently TOC has developed a detailed technique only for the third area. In the first part of
this paper the scope that TOC should be developing in the future is discussed, especially issues that belong to the first two categories.
In part 2, the paper presents some guidelines for assessing the value of new technology. This issue is an important part of the first category of critical decisions in project management for organizations that develop new products or new technologies. The paper will be based on
the six questions about the value of new technology developed by Dr. Goldratt (see Necessary but not Sufficient). Beyond assessing the value, the guidelines could lead to better focusing on developing the right features (category 2 of the critical decision areas), and should have a lot of impact on the marketing of the new products based on the new technology.
The six questions lead to the analysis of the current limitation that the new technology claims to vastly reduce. It further leads to the identification of the current policies and behaviors
that help to overcome the limitation and the future policies and behaviors required to produce the most value. The author expands the scope of the six questions to the development of new products.
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Part 3 deals with the question of whether to include in the initial planning of a project all the features to be included in the project. The paper suggests making a clear distinction between
must-have features, which without even one of them there is no value to the project, and the nice-to-have features. The paper suggests delaying the decision about which nice-to-have
features to include to the latest time within the project itself that still allows the inclusion of the considered feature.
Key words: features.
TOC, CCPM, Goldratt's six questions, must-have features, nice-to-have
1.
Introduction
Employing the generic thinking of the Theory of Constraints, the methodology of scheduling and execution control of single projects has been developed under the name of Critical Chain Project Management. environments. That methodology also has been expanded for managing multi-project
However, TOC has not, so far, contributed much to other areas of critical
decisions regarding projects.
This paper focuses on the following parts: 1. Define the various areas in project management where TOC could contribute.
2. A specific contribution of TOC to the area of new product development involving assessing the value of new technology and expanding the scope to new products. 3. A specific contribution of TOC to the area of planning and scheduling the features of a project.
Of the three parts the first two were strongly influenced by Dr. Goldratt.
The author of this
paper participated with the writing of Necessary but Not Sufficient (Goldratt, Schragenheim and Ptak, 2000) where, during the internal discussions, Dr. Goldratt raised the main ideas for the first two parts. Those discussions were the basis for afterthoughts by the author of this The third part is
paper and formed the thinking and the findings of these parts in the paper.
more independent thinking and development by the author based on the idea about the different decision rules in planning versus execution.
The first part gives the overall picture of where the two separate contributions fit into the
Product Development Projects:Guidelines for assessing the potential of new products and the planning of various features in a project
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managing of new products projects.
Both contributions involve not just the technical aspects
of product development but also its ties to the marketing and sales of the future products.
2. Part 1:
Problematic decision-making areas in managing projects
The term problematic recognizes that the current common processes of dealing with those issues are unsatisfactory. There are definite undesired effects in reality as a result of the
faulty or nonexistent procedure to handle such decisions.
We recognize now three problematic decision-areas in project management for which TOC should have a major role in developing much improved decision making guidelines or procedures. 4. How to choose a project? 5. How to choose the specific features for a given project? 6. How to manage the project timeline and execution?
Currently TOC has developed a detailed technique only for the third area, the CCPM methodology that vastly improves both the planning and the execution of most projects. A
hidden assumption behind the CCPM is that the output of the project is well defined and the knowledge of what tasks and resources are required for achieving the output are well known prior to the formal start of the project. Certainly there are projects for which the CCPM True research and oil drilling projects
cannot be used as is and would require some changes.
(where the continuation of the project and its scope are highly dependent on the findings at every stage of it) would need to cut the main project into short-length ones in order to capitalize on the superior planning and execution rules of CCPM.
Lets now concentrate on the first two problematic decision-making areas.
How to choose a project? Lets first distinguish between two different scenarios for choosing a project. One is when The other
the project is fully under the responsibility and initiative of the organization.
scenario is for an organization that bids (or is simply invited to produce the design) for a project owned by another organization. Bidding for a project looks a little simpler than deciding upon initiating a project. It is,
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however, a critical decision that involves analyzing the long-term value for the organization in choosing the considered project, and then the shorter-term impact on the project-mix of the organization. The impact of the new project on meeting the commitments for the existing projects must also be considered. The analysis of the impact of the new project on the
existing projects is already supported by the CCPM methodology and the related software packages.
After the above analyses, one should analyze the direct financial contribution of the specific project: its revenues and related operating expenses that can be deduced for the project.
Then there is the question of assessing the level of uncertainty, especially regarding the use of capacity and the possibility that it might be required for an even more lucrative project. This
financial analysis under uncertainty is a key for deciding upon the price offered for the bid. This financial analysis under uncertainty should be a very valuable development of TOC in the future, taking into account two scenarios: a reasonably pessimistic scenario and a
reasonably optimistic one (Schragenheims TOCICO presentation at Miami 2004).
Choosing an internal project is an even more complicated decision that calls for a simple, yet effective, TOC procedure. All the above elements are part of this decision as well, but here There are two main questions:
the real focus is on the output of the project.
a. What is the value of the output of the project? a. When we speak about a new product/service, then what is the value to the clients of the company? b. What is the possible value to the company itself? b. Do the managers know how to achieve the above value? considered in order to give a positive answer. All requirements must be
The level of uncertainty in such projects is very high.
Thus, a formal and careful analysis of
both the pessimistic scenario and the optimistic one needs to be done.
Deciding upon the features Defining the output of a project and deciding to accept it still do not fully encompass what features should be included in it. This area is less relevant for projects initiated by another
organization, but is a key area in any project initiated by the organization itself.
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The last part of this paper will expand on the issue.
The main insight is that any feature that An area that suffers the most from
does not truly add value to the project causes damage. non value-adding features is software.
Any option that is not eventually used by the users
has caused the damage of extending the development time, and investment of key resources on top of the damage of having more bugs to fix in maintenance.
3.
Part 2: The six questions about the value of new technology and how to expand the insights to new products.
The initial approach to the six questions appears in Necessary but Not Sufficient (Goldratt, Schragenheim, Ptak, 2000), including an analysis of the ERP (enterprise-resource-planning) software packages replacing (actually, just expanding) the MRP (originally
materials-requirements-planning later turned into manufacturing-resource-planning).
Before discussing the six questions and how to expand them to new product development, lets discuss some issues with the vague notion of the term value and especially what impacts the perception of value.
The concept perception of value The relevancy of the perception of value to clients of any new product is straight-forward. It is a key in being able to sell more or to sell at a higher price. But, the concept of value is
vague enough to make it hard to translate it to money. Even when the perception of value is high it is not always straight-forward to get a relatively high price for the product.
Due to the difficulty of translating value into money, and the sensitivity some people have of not paying more than the worth of the product, people look for something similar in order to decide how much is the product/service worth in money. This creates a reference by For instance, the More
which people judge the worth of anything that looks somewhat similar.
price for a new book has very little to do with how much value is in the book. important is the number of pages and whether it is hard or soft cover.
This is the power of
the reference. New technology, which looks like a substantial change to anything preceding it, is easier to break the barrier of the cheap reference. For instance, flash memory disk-on-key,
looks quite different than a CD or a DVD disk, even though basically both technologies are a means to carry your files from one location to the other without having to carry your computer.
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Thus, the price for disk-on-keys is not fully connected to the price of 5 or 10 blank CDs. On the other hand a CD of music has a very limited range of prices, no matter what is the real value of the music (and the music making) it contains.
What determines the perception of value? identify three different parameters: 1.
Ignoring the distortions of the references, we can
The rational based value to the client, either by helping the client to generate value (money) to himself or by helping him to do things he likes to do and either cannot do at all at the present time or that requires much more time and effort. parameter: the practical need. We can call this
2. The pleasure gained by the esthetic or artistic experience of having the new product. 3. Gaining status by owning / using the product or service. gained by other people appreciating the user for the product. Status means the value Owning a Rolex watch
gains a certain value by letting other people know and appreciate you (or your financial capabilities) wearing it.
TOC focuses on the practical needs as a vehicle to enhance the perception of value.
We do
believe that if the practical need answered by the new technology is substantial, then there is a way to convince the user to pay more. We still need to enhance our understanding of the
cause and effect in the perception of value, considering the references and the other parameters than impact the value.
The six questions on assessing the value of new technology
Question 1: What is the power of the new technology? The first question is the only one from the perspective of the technology developer. objective is to gather the basic information for the later questions. list of the capabilities in order to be able to answer the other questions. Its
Here we expect a clear
Question 2: reduce?
What current limitation or barrier does the new technology eliminate or vastly
This is a key question.
Actually it is a clear verbalization of a practical need.
If there is a
practical need, then there has to be a barrier for something. Now there is a solution which eliminates that barrier.
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Some examples:
The technology of cellular phones eliminated the need of someone away of home to find a phone to make a call. Note that, from the user point of view, the fact that cellular phones are
built upon wireless radiation is not important. The basic capability, as might have been expressed in the answer to the first question, is really using wireless connection, rather than cables. But, the value to the user is eliminating the barrier of having to find a phone, Another barrier is the possibility to
because at that time all phones were tied to a location.
get calls anywhere while, without that technology, it is not possible.
Another example highlights the difficulty in pinning down the main barrier the DVD as a new technology replacing the VHS tapes. One might come up with a barrier of low picture But, it
and sound quality which is upgraded (the barrier is reduced) by the DVD technology.
seems that the most valuable barrier is the size. The DVD technology vastly reduced the space required for a having a library of movies at home, or even at a library. Thinking more about
the limitation of weight and size of the old VHS tapes might have led the developers to be faster in introducing the portable DVD. It now faces competition with laptop computers. The alternative smaller files required to watch movies on the move with acceptable quality for the size of screen allows loading high number of movies on laptops and provide a way to watch a selection of movies while travelling.
The most important point is to force the developers to verbalize the practical need of the users at the very early stage of the idea. We are not there, yet. possible value. By the way, did Microsoft have a very clear idea what barrier would be eliminated or reduced by Vista? This is the first step in establishing the value to the user.
We would need two more answers to questions to establish the
Question 3: limitation?
What policies, norms and behavior patterns are used today to bypass the
The first aspect this question deals with is to set the comparison between the current situation and the suggested future one. The previous question already defined the main limitation, but Before
this does not mean that there are no other ways to deal with the imposed limitation.
the time of the cellular phones public phones were in use to allow access of travelers to phone
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calls, and beepers made it possible to know that someone was looking for you. The ability to find a public phone made it possible to bypass the limitation of phones being tied to one place. So, the real added value of the cellular phones is not simply making it possible to call from anywhere and getting called almost anywhere, but by making it immediate and easy. Before
the age of the DVD we had the heavy and bulky (we had not thought much about it being bulky until we saw the DVD) VHS tapes, and we had to choose the movies we would like to have in our library more carefully because the shelves at home could not hold very many. Goldratt emphasizes the need to analyze the behaviors required to bypass the limitation the new technology tackles and warns us to take real care in understanding those behaviors. In
the VHS era, we had to have more discretion and we often recorded another movie replacing older ones which we assumed we would not be watching again. With the DVD it seems less
important and the demand for erasable DVD was not very large. As a result, this feature did not last very long. Maybe there is a lesson to learn from that. The ability to re-record a
movie was useful because we could not afford to have too many cassettes, and not in order to save some money. Once there is no problem in handling many DVDs, noting the current
bags where you can easily store 25-50 DVDs, there is no need to consider re-recording. What for? Before the era of the cellular phones, we also had to learn to behave in a certain way. People
going on a long trip used to leave a list of locations, each with the appropriate phone number, with their spouses as well as with their business associates. Moreover, whenever you were
in such a trip and arrived at a location with a phone, you used the opportunity to call people who might have tried to reach you.
The point about analyzing the current behaviors in view of a limitation that might be eliminated is that old behaviors do not necessarily stop once the causes for these behaviors cease to exist. It takes time to understand the new paradigm and its behavioral ramifications.
Inquiring about policies, norms and behaviors is even more relevant for organizations, because it is much more difficult to change a policy in an organization than to change the behavior of a person. question. This will become even more important when we examine the next
Question 4:
What policies, norms and behavior patterns should be used once the new
technology is in place?
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This question closes the definition of the relevant information regarding the practical need that is addressed by the new technology and how to valuable it. comparison: Now we have the key for
in the current situation, it is how you address the needs given the existence of
the limitation. You probably get only a partial answer to that need and compare it to the suggested future situation where the limitation is gone or reduced. You realize that you really get a full answer for that need. gained by the new technology. This comparison is the heart of the added value that could be If the current ways cannot really achieve anything of the If the current ways
need, then the potential value is as high as one recognizes the need to be.
achieve part of the need, while the new technology, plus following the new policies and behaviors achieve much more of it, then it is the difference in the answer to the need that generates the added value.
Lets demonstrate the comparison in a very fictional technology, so all our intuition is based on the current limitation. Suppose there is a new technology that could take us from any you
place to any place in the globe within one hour! This new technology is personal: decide to move from New York to Hong-Kong and in an hour you are there.
What limitation is vastly reduced? to another.
Mostly the time it takes to move from one point on earth However, it might
After all, one can easily get from Hong-Kong to New-York.
take 24 hours, or even more, recognizing that there are a limited number of flights a day, it takes time to go to the airport, go through check-in, passport control and security, then go through similar activities at your destination and, finally, a ride from the airport to the specific destination. So, the real difference in the limitation is between 24 hours and one hour. Is that all?
Lets analyze our behavior patterns considering that currently it takes at least 24 hours from a decision to go from Hong-Kong to New York until arrival. Usually such a decision is taken
well ahead of time due to work and family considerations, unless it is an emergency. Currently planning such a trip has to include what should be done in Hong-Kong during the time of absence, which is usually much longer than one day. At the time of planning the trip
more missions to be done in NY are considered on top of the one that has caused the need to go.
Considering now the new behavior patterns when the new technology is in place, we can
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imagine a substantial change: required, and come back.
one can easily and simply decide to go, do whatever is
If the whole trip takes only few hours, no need to extend the stay After all such a trip
and no need to plan what the other people do during your absence.
would be the same as driving for an hour, doing what needs to be done, and driving back. No big deal. Now we can appreciate more the practical value of such a new technology. has no idea how to materialize such a miraculous technology. Sorry, the author
But, did we consider the new policies, norms and behaviors only to make the comparison and make sure the value gained is truly substantial?
Lets continue with the fairy-tale about being able to go from Hong-Kong to New York in one hour. Lets make the reasonable assumption that one still needs a passport for such a trip. this particular example, there is even a need for a visa. This means that in order for In
you to
draw the full value of the new technology, you must have your passport with a valid visa in your possession at all times much like you have your driving license with you at all times. Being that easy to go everywhere in the world without spending too much time would allow you many more business, maybe even personal, opportunities. So, it is also expected that youd go to many more places in the world much more often than you do today. You
definitely would be able to hire people living elsewhere in the world to work for you or with you, as the direct touch with them is no longer problematic. You might also realize that similar opportunities would be open for other people all over the world and thus you might have many more visitors. All in all, we can feel that such new technology would make a huge change on your policies at work, on your norms of life and behavior. yourself as early as possible for those changes. You better prepare
An observation:
the fourth question does not clearly encourage looking for the negative But, the author asserts that it should be an important part of It is certainly a part of the required For instance, moving through the
branches of the new technology.
evaluating the new set of policies and behaviors.
comparison between the current state and the future state.
world with huge speed might have medical impact on our body leading to the possibility that only healthy people could take that type of transportation. It is thus imperative that
analyzing and preparing the answers for question 4 should include a full analysis of the all the negatives. The analysis of the negatives of the new technology is also valuable to the
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following question as the reader shall see.
After giving good answers to the first four questions two important categories of information have been achieved. One is a better idea of the value to the clients and the other is the The latter
challenge of moving from one set of policies, norms and behaviors to another set. understanding is a key in the answers for the next question.
Question 5: In view of the above, what changes/additions to the new technology should be introduced? In other words, what features should be included in the developed technology that would support the use of the policies, norms and behaviors that draw the best value from the new technology? Question no. 5 comes back to the project planning and focuses it on what is truly necessary. Certainly the negative branches of the new technology should be addressed and a way to eliminate them should be searched.
A missing analysis of the current relatively new technology of searching the internet might have delayed us from getting the full value of it. The author strongly believes that we are The value
NOT searching the internet enough for information that is truly valuable for us.
that could have been drawn, mainly in business but also for personal life, from searching the internet is enormous. The problem is that the current search engines are not focused, thus This should have
providing huge numbers of hits, most of them not relevant to the user.
been analyzed as a significant negative branch of the current methods. The other problem is that the search is not friendly. If the need for a search of information had been more thoroughly analyzed, then it could be that wed already have a much more effective search. The change in behavior would have been faster and most organizations would rely much more on really good information critical to the business.
Question 6:
How to cause the change?
Actually this question is targeted at what Marketing has to do, either before the launch of the new technology or afterwards. It is the duty of Marketing to accelerate the speed of change
in behaviors that would enhance the use of the new technology and, by that, enhance the perception of value of the new technology. Marketing here has a formidable challenge to We did in the past
wipe away the notion of it is too early for the users to grasp the value.
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have inventions that took a very long time until they were properly appreciated, For instance, the infrastructure for the Internet existed long before the mid-90s where it really started to grow. This demonstrates that inventing a new technology is still far away from having most The questions are all geared to make it happen much sooner.
people appreciate its value.
Discussion:
Are the six questions relevant just for new technologies?
Can they be used to
analyze regular products and what new product development could learn from it? Too many new products are simply more of the same. It seems that no substantial limitation is reduced by their appearance. They serve, to some degree, to reduce the price of the existing
similar products, and to provide additional capacity in producing products under good demand. Another limitation they reduce is the logistical one. When many manufacturers This kind of limitation
produce replaceable products, then they can be found in more stores.
does not have a real impact on behaviors, and the net added value of these products depends on the state of capacity relative to the demand and the relative power of the distribution channels that manage them in stock.
Products that make a significant difference through esthetics or through their perceived status do not lend themselves to the above analysis guided by the six questions. What about products that do offer certain unique features? luggage did not have wheels. Is it a new technology? For instance, forty years ago
Adding wheels to luggage is an It not only relieves us from
idea that could have been analyzed by the above questions.
having to carry heavy luggage by hand, or look for carts which are not always available, it also allows us to carry heavier luggage because, on wheels, it is not all that heavy. people aware of that simple change in behavior? Are all
Not only products containing unique features should use the guidance of the six questions. A good understanding of the essence of the second question could initiate the right ideas for such new products. Note, if you do come up with an idea that could significantly reduce an Of course, the rest of the
existing limitation, you might have a real star on your hands.
questions should be used to both assess whether there is a star here and, if so, how to draw the best of it, thus reducing the huge risk of developing a non-star product. could stir up great new opportunities for all types of manufacturers. The above questions
Lets view a simple example:
A new air-conditioning device that is TRULY quiet to the
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extent that no human person can hear it when it is operating. certainly not a major advance in technology.
Is it a new technology?
It is
We would like here to express just some quick
remarks towards the use of such a new product using the six questions, starting with the second one: a. The current limitation addressed by the new air-condition device is clear: devices make a certain level of noise that some people are sensitive to. b. The key question is what people are doing now to overcome the limitation of having a certain level of noise coming from the air-conditioning? Do they refrain sometimes Do they raise their the current
from using the air-conditioning because of this slight noise? voice when they talk?
Do they increase the volume of the TV they are listening to?
c. It seems that there are people who are sensitive to the noise of the air-conditioning who would not feel the need to raise their voices or increase the volume anymore. But, it might take them more time to activate the air-conditioning under conditions when, before the new product, they would have refrained from doing so. Looking for possible negative branches leads us to realize that if you dont hear the air-conditioning, you might forget to switch it off. This could have a negative impact on your bank account. d. In view of the above, it is beneficial to add a visual way to express the fact that the air-conditioning is on. e. Not having to increase the volume of the TV looks a valid point to express the added value of the new product. f. All in all does this product truly add value? Is it just one of the small features that
regular competition is based upon or does it offer a high level of unique value?
All of the above is very relevant for software development.
Generally speaking software
products are not just a copy of somebody elses, and the esthetic aspect, while being there, is not the most important one. Thus, the features themselves, sometimes the very essence of Reducing hassle The
the product, are very good candidates for analysis using the six questions.
is the most common limitation upon which many software tools and features are based.
question is whether reducing the hassle provides some users with a practical capability to do valuable things that otherwise they would not do because of a lack of time. If the developing
company can show a real merit of doing something that was not done before, even though it gives value, then it could be described as eliminating or reducing a limitation, and then the other questions should be carefully analyzed.
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Lets have another look at the current technology, to search the internet for relevant information, of which the best known one is Google. The author believes that business
organizations, as well as private people, do NOT search the internet for very valuable information. Is it because of the current tools are not good enough? Or is it because the
value of searching information in the internet is not clear to many users, and they still look for information in newspapers, encyclopedias, and other existing tools? The author believes that
the root cause is that the existing tools are not straightforward and do not provide an easy search for information. A search for information that identifies thousands of findings is not This
usable unless what you look for is found within the first 10-20 entries in the search list.
difficulty is preventing many people to realize that valuable information exist in the Internet. Of course, once a more focused search would be available there will be real need to spread the notion that such valuable information can be easily accessed.
Conclusions: the value of the six questions The guidelines of the six questions are not a product and certainly not a technology. It is just
a verbalization of a thinking process that could be valuable in a huge number of cases, especially by companies struggling to develop a profitable next product/technology. There are three different values that can be obtained by using the above guidelines for new product development: 1. Having better assessment of the added value of the new product. 2. Focusing the development on the issues that truly contribute to draw the most value of the new product/technology. 3. Focusing the marketing and sales efforts to achieve the required high perception of value of the users.
The above procedure could be much enhanced by publishing actual analyses of new ideas that use the guidelines of the six questions. The author believes we need the documentation of
analyses that led to stopping the idea/project as well, of course, to analyses where the project has been developed so we can realize how the development and marketing were impacted by the analysis.
4. Part 3:
Managing the features of a project.
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The norm in planning a project is to have a detailed plan of all the features of any project at the start of the project. The TOC planning methodology called CCPM (Critical Chain that there is a good grasp of the required
Project Management) has this assumption in mind:
output of the project and the all the required tasks to achieve the output are known already at the initial point in the project.
Is this a valid assumption regarding many projects? before the project starts?
Is it good to define the output in detail What level of details is
Is it a good way to handle projects?
required for deciding to start a project, and its reasonable budget? What is truly required in order to get a good idea of the project completion time?
In Supply Chain Management at Warp Speed (Schragenheim, Dettmer and Patterson, 2009, pages 5-8) the authors describe briefly the different decision rules between planning and execution. The problematic nature of any planning is that it requires making decisions ahead of time and thus causing Murphys Law (the impact of uncertainty in causing trouble) to mess with those decisions, prevent in straightforward execution, and cause failures in achieving the full objectives.
The conclusions for planning are: 1. Include in the planning only the decisions that are critical in the sense that any deviation from them would disrupt achieving the objectives. 2. Include buffers to protect the critical decisions within the planning.
The impact of this kind of minimal planning that is well protected is that the people in the execution phase have considerable flexibility to deal with the small surprises of the common uncertainty. Buffer management (See the Haystack Syndrome and Supply Chain Management at warp Speed) should then guide the right priorities within the execution phase.
The above rules for planning raise a certain doubt whether requiring all the features of a project must be decided before the project has started. It is enough that the main description
of the projects desired output, based on some of the more critical features of it, would be clearly verbalized and decided upon to justify the project as a whole, without having to define the secondary set of features. Those features could be added later in the project progress
based on their added value and the availability of resources.
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This observation makes it necessary to define two different sets of features: a. The must have features that, without even one of them, there is no value to the output of the project. These features define the need for the project.
b. Nice to have features that each adds a certain value to the project, but if it is not included within the project, there is still an overall worthy project.
The must-have features already define the global value the project-output has to offer.
If the
output of the project is a new product developed by the company, the group of must-have features must already eliminate/reduce a current limitation and thus add the most of the practical value the product/technology has to offer.
Every nice-to-have feature should add a certain value.
It could also further reduce a Thus, every such
limitation (such as a hassle) or add an artistic or esthetic value to it.
feature should pass a test of added-value against the cost of developing it, or the difficulty is allocating the resources and possibly having a negative impact on the timeline of the project. An observation: uncertain. the value of any project and/or feature could change with time and is highly
We dont know the actual market demand when the project is finished, we dont
know what other organizations are developing; we cannot be certain how the output would be evaluated by the market, even when we try hard to estimate that value.
The immediate conclusion should be:
Once the decision to accept the project is made, then At a certain point in time a
efforts should be made to finish the project as soon as possible.
decision to stop or hold the project might be made based on the current updated analysis of its value. This kind of conclusion makes it obvious that the desirability of certain nice-to-have
features should be delayed until the appropriate time to start developing them (delaying it more might delay the overall project, which is something to be avoided).
The suggested procedure is to base the plan for the whole project solely on the must-have features, with the possibility of adding time to the integration tasks in case the integration may have to deal with a higher number of features. At the same time, some of the considered nice-to-have features could be planned as a floating chains of tasks. Having the features planned this way could point to the timeline
in the project where the development of such a feature can be started (meaning all the
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required inputs are completed), and judging whether there is enough time for the feature to be completed without delaying the project. Of course, if the feature might delay the project it
does not mean it would not be executed as its added-value might be highly appreciated at that time, but the probability for that is lower.
Of course, such a scheme opens the door for more suggestions regarding the inclusion of nice-to-have features that add substantial value to the project.
Self-initiated projects and project on order from another party A company that develops its own project should be able to decide by itself how to consider the features, which features to include as must-have and on which to delay the final decision to later stages of the project. organization? But, what about a project that is initiated by another
The norm of such cases, notably when the project is won by a bid, is to It is true, of
specify in great detail what should be included in the final output of the project.
course, that in so many cases some substantial changes to the content of the project are actually made. Some of the companies executing such projects intentionally quote low
prices in order to win the bids, and then rely on the changes required by the client organization to make the profit. In such a case, it is up to the client to change the rules and
decide upfront only the substantial part of the project (the must-have). The client should require that the bidders specify their way to determine the price for the nice-to-have parts once they are determined. The main benefits of minimum planning protected by buffers Both the costs and even more so, the value
are for the organization owning the project.
generated by the projects would be enhanced from a greater flexibility in the execution of the project, and the focus on what truly adds significant value to the project as a whole.
The ramifications on CCPM The logic behind the suggestion to delay the final decisions on including nice-to-have features to the actual time these features need to be worked on is definitely within the line of thought of TOC. However, the current specific CCPM methodology assumes a stable plan of the
project tasks.
The ramifications of the above suggestion to the supporting software are to allow basing the project CCPM planning just on the must-have, allowing more time to the integration part. Then, a set of floating features would be planned, each with a definition of the required
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input tasks and the integration point within the critical-chain.
Those features need to be
maintained by the software, connected to the project, but wait for their time to be on or cancelled.
The main assumption behind the suggested procedure is that the identified critical-chain is not dependent on the nice-to-have features. naturally be the case. The author believes that in many cases this would
Any nice-to-have feature that requires a substantial part of the
critical-chain and thus has a definite negative impact of the duration of the project would have a hard-time to being included in the project. The supporting software would need to allow
for insertion and deletion of certain features (defined chains within the project) and display the ramifications on the identified critical-chain.
But, if eventually a certain nice-to-have feature does have an impact (usually small) on the critical-chain, like requiring a resource that is in high need and thus might be part of the critical-chain, there are two ways to handle such a case: 1. Simply leave the net impact be taken care by the project buffer. Remember, if the
decision to include that feature is taken at a later stage of the project, then the penetration into the project buffer at that time can be considered and, if it is relatively small, then a positive decision to include that feature can be safely taken. Knowing better the ramifications on the projects completion time is an asset for such decisions. 2. If several nice-to-have features require resources that seem pretty heavily loaded, and thus any additional tasks using one of those resources might have an impact on the identification of the critical-chain, then a dummy task using all those resources could be inserted into the basic plan of the project to cover for a choice of features to be taken later.
An important note to remember: a degree close to a bottleneck!
in multi-project management, no resource can be loaded to Human resources know how to look busy all the time, and But, loading them too high would have a disastrous
still have the flexibility to do more.
impact on the durations of the projects, and even on the quality of the output. Thus, flexible planning is possible and desirable, even when the impression is that one or two resources are very heavily loaded.
5.
Further developing the TOC Way for project oriented environments
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The issue of how to choose a project is a must-have area for further development.
The
financial aspects in managing many resources, so that no one of them should be capacity-constrained and the impact of uncertainty of both the throughput and the operating expenses, require much thought, but are also required in order to present to the world a clearer TOC way to proceed. The guidelines on assessing the value of a new technology/product are part of that grand mission. The guidelines do not currently have a way to quantify the value. There is some
doubt whether there will in the future a beneficial way to quantify value into money. However, having a reference between two states: without the new technology/new product,
and with the new technology, is good enough to make a decision.
Note, in order to make a good decision to develop a new product/technology all that is required is to assess that the value generated is far larger than the investment! necessary to give a concrete financial value to the two main parameters. It is NOT
Anyway there is no
way to give concrete numbers to variables under such a level of uncertainty. Making the distinction between must-have and nice-to-have features is a planning necessity to handle uncertainty. Recognizing the need to minimize the planning decisions, having to The direction outlined above is a solution to a
have the appropriate buffers, is a way to go. seemingly impossible situation. welcome.
Software support and subsequent research would be most
REFERENCES There are many books on CCPM and the author prefers not to point to any specific ones. Schragenheim, Decision making under uncertainty: Miami, 2004. On the topic of the six questions for assessing the value of new technology Goldratt, Schragenheim, Ptak, Necessary but Not Sufficient, 2000, North River Press. On the topic of planning and execution: Goldratt, The Haystack Syndrome, 1990, North River Press. Schragenheim, Dettmer, Patterson, Supply Chain Management at Warp Speed, 2009, CRC Press (an Auerbach Book), pages 5-8. A presentation in TOCICO in
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AUTHOR Eli Schragenheim international activity combines consultancy, management education, software development, including unique educational tools, public speaking and writing books on the front knowledge in management thinking. Since he has joined Dr. Eliyahu M. Goldratt in 1985, Eli Schragenheim has taught, spoke at conferences and consulted all over the globe, including the US, Canada, Britain, Russia, Brazil, Colombia, Germany, Italy, Belgium, South Africa, India, China and Japan. Eli Schragenheim is also known for his own software simulators and management games designed to experience the thinking and potential of the Theory of Constraints (TOC) in complex environments. Eli Schragenheim was a partner in the A.Y. Goldratt Institute and he is now a director in The Goldratt Schools. He is the author of several books on various aspects of management. His first book Management Dilemmas (1998) showed a variety of problematic situation is management and the rigorous analysis to pinpoint the right solution. Next he collaborated with William H. Dettmer in writing Manufacturing at Warp Speed. In this book the new concept of Simplified-DBR, now a key concept in production planning according to TOC was introduced. He also collaborated with Carol A. Ptak on ERP, Tools, Techniques, and Applications for Integrating the Supply Chain, and with Dr. Goldratt and Carol Ptak on Necessary But Not Sufficient. His new book Supply Chain Management at Warp Speed, with William H. Dettmer and Wayne Patterson is now available. The new book contains much of the new developments of TOC in operations in the last 5-8 years and is the only current book on these topics. Mr. Schragenheim holds an MBA from Tel-Aviv University and B.Sc in Mathematics and Physics from the Hebrew University in Jerusalem. In between his formal studies he was a TV director for almost 10 years. Eli Schragenheim is a citizen of Israel.
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PRACTICAL ASPRCTS OF IMPLEMENTING CRITICAL CHAIN PROJECT MANAGEMENT CCPM
EXAMPLES OF IMPLEMENATION PROCEDURES

Jelena Fedurko Goldratt Schools
ABSTRACT Theory of Constraints (TOC) is widely recognized as a managerial approach with a profound knowledge base in major managerial spheres (production, supply chain, distribution, projects, marketing, sales, people management, strategy and tactics); logic-based solutions in the form of well-developed applications and software; proven outstanding results directly reflecting in the bottom line1.
TOC as a new way of managing is usually brought into the company from the top by an owner, by top management, or by a manager who has enough authority and opportunity to initiate changes in the area under his/her responsibility e.g.a head of the Production Department, a Project Manager, etc. These people are convinced about the logic of TOC, see great potential for the company, are very enthusiastic about TOC, and truly want the implementation to succeed and bring results. Top management support and enthusiasm is extremely important.
Still, for the implementation to go smoothly and to bring expected results quickly and persuasively, there are important technical aspects of the preparation and the implementation itself that should be taken care of. In this article I would like to highlight these aspects, describe the objectives and major activities of CCPM implementation stages, and share with the reader practical examples of implementation procedures.
1
Mabin, Victoria J. and Balderstone, Steven J., The World of the Theory of Constraints, CRC Press LLC, 2000. A review of the international literature on TOC, average results achieved: 70% reduction in lead time, 44% improvement in due-date performance, 76% increase in revenue/throughput/profit. Also, ample references to the TOC implementation results presented by different companies can be found on TOCICO site (www.tocico.org) and Goldratt Marketing sites (www.TOC.tv) and (www.toc-goldratt.com).
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Keywords: project management, CCPM, implementation, procedures, injections.
Moving to CCPM
Success of any new initiative mostly depends on three factors: how many people support this initiative; how big an investment is needed, both financial and in terms of managerial effort and time; how fast the result will come. In other words, what is the return on the investment (this also plays its role in estimating the risks associated with this new initiative). The bigger the change brought by the initiative, the more attention the top management pays to these three factors in making the decision of embarking on this initiative and in assessing its progress in the course of implementation.
Moving the company onto a new way of managing projects, CCPM, is a significant managerial change. Its success depends on how structured and smooth the implementation will be, whether there is the support of project leaders and resources, and how quickly the
company will get the results . These results include better due date performance, shorter lead time allowing to the completion of more projects within a period of time with the same resources, more project visibility, better coordination and utilization of the resources, and easier internal communications.
The implementation will need a core team that should: know the content and logic of the solution; have good communication skills to communicate the technicalities of the solution and the benefits to the troops and get their support; be able to recognize when stuck or unsure; be assertive in turning for help, when needed, to top management and TOC professionals.
TOC a new culture
When an organization moves on a new way of management, people in the organization go
Practical aspects of implementing Critical Chain Project Management-CCPM-Examples of implementation procedures 73
through a process similar to the one that occurs when living and operating in a new culture, The process of adapting to a new culture, often referred to as a culture shock, has been
known and widely used since the 1950s. One can find in the literature various classifications of the process stages. If we look at this process from the point of view of implementing a major initiative, we will find the following picture that is well known to managers and management consultants.
Enthusiasm Mood Emotions
Honeymoon
Adjustment
Crisis Recovery
Time
Pre-Implementation
Implementation Roll-Out
Completing Roll-Out and Moving to Full Execution
. Figure 1: Phases of adaptation to a new culture and stages of a new initiative implementation.
The honeymoon phase is characterized by high enthusiasm about the new culture. Differences to the home culture are viewed as exciting and intriguing. A person has high energy and self confidence and a willingness to learn new things.
After a period of enthusiasm and high expectations, the crisis phase begins. A person starts feeling insecure and frustrated by unforeseen difficulties. The overall feeling is lack of control and disappointment. This is the period when the majority of initiatives start stagnating and gradually vanish.
However, if in the crisis phase a person did not give up, as time goes by he/she starts working out how to operate in a new environment. This makes them feel more relaxed and more in control. This is the recovery phase.
When a person has reached the phase when he/she feels confident about handling most or all
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situations, it is the start of the adjustment phase.
Experience shows that it is when the implementation starts rolling out that the team comes across issues which they may not know how to address. This is natural since, by definition, a new initiative is something that a company has not done before. People do not have any practical experience in this area. If unanswered, these problematic issues start piling up, slow down the implementation, put a question mark on getting the expected benefits, and as a result, cause frustration, confidence of the team and the whole organization is damaged.
These are typical characteristics of the crisis phase. It is important to recognize that the crisis phase is natural, though not unavoidable. Even more important is to realize that its effects can be offset, or significantly mitigated, by detailed preparation in the pre-implementation stage when the enthusiasm and expectations are high, and by proper support to the implementation team when the first signs of difficulties and slowing down appear.
Pre-implementation The more profound the preparation in the pre-implementation, the more equipped and secure people feel in the implementation roll-out stage. However, it is important to know what amount of preparation in the pre-implementation stage is good enough to proceed to the implementation itself. This would avoid paralysis from preparation which is, in fact, simple procrastinating in moving towards concrete action.
Major objectives for the implementation team in the pre-implementation stage: 1. Getting a clear understanding of CCPM as a way of managing projects and the content and mechanics of the CCPM Injections (in TOC terminology injections are elements of the solutions). a. How the company/department will be operating in the on-going mode AFTER the implementation how the CCPM injections will be working when implemented, and b. HOW TO GET THERE the content and proceedings of the transition phase the implementation phase itself. 2. Determining and agreeing on the exact scope of the implementation project through meetings and discussions with the projects director, development director, project
management office (PMO) director, shared resources manager, resource pool manager, relevant IT specialists, other relevant managers and specialists. 3. Determining the list of new Procedures that will keep Injections operational. a. One Injection may include several Procedures, or b. several Injections can be covered by one Procedure. Note: only those procedures shall be included in the list that are absolutely necessary and directly stem from the solution Injections! 4. Building the CCPM implementation project plan. 5. Getting the formalized approval of the scope and duration of the project by the top Management. 6. Getting the internal training with a CCPM specialist to ensure proper transfer of the solution knowledge.
Please note that, at the pre-implementation stage, the implementation team is not supposed to develop managerial and technical procedures for all CCPM injections. However, it is important to identify which procedures will be developed (activity 3). Developing procedures for injections will be done in the implementation roll-out stage according to the staggered sequence of injection implementations.
Moving developing procedures into the implementation roll-out stage prevents procrastinating in the pre-implementation phase. Moreover, not all necessary information for developing detailed procedures for all injections is available before the implementation starts.
Beginning Implementation roll-out Major objectives: 1. Learning how the CCPM injections work. 2. Developing, testing and upgrading procedures. Later on in this article I will show an example of the full set of implementations procedures. 3. Surfacing issues missed in the Pre-implementation and dealing with them. 4. Surfacing issues related to the IT support and dealing with them. 5. Learning how to gain support and collaboration of involved people. 6. Getting complete understanding of the TOC solution. 7. Gaining confidence about handling all implementation-related situations.
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Completing implementation roll-out and moving to full execution Major objectives: 1. Checking and finalizing all procedures (that were under continuous upgrade during the roll-out). 2. Getting the official approval of the finalized procedures by the responsible top manager. 3. Organizing the new procedures into a Procedures Book, distributing it among relevant people, and making it official and operational. 4. Finalizing the issues concerning IT support (purchase of the software, etc) 5. Getting the top management to continuously participate in control of the execution of the new managing mode. 6. Starting to tightly monitor and control so that the procedures are becoming routine proceedings. 7. Making sure all relevant on-going documentation is continuously produced and stored in a formal mode that is accessible for tracing (buffer status reports, lists of recovery actions and their outcomes, etc)
The focus of this article is on developing and establishing procedures that will make the injections a new way of managing projects and will bring the expected benefits. I will be describing five on-going procedures for Injections 2-6 of the CCPM solution structure as developed by Oded Cohen. The essence of the solution, and the content of each injection, is presented in Oded Cohens article in this collection of articles.
Tactics: The Project organization implements Critical Chain project management
Mindset: Injection 1
Planning Injections 2-4
Execution Control Injections 5-9
Injection 2
Project Planning Diagrams are in place with tasks resourced and estimated for duration
Injection 3
Critical Chain is determined through resolving resource conflicts
Injection 4
Buffers are inserted in strategic points
Figure 2: Planning Injections 2-4 of the CCPM solution, presented with permission with the author Oded Cohen.
Tactics: The Project organization implements Critical Chain project management
Mindset: Injection 1
Planning Injections 2-4
Execution Control Injections 5-9
Injection 5
Tasks are performed according to the status of their corresponding buffers
Injection 6
Resource availability is monitored in anticipation of a new planned task
Injection 7
BM for corrective actions (expediting) is in place
Injection 8
Buffer penetration reasons are reviewed weekly for POOGI
Injection 9
Resources are monitored as potential Critical Resources
Figure 3: Execution Control Injections 5-9 of the CCPM solution, presented with permission of the author, Oded Cohen.
Injections are core elements of any TOC solution. Procedures are the means to make injections the new reality through two phases: 1. The Injection needs to be launched. This is done in the implementation roll-out stage (transition period). If the implementation is not big, and not a pilot within a company, launching the injection is a one-off activity and a simple list of sequenced actions may be enough. If the implementation is a pilot, launching the Injection shall be replicated throughout several departments. In this case, it is recommended to create and document a launching procedure for each injection. 2. After launching, the Injection shall become a new reality and work in the on-going mode. It requires on-going procedures that are determined in the pre-implementation stage and developed, launched, tested and upgraded in the implementation phase.
The role of on-going procedures Clearly set and describe the new management rules. Inform the managers on how to behave. Allow meaningful communication between the internal implementation team and the rest of the organization.
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Serve as a means of execution and control for the implementation team and top management. Give the implementation team visibility of the implementation and ease feedback on procedures completeness and effectiveness. Constantly monitored procedures and, before moving to the full execution stage, upgraded and finalize them.
Recording the Procedure Structure The number of procedures should be practical, so that they shall be managed easily. Depending on the logic and particular needs, one procedure can cover several injections, or one injection can have several procedures. Every procedure shall be documented.
I suggest the following structure of the document: Procedure number and name, relevant injection(s), date of approval. Objective of the procedure. Inputs Deliverables. Who needs the deliverables. Responsible people and scope of their responsibilities Description of the procedure the sequenced steps covering o WHAT shall be done (the content) o HOW it shall be done (the mechanics), also recommended to present the flow in the diagram format o Responsible people, who have the task or supervisory assignments o The flow diagram (if applicable) showing the interconnections between the different functions/positions What related documents shall be attached.
Please note that in some procedures some parts of the information in the section Responsible people looks similar to the information in the section Description of the procedure. However, the description of the procedure is focused more on the interaction between the managers and resources while the section Responsible people is an explicit reference to
different managers to outline their individual responsibilities within the framework of the procedure.
Examples of CCPM procedures
Please note that the procedures that I am about to present are only examples, They should not be treated as rigid recommendations. Also, though generic, the presented procedures reflect specific aspects of the company and project environment they were developed for, especially in the section describing inputs and deliverables for each procedure. Some of the procedures also include a flow diagram clarifying the interactions between different managers and resources.
PROCEDURE 1: PROJECT PLANNING Injection 2 Project Planning Diagrams are in place with tasks resourced and their duration estimated. Injection 3 Critical Chain is determined and resource conflicts resolved. Injection 4 Buffers are inserted in strategic points.
1.1. Objective: The objective of the procedure is to ensure project planning with the application of CCPM through the relevant CCPM software, consistency of planning techniques throughout all projects, and high quality of the projects plans to allow for effective execution. 1.2. Inputs: deployment chart of the current project management flow in the company date of releasing the planning activities for the project date of accepting the project plan documented project specifications relevant project template(s) assigned Project Leader
1.3. Deliverables: full CCPM plan in the relevant CCPM software approved project start date approved project due date project summary
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project budget list of tasks/subprojects for external subcontracting with corresponding subcontractors (if applicable) list of specific terms and conditions to control external subcontractors (if applicable)
1.4. Who needs the deliverables: Project Leader, PMO, Development Director, Resource Pool Manager, Shared Services Manager, Top Management
1.5. Responsible people: Project Leader (owner of the procedure) is responsible for fulfilling the actions outlined in 1.6. PMO Director is responsible for: o ensuring that the Project Leader will get all necessary inputs (see the list of Inputs in 1.2); o assisting the Project Leader in building a quality project plan; o assisting in communications between Project Leaders, Resource Managers and Top management.
1.6. Description of the procedure: 1.6.1. On arrival of the date of releasing the planning activities for the project the Project Leader starts planning activities: build the project plan in the relevant CCPM software. Ensure that all necessary tasks shall be included, based on the principle that the task duration shall not be less than 2 days or more than 14 days; ensure correctness and relevancy of task dependencies through careful and detailed checking of all predecessors for each task (in the relevant CCPM software); ensure that each task will have the necessary task resource or type of resource (through communicating to Resource Managers and resources); get from the task resources estimated durations for their tasks; verify the suggested task durations with Resource Leaders or, if necessary, with other experienced resources. If needed, change the estimated durations; ensure the integrity of data in the project plan;
develop the project budget on the basis of the project plan; submit the project plan and the project budget to top management for acceptance; re-work the project plan if required by top management; prepare the project summary and submit it to PMO Director; prepare the list of tasks/subprojects for external subcontracting with the appropriate subcontractors (if applicable) and submit it to PMO Director; prepare the list of specific terms and conditions to control external subcontractors (if applicable) and submit it to PMO Director; prepare the Project Log. This document will give the brief description of a project, what goes well, what does not go well, what may be done better next time. The Project Log will be filled in during the project and completed with the completion of the project.
1.6.2. Acceptance of the project plan by the top management:

After the project plan is accepted by the top management, and the project start date is approved, the project is moved to the execution phase. If the project plan is sent back to the Project Leader or PMO for an upgrade ,the Project Leader with the assistance of the PMO Director will repeat steps described in 1.6.1.
PROCEDURE 2: UPDATING PROJECT STATUS AND REPORTING Injection 5 - Tasks are performed according to the status of their corresponding buffers.
2.1. Objective: The objective of the procedure is to ensure that the project plans represent the actual daily status of the projects in the execution phase. This will enable effective managerial decisions of different levels (Project Leader/PMO Director/Top Management) within the project frame.
The procedure determines the principles to be applied to update the information about the project as well as what reports shall be created, for whom, by whom, in what way and in what time.
2.2. Inputs: daily report from internal resources on WIP task remaining duration;
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frequent (every 3~7 days) reports from subcontractors on WIP task remaining duration .
2.3. Deliverables: buffer status report from the CCPM software.
2.4. Who needs the deliverables: Project Leader, PMO, Shared Services Manager.
2.5. Responsible people: PMO Director (owner of the procedure) is responsible for: o supervision of correct updating of the information about tasks in all projects; o preparation of Buffer Status Reports of all projects for Project Review Buffer Management meetings and Project Portfolio Review meetings; o distributing the relevant reports to the relevant people.
Project Leader is responsible for: o updating the information about tasks in the project in the CCPM software o preparing the Buffer Status Report about the penetration of buffers o ensuring that the information gets to the PMO (including being entered into the report informing about actions that were taken or proposed to be taken see Procedure 6 Project Review for reference)
Resource Leader is responsible for: o getting from the Task Performers the information about the remaining duration (days) of the open tasks o handing this information over to the Project Leader.
Task Performer is responsible for: o providing information about the remaining duration (days) of the open tasks to the Resource Leader (if reporting to the Resource Leader) or the Project Leader (if reporting directly to the Project Leader).
Subcontractor (if applicable) is responsible for: o handing over the information about the remaining duration times (days) of open tasks to Project Leader.
2.6. Description of the procedure: Task Performer by 12.00 every day informs the Resource Leader (if reporting to the Resource Leader) or the Project Leader (if reporting directly to the Project Leader) about the open task remaining duration (days). Every day Project Leader updates the information received from Tasks Performers/Resources Leaders about the days remaining for finishing tasks in CCPM software. If performing the task was commissioned for the Subcontractor, in determined time intervals, (depending on a subcontract - in the range of 3~7 days), the information about the remaining days is handed over to the Project Leader. Project Leader prepares and passes (by email) the Buffer Status Report to the PMO Director prior to 10.00 of the next day. PMO Director prepares the Buffer Status Report as a part of the Project Portfolio Review (see Procedure 7 for reference)
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Flow diagram for Procedure 2:
Task Performer (Subcontractor) estimates remaining duration for completing the task.
Does Task Performer have a Resource Leader?
YES
Task Performer informs Resource Leader about remaining duration.
Frequency: 1D (Subcontractor 3~7D)
NO
Task Performer (Subcontractor) informs Project Leader about remaining duration. Frequency: 1D (Subcontractor 3~7D)
Resource Leader passes on information about remaining duration to Project Leader.
Frequency: 1D
Project Leader updates the information about tasks in the CCPM software, prepares report on buffers penetration, lists the actions to be taken and sends all info to PMO
Frequency: 1D
PMO prepares report about buffer penetration in all Projects, lists actions , and send all info by email to Development Director And Top Management
Frequency: 7D (for Project Portfolio Review)
PROCEDURE 3: PRIORITIZING TASKS AND ALLOCATING RESOURCES Injection 5 Tasks are performed according to the status of their corresponding buffers.
3.1. Objective: The objective of the procedure is to ensure the effective flow of the project by assigning task priorities according to their buffer status and ensuring that the tasks are resourced.
3.2. Inputs: buffer status report information about the upcoming tasks with the planned start and estimated duration and given priorities (CCPM software report Upcoming tasks by project). resources Skill Matrix.
3.3. Deliverables: list of upcoming tasks with established priorities and assigned resources for their realization.
3.4. Who needs the deliverables: Project Leader, PMO, Shared Services Manager, Resource Pool Manager.
3.5. Responsible people: PMO Director (owner of the procedure) is responsible for: o developing and updating the Resources Skill Matrix (a document that describes all Task Performers level of skills, range of knowledge and suitability for various types of tasks); o supervising establishing correct task priorities; o solving conflicts between tasks with the equal priority for the same task performer in different projects.
Project Leader is responsible for: o following priorities for tasks established by the CCPM software; o allocating resources for the tasks; o solving conflicts between tasks with the equal priority in their project.
Resource Leader is responsible for: o using established priorities for tasks by subordinate Task Performers.
Shared Services Manager is responsible for: o informing subordinate Resource Leaders about tasks and their priorities.
HR Department is responsible for: o preparing job descriptions for Resources Skill Matrix.
3.6. Description of the procedure: Twice a week the Project Leader assigns priorities to the upcoming tasks:
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o On the basis of the list of upcoming tasks for the given period of time (CCPM software report Upcoming Tasks by Project - 7 days horizon) the Project Leader checks what tasks are planned for the Tasks Performers and what is the priority assigned by the software. o The Project Leader assigns tasks to the Task Performers using the following diagram:
Yes
Project Leader checks if this task is assigned to Shared Services?
No
If there is more than one task with the same priority SSM informs Project Leaders, and they decide on the tasks sequence. If they can't agree PMO Director will decide.
If there is more than one task with the same priority Project Leader decides on their sequence.
SSM informs subordinate Resource Leaders about the tasks and their priorities
Yes
Does Task Performer have Resource Leader?
No
Resource Leader assigns the task to the available Task Performer, starting from the task with highest priority.
Project Leader assigns the task to the available Task Performer, starting from the task with highest priority.
PROCEDURE 4: MONITORING RESOURCE AVAILABILITY FOR UPCOMING TASKS Injection 6 Resource availability is monitored in anticipation of a new planned task.
4.1. Objective:
The aim of the procedure is to ensure that the resources will be available for the upcoming tasks and will have all inputs necessary to start the task within one project and between different project.
4.2. Inputs: buffer status report
information about the upcoming tasks with the planned start and estimated duration and given priorities (CCPM software report Upcoming tasks by Project).
4.3. Deliverables: list of upcoming tasks sorted by resource report Upcoming task by resource checked for the availability of the resources for the upcoming tasks at the planned start time.
4.4. Who needs the deliverables: Resource Leader, Project Leader, PMO, Shared Services Manager, Resource Pool Manager.
4.5. Responsible people: PMO Director (owner of the procedure) is responsible for: o ensuring that the Project Leaders regularly perform the resource monitoring for upcoming tasks; o doing a regular overview of the upcoming load on the resources to know the type of load profile per resource and, if required, to resolve conflicts in the case of competition for the resource by the upcoming tasks between the projects.
Project Leader is responsible for: o regular monitoring and checking the resource availability for the upcoming tasks within the set time horizon; o ensuring availability of the full kit of inputs for the upcoming tasks; o identifying cases when a different, as opposed to the planned, resource shall be assigned to upcoming tasks (in cases of unexpected unrecoverable unavailability of the resource like resource resigned/fired; ill, etc) o when a new resource needs to be assigned to the upcoming tasks due to unrecoverable unavailability of the planned resource - ensuring assignment of the new resource through Procedure 3 by involving the relevant people Shared Services Manager and Resource Leaders
Shared Services Manager and Resource Leader are responsible for:
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o doing a regular overview of the upcoming load on the resources that report to each of them to know the type of load profile per resource and, if required, to resolve conflicts in the case of competition for the resource by the upcoming tasks between the projects; o in case a new resource needs to be assigned to the upcoming tasks due to unrecoverable unavailability of the planned resource, ensuring assignment of the new resource through Procedure 3.
4.6. Description of the procedure: At least once a week (if there are tasks that are shorter, depending on the length of the tasks, more frequently) the Project Leader monitors and checks the resource availability for the upcoming tasks within the horizon of (minimum) a week, 2 weeks, 3 weeks. Checking is done to identify cases of unexpected unrecoverable unavailability of the resource for the planned upcoming tasks like resource resigned/fired, ill, etc. If such cases are identified, the Project Leader ensures assignment of the new resource through Procedure 3 by involving relevant people Shared Services Manager and Resource Leaders Project Leader also ensures that by the time the task arrives at the resource, the resource will have a full kit of inputs (deliverables of the predecessors, permissions, documentations, etc) necessary to start work on the task;

Project Leader twice a week monitors and checks resource availability for the upcoming tasks (CCPM software report t Upcoming tasks by Project) within the 21 days horizon.
Yes
Is any resource unavailable by unexpected reasons (resigned/fired, ill etc.)?
No
Yes Does Resource have a Resource Leader?
No
Project Leader informs relevant Resource Leader about upcoming tasks which should be assigned to a new resource, according to Procedure no 3.
Project Leader assigns upcoming tasks (which should be assigned to another resource) to a new resource, according to Procedure no 3.
Resource Leader assigns a new resource and informs Project Leader.
Project Leader checks if resource will have all inputs form predecessors and all tools to be needed for the task.
PROCEDURE 5: SETTING RESOURCE ALERT FOR UPCOMING TASKS Injection 6 Resource availability is monitored in anticipation of a new planned task.
5.1. Objective: The objective of the procedure is to ensure that the relevant resources know about their upcoming tasks in sufficient time to be prepared for them and to be available.
5.2. Inputs: filtered view of CC with buffers from CCPM software; report on remaining duration of current CC-tasks; report Upcoming task by resource listing all upcoming tasks by the resource.
5.3. Deliverables: the mechanism to remind the resource about the upcoming task through email with a confirmed receipt or/and personal telephone call; confirmation from the resource about availability for the upcoming task.
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5.4. Who needs the deliverables: Resource Leader, Project Leader, PMO, Shared Services Manager, Resource Pool Manager, Manager for subcontractors.
5.5. Responsible people: PMO Director (owner of the procedure) is responsible for: o determining and ensuring the mechanism of resource alerting mode and timing
internal resources: mode email with confirmed receipt; timing a week in advance, repeating 3 days in advance, repeating the day before the task is due to start
subcontractors: mode by email or by personal telephone call depending on the terms of contract; timing a week in advance, repeating the day before the task is due to start; o determining and ensuring the mechanism of the Resource confirming the alert by an email response; o ensuring that the Resources are being routinely alerted to the upcoming tasks by Project Leaders and/or Resource Leaders.
Project Leader or Resource Leader (depending on who the Resource reports to) is responsible for: o alerting the resource about the upcoming task in the mode (e.g. email with a confirmed receipt), and timing (e.g. a week in advance, repeating 3 days in advance, repeating the day before the task is due to start) specified by the PMO Director; o monitoring and ensuring the confirmation of the Resource about receiving the alert; o in case the Resource informs about the unrecoverable unavailability ,taking measures to assign another Resource through Procedure 3 by involving relevant people (Shared Resource Manager and Resource Leaders or Project Leader).
Shared Services Manager and Resource Leader are responsible for:
o in case a new Resource needs to be assigned to the upcoming tasks due to unrecoverable unavailability of the planned Resource, ensuring assignment of the new resource through Procedure 3.
5.6. Description of the procedure: 5.6.1. Project Leader daily monitors the upcoming tasks by resource with the view of alerting resources according to the timing set by the PMO - a week in advance, repeating 3 days in advance, repeating the day before the task is due to start, sends the reminder to the Resources/Resource Leader by email with receiving confirmation, monitors and ensures the confirmation of the Resource/Resource Leader about receiving the alert 5.6.2. Resource sends, by email, confirmation of receiving alert and the information about her/his availability to the Project Leader (if the Resource reports directly to him/her) or the Resource Leader; in case the resource knows about unrecoverable unavailability for the upcoming task, he/she then notifies Project Leader (if the Resource reports directly to him/her) or the Resource Leader.
5.6.3. Resource Leader or Project Leader in case there is unrecoverable unavailability of the Resource for the upcoming task assigns a new Resource through Procedure 3 and informs all relevant people.
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Project Leader daily monitors the upcoming tasks by resource with the view of alerting resources according to the timing set by PMO.
Yes Does Resource have a Resource Leader? Project Leader sends an email to the Resource Leader with reminder about the upcoming task assigned to the Resource a week in advance, repeating 3 days in advance and the day before the task is due to start.
No
Project Leader sends an email to the Resource with the reminder about the upcoming task a week in advance, repeating 3 days in advance and the day before the task is due to start.
Resource Leader sends email to the Resource with reminder about the upcoming task a week in advance, repeating 3 days in advance and the day before the task is due to start. Resource sends an email to the Project Leader with confirmation of receiving the reminder and notification about his/her availability or unavailability.
Resource sends an email to the Resource Leader with confirmation of receiving the reminder and notification of his/her availability or unavailability.
Resource Leader sends an email to the Project Leader/Sub Projects Leader with the information about Resource availability or unavailability. Is Resource available for the task? No Yes
Does Resource have a Resource Leader? Yes No
Resource Leader assigns the task to a new Resource according to Procedure no 3 and notifies Project Leader about the change of the assigned Resource
Project Leader assigns the task to a new Resource according to Procedure no 3
Resource starts work on the task in due time.
Summary of the example
The five procedures presented above are only a part of the full set of procedures that cover all 9 injections of the solution. I would like to stress again that they are just examples to give an understanding of the extent of thought, preparation and coordination that should be put into ensuring that each injection will become a routine way of performing work on projects.
All procedures discussed above are the on-going procedures that were developed in the staggered way in the implementation roll-out stage, and tested in managing several real projects. The feedback from the managers and the resources was collected and integrated into the upgraded procedures in the stage of moving to full execution. Some of the procedures were streamlined. Some steps were removed those that were believed necessary when the procedures were developed, or just followed the routine communication flow in the company, but turned out to be redundant in practice.
Conclusion A very important outcome of developing procedures is that we get a clear understanding of the current way the organization functions and what needs improving. I would like to warn against mechanical copying any ready-made procedures into a specific environment. It is important to recognize that every procedure is a combination and integration of technical aspects of the solution for CCPM, it will be the mechanisms of project buffer, feeding buffers, buffer management, task duration estimations, etc, and managerial aspects of
making the solution happen like reporting, monitoring, getting a feedback, making decisions. A robust procedure can be built only through deep understanding of the solution injections their essence, what undesirable effects (UDEs) in the current reality they remove, what desired effects (DEs) they will bring, how to recognize and prevent potential negative outcomes (NBRs), and how injections will work mechanics and procedures in the specific environment. Clear structure of the solution, the injections, and well-developed procedures make the implementation straightforward, provide visibility and control, increase confidence of the implementation team and speed up the results.
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AUTHOR Jelena Fedurko is the Principal for Russia and Russian Speaking Regions Jelenas involvement with TOC started in 1999 when she translated to Russian the Goldratt Satellite Program, followed by the translation of the books The Goal, Its Not Luck (The Goal-2), Critical Chain, and the TOC Insights. Since 2005 Jelena has been closely working with Goldratt Schools as a TOC trainer and consultant. Jelena develops TOC teaching material, conducts TOC trainings and provides implementation support in supply chain and project management. Among the countries where Jelena has worked are Japan, Poland, Turkey, Russia, Ukraine, India, China, Chili.
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USING TOC CCPM S&T TREE TO RAPIDLY IMPROVE PERFORMANCE OF NEW PRODUCT DEVELOPMENT PROJECTS: A CASE STUDY IN TAIWAN
Yunn-Jin Hwang1, Yu-Min Chang2, Rong-Kwei Li1 Department of Industrial Engineering and Management, National Chiao-Tung University, and 2TOC Great China Inc., Taiwan .
ABSTRACT Despite hundreds of reported accounts of successful Theory of Constraints (TOC) Critical Chain Project Management (CCPM) implementations, project managers still raise two immediate concerns: (1) TOC CCPM solutions are conceptual only and lack solid implementation steps to effect the change; (2) A good project management foundation to handle uncertainty is a pre-requisite, and reducing variation is the key. Building or improving the foundation (such as Lean, 6 Sigma, Product Data Management (PDM) system, etc) should be the priority. For the first concern, E. Goldratt developed the Strategy and Tactics (S&T) tree to provide step-by-step guidance for effecting the change. However, other researchers have not extensively investigated Goldratts approach and its effectiveness has not been empirically validated. Regarding the second concern, unless a successful case can disprove it, the concern will remain. Consequently, companies with a poor management foundation will hesitate to adopt CCPM and miss significant improvement potentials.
This paper presents a case study of a Taiwan high tech electronic components manufacturing company that, like most other manufacturers that have many new product development projects, lacked a good project management foundation. Nevertheless, the company adopted Goldratts CCPM S&T tree and the related logic and implementation steps were followed accordingly. The objectives of this case study are to validate that: (1) the logic of the CCPM S&T tree is robust and effective and (2) a good management foundation is not a pre-requisite for implementing TOC CCPM. The key to achieving successful improvements is to adopt the right concepts, establishing mechanisms to stabilize the system first before kaizen (changing the processes to reduce variability and set-up time etc., which is the focus of Lean and 6 Sigma).
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Keywords: Theory of Constraints (TOC), Critical Chain Project Management (CCPM), Strategy and Tactics (S&T) trees
1. Introduction
Despite hundreds of reported accounts of successful Theory of Constraints (TOC) Critical Chain Project Management (CCPM) implementations (Mabin and Balderstone 2000, Jaume Ribera et al. 2003, Cohen I. et al. 2004, Relization.com 2009), when we presented TOC CCPM (Goldratt 1997,Goldratt 1999, Kent Kettell 2004,Goldratt 2006,Goldratt 2007, Goldratt 2009) to project managers, two concerns were raised immediately. (1) TOC CCPM solutions are conceptual only. Even success stories lack in depth discussions on how to translate the concept into practice to reach the results (how to implement CCPM). Their major concern was the lack of solid implementation steps to effect the change. (2) A good project management foundation to handle uncertainty is a pre-requisite, and reducing variation is the key. Building or improving the foundation (such as Lean, 6 Sigma, Product Data Management (PDM) system, etc) should be the priority. Regarding the first concern, Goldratt acknowledged that, in the past, TOC CCPM did not have the solid steps needed for implementation. Consequently, he developed the Strategy and Tactics (S&T) trees (Goldratt 2007) to provide step-by-step guidance for effecting the change. Although the logic of the S&T tree developed by Goldratt is quite robust, TOC practitioners and academics have neither researched it extensively nor validated its effectiveness empirically.
With respect to the second concern, Goldratt (2009) noted that most variations that occur are local; the most significant global variation that occurs in a project management environment is variation in due date performance (DDP). Reducing local variations by using management programs such as Lean, 6 Sigma, PDM, etc., does not automatically guarantee improvement in DDP. He also claimed that, in a chaotic system, reducing local variations should not be the first priority. Instead, the first step should be to stabilize the system. TOC CCPM and buffer management (BM) provide mechanisms to stabilize a system and reduce variations in DDP, the only significant global variation in project management. Chang, (2009) conducted an experiment to examine why it was so difficult to achieve high DDP. Thirty teams participated in the experiment involving 210 people, and the results support Goldratts claim. Kapoor (2009) also pointed out that the real reason for failures in implementing Lean or TPS is that
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the implementation has been carried out inappropriately in two ways: doing kaizen (reducing variability) before Kanban (stabilizing the system), and continuing to use local efficiency measurements. Following stabilization, a company can initiate a local improvement program (such as Lean or 6 Sigma), regulated by TOC BM analysis, to focus on the right places to reduce variation.
However, successful TOC stories published in the past dealt with companies that always had a good management foundation before adopting the TOC CCPM solutions (Realization 2009). As a result, the second concern remains unaddressed. This concern is particularly relevant to new products development project, which typically have a high level of local variations. Reducing variability is the focus of their improvement efforts. Observation reveals that variation in DDP (global variation in project management) among new product development projects remains a major issue.
Therefore, this paper presents a case study of a Taiwan high tech company that, like most other high tech companies, had poor performance of on time to market. The company had high levels of local variations and had poor projects DDP performance and long project lead time. This company applied TOC to improve its performance and adopted the CCPM S&T tree developed by Goldratt (2006) following the related logic and implementation steps. The objectives of this case study are to validate that: (1) the logic of the CCPM S&T tree is robust and effective and (2) a good project management foundation is not a pre-requisite for implementing TOC CCPM. The key to achieving successful improvements is to adopt the right concepts, establishing mechanisms to stabilize the system first before kaizen (changing the processes to reduce variability and set-up time etc., which is the focus of Lean and 6 Sigma).
2. TOC Strategy and Tactic tree
The TOC Strategy & Tactics tree (S&T tree) developed by Goldratt (2006) is the TOC Thinking Process application for facilitating whole-company ongoing improvement. Goldratt defines strategy as simply the answer to the question what for? or what is the purpose (the desired effect)? Tactics are the answer to the question How do we achieve the strategy/desired effect (using a chosen mode of operation)? Based on these definitions, S&T entities always exist together, S&T entities exist at each conceptual level. This means talking
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about a S&T tree is actually talking about a structure that looks something like that shown in Figure 1 (Barnard 2008). At the top are the strategy and tactics of the highest level. This study will call it the mission statement. Further down the tree addresses how to achieve the mission set out in the mission statement and goes into the functions with greater and greater detail. Each level must provide the answers to what for and how.
Figure 2 (Barnard 2008) shows the S&T tree entity structure. Since any logical tree is only as valid as its assumptions, the user must provide the assumptions (or facts of life) to explain the claims. For example, if the objective is to achieve level 2, an explanation must be given providing the complete logic as to why the what for at this level will answer the necessary assumption of the S&T in the upper level. Proof must also be given that the how at this level is good enough to achieve the what for of the level (parallel assumptions). Of course, we also have to provide the logic for why accomplishing level 2 is at risk without providing another level of details for the subordinates; or how do these link with what the others are responsible for accomplishing, etc. (sufficiency assumption). The sufficiency assumption is a warning message. Ignoring the warning message will cause failure of the step. Figure 3 (Goldratt 2007) illustrates the Reducing Bad Multi-Tasking entity. The necessary assumption states, When too many projects are executed simultaneously, many resources will find themselves under pressure to work on more than one task and bad multi-tasking is unavoidable. Prolific bad multi-tasking significantly prolongs each projects lead-time. If this assumption is correct, then the step of Reducing Bad Multi-Tasking is necessary to achieve the higher level entity Meeting promises. To address the undesirable conditions set out in the necessary assumption, the strategy (objective) is to make sure Flow is the number one consideration (the target is not how many projects the Company succeeds to start working on, rather it is how many projects are completed).
How does an organization achieve this objective? Further, how does the organization achieve this objective without suffering the negative effects of choking the amount of projects that are on the floor? The objective requires proper tactics. What are the proper tactics? This depends on the parallel assumptions. The parallel assumptions say,
(1) The statement, the earlier we start each project, the earlier each project will be finished, is not correct for multi-project environments (not only the first elephant but also the last elephant will go through a door much faster if they go in procession).
(2) Vast experience shows that, in multi-project environments, reducing the number of open projects by at least 25% reduces bad multi-tasking without causing starvation of work. Therefore it significantly reduces the lead time of all projects it increases the flow.
If assumptions 1 and 2 are true, and an organization trusts past successful experience (facts of life) then the tactic becomes, The Company properly controls the number of projects that are open at any given point in time. In the CCPM implementation, people tend to spend time getting more accurate estimates for parameters such as task buffer time. Therefore, the sufficiency assumption warns us that Adjusting the amount of work is not enough. The company must also ensure that as time passes the proper amount of work will be always maintained.
Figure 4 illustrates the CCPM S&T tree developed by Goldratt (2007). The top level of the tree shown is the viable vision for the corporation; the second level is the business strategies. Within the multi-projects management environment, the operational strategy is Meeting promises which is shown on the left side of the third level of the CCPM S&T tree (Meeting promises is a primary objective of project management environment.) Although meeting promises is the objective for the highest level of the CCPM S&T tree, this is only one of the many steps Goldratt set out in the S&T tree for a project management environment. A TOC S&T tree forces the organization to explain in detail the necessary implementation steps. The S&T tree not only defines the necessary and sufficient conditions for achieving an objective, but also defines the specific changes in focus, measurements, processes and policies and behaviors required at each level and in each function of the organization.
3. Overview of the case company
The case company focuses on developing, manufacturing, and marketing high-tech electronic components widely used in 4C products. The companys product life cycle is about 3~6 months. Breakthrough technology emerges every 6 months. As a result, the companys new product development division faces the following challenges: 1. Difficulty maintaining a leading position since new technology develops quickly in this industry. 2. Difficulty controlling project schedules and avoiding poor due-date performance.
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3.
Difficulty evaluating the manpower and productivity of the new products development division.
The companys current reality before implementing the TOC CCPM included the following problems: 1. A lack of unified planning methods. As a result, projects were released as soon as possible, causing serious bad multi-tasking. 2. When estimating the time required for tasks, safety time was put in every task and at every milestone or checkpoint. 3. Most projects were planned and executed by one engineer, forcing engineers to function more like coordinators than project managers. No support was provided from other resources, and the division did not operate as a project team. 4. Engineers received different orders from every level of management, and different managers asked for different reports from their respective milestones. 5. The companys priority mechanism was based on First in first out as judged by engineers. However, the engineers had no control over supporting resources, and had to rely on managers to be their mediators. As a result, there was no way to reveal real project urgency.
These factors resulted in poor time to market performance, a long lead time for each project, and high expediting costs. The problems faced by the case company are common to many other high-tech electronic components companies in Taiwan.
4. TOC CCPM S&T tree implementation
The company first knew about TOC when their top management attended the Viable Vision event conducted by Goldratt in October 2006 in Taipei, Taiwan. At that time, the company chose to implement TOC, deciding that improving on-time delivery for each new product development project should be the first priority. The company contracted with an outside TOC expert (TOCE), certified by the Goldratt School to implement TOC CCPM, and buffer management (BM) solutions. The implementation covered the following three phases:
Phase one: TOC knowledge transfer The objective of this knowledge transfer phase was for the management team to gain
sufficient knowledge and understanding of the relevant TOC generic concepts and functional solutions applicable to the companys environment. Company-wide training commenced in June 2008 for the transfer of the TOC body of knowledge. The entire management team, from the board of directors to project managers and engineers, participated in the training. Experience has shown that people may learn but not understand; they may understand but not know how to apply the theory. Hence, examples, practice, role playing, quizzes and tests were crucial in this knowledge transfer phase. Games (Chang 2009), computer simulation (Goldratt 1996) and TOC Insight (Goldratt 2006) were also used as learning tools.
Phase two: consensus and commitment The objective of this phase was to use the S&T tree set out in Figure 4 (Goldratt 2007) to facilitate the management team reaching a consensus on the adoption of CCPM as their improvement tool and to obtain their commitment for its implementation. The TOCE first led the management team to read the CCPM S&T tree. The TOCE followed four steps in communicating the S&T tree (Figure 5) (Barnard 2008): Step 1: Start reading the highest level objective the Strategy or what for? Step 2: Say something like Since any logical tree is only as valid as its assumptions, we need to validate each of the assumptions to check if they can be considered Fact of life. Then we will read the Parallel Assumptions (PA) and the
Tactics or How to as a logical conclusion of these assumptions or Facts of life. Step 3: Then read the Sufficiency Assumption (SA) as a warning or reminder and continue with the Necessary Assumption (NA), Strategy, Parallel Assumption and Tactics of the first lower level S&T entity (most left). Then read the second, third, etc. S&T blocks in the sequence defined from left to right. Step 4: Continue in this way until the whole tree is completed (reading from left to right), checking with the audience regarding whether each assumption can be considered a fact of life and whether each Strategy & Tactic is a logical conclusion of these assumptions.
According to the communication steps, the flow to read the CCPM S&T tree (Figure 4) is: start reading entity 3:1, then 4:11, then 5:11.1, 5:11.2, 5:11.3, 5:11.4, then back to 4:12, then down to 5:12.1, 5:12.2, 4:13, etc.
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During the review of the CCPM S&T tree, the TOCE asked management to raise reservations. Reservations are either negative branches (side effects) or obstacles that prevent achievement of some of the S&T tree entities. In preparation for the review, the participants were taught how to verbalize their reservations correctly prior to the review process. The management team then split into smaller working groups. Each group worked on verbalizing the reservations raised by its members. The TOCE worked with each group to come up with the appropriate verbalized reservations, which were then presented to the whole management team. The management team then effectively dealt with the reservations with the help of the TOCE.
Broadly speaking, there are three types of reservations: a lack of knowledge, misunderstanding of or disagreement with an S&T entity, or a lack of commitment. Through the review of the S&T tree process described above, sufficient knowledge should have been conveyed to the participants and any misunderstanding of, or disagreement with, an S&T entity dealt with. An in-depth understanding of the S&T tree, and having addressing the potential obstacles and negative side effects, eliminates reservations for its adoption and helps instill commitment for its implementation. Strong support by top management further helps secure commitment at lower levels.
The S&T tree sets out the minimum mandatory changes required in a system to ensure the company is solidly on a process of ongoing improvement. The S&T tree provides a clear road map of all the changes that can be easily understood. The S&T tree also fully explains the logic for making the changes. Fully explaining the logic makes the S&T tree an effective communication tool across hierarchy, across functions and over time. This helps achieve consensus and secure support and commitment.
The TOCE made sure the assumptions were reviewed by the participants and were accepted by them as facts of life. Management agreed that the resulting strategy/tactics were appropriate.
Phase three: Implementation Having reached consensus and obtained commitment on the CCPM S&T tree, the TOCE explained the implementation sequence. He asked the participants to assume personal responsibility for implementing level 4 entities. In this way, each entity had a manager who
was responsible for its implementation. An implementation team was formed and implementation projects were launched in June 2008. The intensive coaching and mentoring by the TOCE ended in August 2008 with limited follow-up training until December 2008. The most important assumption in the S&T tree concerning implementation was the sufficiency assumption of entity 3.1. (Meeting promises): To ensure an outstanding start of a major project, it is vital to ensure that each of the first substantial actions will result in immediate substantial benefits. Goldratt designed the S&T tree in such a way that the first step has no relevant obstacle to its implementation and will result in substantial benefits. The successive steps are easy to implement if the first one has demonstrated substantial benefits.
The company started the implementation process by training the project managers and engineers. Entity 4:11, Reducing Bad Multi-Tasking, was then immediately executed. The currently released projects were sorted by priorities through meetings and the decision was made to freeze 25% of the existing projects. New projects were choked (not released) to accelerate completion of the unfrozen projects. After implementing entity 4:11, entity 4:12 Full Kit followed. The company used the window of reduced load on resources that do the preparations to ensure thatFull Kit practice would become the norm and a project is rarely launched before its preparations are complete. It took about three months to implement Reducing Bad Multi-Tasking and Full Kit. The positive results in DDP and project lead time were evident.
They then quickly moved on to implement entity 4:13 Planning Proper network templates are built and CCPM networks were created. The time estimates are cut in half and projects and feeding buffers are inserted according to CCPM. Also, the projects are properly staggered. Actions are taken to ensure that resources are aware that their estimates are regarded as just estimates (they will no longer be judged according to meeting their time estimates). The resulting plan is used to properly release projects into operations. The resulting planning ability is used to determine reliable and acceptable due-date commitments for new projects. The last entity for implementing was 4:14 Executing. The time to implement these four entities totaled about eight months and the results are significant (see Section 5).
The company managed the implementation as follows: (1) Monitor all projects according TOC CCPM principles. (2) Daily buffer meetings with implementation teams to monitor progress and ensure they were on track. (3) Weekly meetings with top management to keep
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them updated and secure their continued commitment. (4) Management team is involved in all the major decisions in the implementation process. (5) Escalating an issue to top management whenever the issue might risk the successful completion of implementation.
5. Results
After two months of knowledge transfer training, three month of implementing Reducing Bad Multi-Tasking and Full Kit and four months of Planning and Executing, the significant performance results and benefits are as follows: 1. 2. 3. 4. 5. 6. Project due date performance increased from <30% to >80% Increased advantage of time to market, in addition to improved technology Reduced project lead time by approximately 30~50% On-time risk management and effective decision-making Better controls of resource loading and improved RD schedule and cost evaluation Improved planning and executing abilities with a holistic view, forming an effective management model for the new products development division
These results demonstrate that significant improvements can be achieved swiftly by following TOC strategies and tactics despite the lack of a strong project management foundation, all without increasing manpower or equipment.
6. Lessons learned
Although CCPM was the right solution for the case companys new products development division, they could not have achieved the results in the short period of about eight months without the following key success factors.
Top management support and commitment For the case company, implementing CCPM involved multi-paradigm shifts and company-wide changes. Securing strong support and commitment from top management was imperative as the company made one change after another. The commitment of top management was not just lip service, but was real. (1) Management committed a whole three months of time and fully participated in the TOC knowledge transfer and CCPM S&T verification process. The implementation of the program involved changes in working habits
and culture. Even with the robust logic of the S&T tree, there can be occasional hesitations and reversions to old practices. In these situations, without a thorough understanding of the TOC knowledge and CCPM S&T tree, it would be impossible for top management to support the program and require subordinates to make the necessary changes. (2) Management also committed to staying focused on implementing the CCPM S&T tree. This meant the general manager and his top management team decided to stop all other initiatives requiring management attention that were not part of the CCPM S&T tree. Given the multi-paradigm shifts and company-wide changes required, the author believes the single most important success factor is the support and commitment of top management.
Stick to the CCPM S&T Tree The CCPM S&T tree provides robust and complete implementation steps and leads to desired results if properly followed. Previous TOC implementation experiences show that the various CCPM S&T tree must be implemented in a specific order. Although the CCPM S&T tree sets out the order of implementation, when reservations arise, the participants often use their personal experience to modify the solution to deal with their reservations. This leads to deviations from the CCPM S&T tree and improper implementation. An improper implementation inevitably delays achievement of the target results, and weakens the commitment to implement the solution as a whole. An organization must strictly adhere to the order of implementation. Only proceed to the following step after confirming satisfactory completion of the previous step. A successful implementation generates certain signals. By observing these signals, buffer management meetings can tell whether the organization has correctly implemented an entity.
Must have quick and noticeable wins The most important assumption in the CCPM S&T tree concerning implementation is this: to ensure an outstanding start of a major project, it is vital that each of the first substantial actions results in immediate substantial benefits. The CCPM S&T is designed to ensure that the implementation follows the logic of the tree a step at a time. The first step is designed to have no relevant obstacles to implementation. The successive steps are easy to implement after the first one has demonstrated substantial benefits. Hence, getting significant and noticeable wins quickly turns resistance to change into momentum for change and is a key success factor. In the case company, within three months of Freeze and Full kit implementation, both management and engineers could see the improvements and benefits.
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Thus they were motivated to continue implementing the other changes.
Sustainability is the key Sustainability is the key to achieving significant improvement. Sharing the benefits of improvement with employees through bonuses and pay raises provides momentum for sustainability. Holding a daily buffer meeting is an important method for sustaining improvements. During buffer meetings, all participants can see the process of change, the obstacles, the negative side effects and the benefits of the improvements. The participants also share with each other what they have learned during implementation that reinforces the upward spiral. At the case company, the implementation phase took place within three months after the participants first learned about TOC. Inevitably, participants understanding of the TOC body of knowledge was limited. To sustain improvement efforts under these circumstances, it is important that follow-on training by TOC experts be conducted during the first year of implementation to reinforce TOC knowledge and ensure that participants do not revert to previous work practices.
7. Conclusions
This paper presents a case study of a Taiwan high-tech electronic components manufacturing company that, like most other high-tech electronic components companies, had the same problems such as high levels of local variations and poor operational performance such as low DDP, and a long project lead time. By following the CCPM S&T tree developed by E. Goldratt, within eight months the company achieved significant improved results. Project lead time was significantly reduced and DDP reached over 85 percent. This successful case provides evidence that: (1) the logic of the CCPM S&T tree is robust and effective, and (2) a good management foundation is not a pre-requisite for implementing TOC CCPM. The key to achieving significant improvements is to adopt the right concepts, establishing mechanisms to stabilize the system before using management programs such as PERT, Lean and 6 Sigma, etc. for kaizen.
Figure 1:
S&T tree entities description from TOC view (Barnard 2008)
Figure 2:
S&T tree entities description from TOC view (Barnard 2008)
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Figure 3:
Level 4.11 of CCPM S&T tree (Goldratt 2007)
Figure 4:
The CCPM S&T tree (Goldratt 2007)
Figure 5:
Four steps in communicating the S&T tree (Barnard 2008)
REFERENCES 1. Barnard, A., 2008. Harmony_TOC S&T Expert System, Goldratt Marketing Groups. 2. Cohen, I., A. Mandelbaum, et al.,2004. Multi-Project Scheduling and Control: A Process-based comparative Study of the critical Chain Methodology and some Alternatives. Project Management Journal, pp.39-50, 2004. 3. Chang, Y. M., 2009. Why is high Due-Date Performance so difficult to achieve for project management?an experimental study. A Thesis for Degree of Master of Science In Department of Industrial Engineering and Management College of Management National Chiao-Tung University, Taiwan 4. 5. Goldratt, E. M., 1997. Critical chain. North River Press Great Barrington, MA. Goldratt, E. M., 1998. Project Management the TOC way. San Jose, CA: Thru-Put Technologies 6. Goldratt, E. M., 1999. Project management and engineering-critical chain (CCPM) and product development. Goldratt Marketing Groups. 7. Goldratt, E. M., 2006. Critical Chain Project Management strategy and tactics tree.
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Goldratt Group. 8. Goldratt, E. M., 2006. TOC insight into project management and engineering. Goldratt Marketing Groups. 9. Goldratt, E. M., 2007. The GWS on project management (CCPM) - an extract. Goldratt Marketing Groups. 10. Goldratt, E. M., 2009. Goldratt Explains: Lean, Six Sigma and TOC, TOC.tv, Goldratt Marketing Group. 11. Jaume Ribera, Marc Sachon and Alex Grasas, 2003. Putting the elements of critical chain project management into perspective: A general framework for buffer management, Working report, IESE Business School, 2003. 12. Kent Kettell, 2004. CCPM: Five key success factors. TOCICO International Conference, Miami, Florida. USA. 13. Kapoor, A., 2009. Why Lean doesnt work, Execution Management Minute Realization Company, USA. 14. Mabin, V. J. and S. J. Balderstone, 2000. The world of the theory of constraints: a review of the international literature. Boca Raton, Florida: St. Lucie Press. 15. Relization.com, 2009. Execution Management Results- As reported by Realizations clients, (WWW.document) available 31.10.2009 in http://realization.com/pdf/PF2009_Postscript.pdf
AUTHOR Rong Kwei Li is a professor of Industrial Engineering and Management at National Chiao Tung Univeristy, Hsinchu, Taiwan. His academic and professional interests involve TOC and Strategic decision making. He is recognized as a Jonahs Jonah by the AGI and is certified in the field of Thinking process and logistics management by TOCICO. In the later part of 2005, he joined the Goldratt Schools for supporting the training effort in the Viable Vision. He has published more than 60 articles in academic journal including the international Journal of Production Research, Production and Inventory Management Journal, International Journal of Computer and Industrial Engineering.
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A STRATEGIC PROJECTS MANAGEMENT SOLUTION DEVELOPED FROM THEORY OF CONSTRAINTS CONCEPTS

Philip J. Viljoen Goldratt Schools Africa, India and Australasia
ABSTRACT A solution for managing the flow of strategic projects is introduced. Principles and concepts
of the Theory of Constraints are applied in the development of the solution to provide a way to maximise organizational benefits from strategy and implementation. The strategy and
tactics application of TOC is the primary application used and the four flow concepts are practically applied.
A case study is presented to test the solution. Insights concluded from the case are used to suggest how to improve the theoretical solution.
Key words: Strategy and Tactics, strategic projects, Theory of Constraints, flow concepts, project design, multi-projects
1.
Introduction
The purpose of strategy is to define the competitive advantage that organisations seek to achieve. Strategic Project Management is defined as the means for delivering on the strategy, However, organisations experience is that strategic
making the competitive advantage real.
decisions are made in an incremental fashion. The end results and the outcomes of strategic projects seem to be disjointed with limited logic, programs are incoherent, management decision making has bounded rationality - focusing on muddling through, decisions cannot be detected easily and, when made, implementation is half hearted and weak. Grundy [1] claims that these effects are the result of not following or abandoning a rational approach to strategy implementation. Is this the core problem? What is a rational approach?
McElroy [2] claims senior managers dedicate a great deal of time and effort to developing
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and implementing the appropriate strategy, but all too often find that very little changes within the organization. He postulated the following conflicts as root causes for the problem:
Smooth flow of operations versus step change to seize the opportunity Efficient execution of tasks versus securing of desired benefits Current way of doing business versus future way of doing business Established distribution of power versus new distribution of power.
Analyzing these negative effects and postulated root causes leads to the following hypothesis.
Everybody in an organization would like to see that strategic targets are exceeded.
In order
to achieve this, managers must have full ownership of the strategies that they believe will make it possible and for which they are responsible. There is little drive to implement without full ownership. Strategic objectives must also be logically necessary and sufficient to
achieve the targets (rational).
In order for managers to have full ownership, they must set strategic objectives according to their intimate knowledge of the area for which they are responsible. Nobody else has the full understanding of their uniqueness and is responsible for solving their problems. In order for
strategic objectives to be logically necessary and sufficient, they must be devised in an objective way for the organization as a whole. Many times local improvements not necessary for organisational improvements, are driven by managers. two modes of operation are in direct conflict. Herein lies the problem. These
(Set strategic objectives based on intimate
local knowledge versus devise strategic objectives in an objective way for the organisation as a whole). Managers intimate knowledge is bounded by their areas of responsibility, what is
good for one area is often bad for the system as a whole, many objectives that are seen as necessary for the local area are not necessary or are even detrimental for the global performance (e.g. high inventories necessary for maximising sales are detrimental to good cash flow).
This paper explores some of the literature for solutions to this problem.
It then introduces
the Strategy and Tactics tree, the Theory of Constraints (TOC) application developed by Dr. E. M. Goldratt, It also considers how to manage strategic projects necessary for realizing the Strategy, as the solution to this core problem. validation for this TOC solution. Finally, a case study is presented to provide
A strategic projects management solution developed from Theory of Constraints concepts
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2.
Literature study
McElroys [2] solution to his proposed root causes is to deliver on strategy through programs and projects as the vehicle of how to deal with hard and soft aspects of organisational culture. This enables Identifying the dominant linkages and interdependencies between projects, Providing a mechanism for classification and prioritisation of projects Allowing projects to be assimilated on an incremental basis
Dietrich and Lehtonen [3] concluded from an empirical study of 288 organisations that successful management of strategic intentions depends on: a common project management process or project model, organising projects into programs, evaluating the portfolio consistently when selecting new projects, reviewing frequently the objectives of multiple projects in linkage with strategy formulation and the quality of the information that decision makers have regarding projects.
In a study into the strategic project management process of the UK upstream oil and gas sector (Asrilhant et al [4]) it was concluded that strategic project management success (financial success, strategic success, successful completion and successful management) has internal business elements as key drivers. Managers, however, neglect half of the drivers, This is
particularly flexibility, interdependency and learning and innovative routines.
indicative of a short-term management style that focuses on current activities at the expense of future improvements in management processes. Managers also spend time on elements Implicit to this
that are not critical to success such as financial and environmental issues.
study is the belief that management focus on the critical success factors will solve the core problem.
In summary, the literature suggests that the solution to the problems with strategy and strategic projects is to have a rational system that links a strategy for competitive advantage to strategic projects through programs that are conducted utilising a common methodology for
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setting priorities, and to focus resources and management on the elements that will ensure project success.
What is this rational system? It is proposed in this paper that the TOC application of Strategy and Tactics, and conducting the multiple strategic projects with Critical Chain multi-project management, is that rational approach that solves the core problem completely and can deliver a Decisive Competitive Edge.
3.
Strategic project management model
Strategy development The concepts of Strategy and Tactics and Strategy and Tactic trees are clearly defined by Dr. E. M. Goldratt et al. [5]. A short summary will suffice for the purposes of this article.
A strategy and tactic is defined as one entity consisting of 5 elements.
It consists of a
statement of what has to be achieved the strategy, why the strategy is necessary the necessary assumption (except for the highest S&T entity), how to achieve the strategy the tactic, and why the tactic will achieve the strategy the parallel assumptions.
Strategy and tactic (S&T) entities are connected in different levels, like a work breakdown structure with each lower level detailing what is necessary and sufficient for achieving the higher level entity. The fifth element of every entity (except for the lowest level of course)
states what has to be considered to ensure that the group of S&T entities at the lower level is sufficient the sufficient assumption.
This S&T construct, therefore, contains all the logic (rationale) required to define a comprehensive view of what future management wants for their organization as well as how to realize that future. It can be seen as the vision and the mission, blended into one.
Synchronization between the different organization parts and communication of the road ahead to all levels can be enhanced.
The strategy of the first (highest) entity always states the vision in the form of a specific very ambitious target, in the goal units of the organisation, to be achieved within a short time frame.
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Examples of first level strategies are Sales of 100m with NP equal to 40% of sales within 5 years; Turn current sales of 100m into net profit of 100m in 4 years; Increase the GDP per capita of the country by 5% in 5 years. The second level always describes the decisive competitive edge that is necessary for the achievement of the target. The concept of being a
good competitor through a sustainable competitive advantage developed by Porter [6] through his 5 forces model is taken further by Goldratt to the concept of a Decisive Competitive Edge (DCE). The sufficient assumption of the highest S&T entity of all strategy and tactics trees written by Goldratt [7] is stated as The way to have a decisive competitive edge is to satisfy a clients significant need to an extent that no significant competitor can. A business that
has a decisive competitive edge causes its clients to want to buy from it rather than from other competitors, and also enables the organisation to decide to which clients it wants to sell. The
outcome of this competitive position is that the workload on the business can be from the most lucrative demand.
The implementation flow of an S&T tree is from the left to right. must be the first to be realized. established by the entities to its left.
The leftmost S&T entity
Entities to the right, typically, build on the capabilities It implies that assumptions are made on the sequencing This convention does not mean
of entities. However, that is not made explicit in the tree. that a simple linear flow is required.
Parallel paths exist, for example for the S&T entities
for production and marketing building new capabilities required and capitalizing on a decisive competitive edge.
Constructing a strategy and tactics tree should be done with full collaboration from all senior executives. It is vital that ownership is achieved of the vision/mission and how to realize it,
in order to energize people to work on their strategic projects. The logic of S&T trees clearly defines the interdependency of organisational units and, therefore, the roles of managers seen for the organisation as a whole
The S&T tree does not clearly define the work that people have to do to realize each strategy and tactic. Therefore a process is necessary that can define the end objectives of strategic
projects and design the projects that must be conducted. A methodology for conducting the projects, in such a way that the flow of work completed is maximised, is also absolutely necessary to ensure that the benefits expected from the strategy are realized as soon as possible.
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The structure of every S&T entity is such that it is relatively easy to define the end objectives of projects to be conducted. One typical end objective that is necessary for the left-most S&T entity is The interface between the production planning and execution software and the ERP system is functional for daily production planning. The linkage of this project objective
and the S&T entity are the necessary assumptions that an interface does not exist, the software must download and upload data to the ERP, that an ERP system is in place and that daily planning must be done. execution software. Also, that it is not possible to operate without the planning and
The work required for the strategic projects for a future time horizon, say 6 months, can be defined by designing all the strategic projects necessary for establishing the set of S&Ts for which work has to start within this horizon. A project design is complete when the feeding
and project buffers are placed and sized appropriately according to the Critical Chain methodology. (Goldratt [9]). A Critical Chain plan for a project defines the workload based
on aggressive task duration estimates. It is based on the assumption that the resources are waiting for work and tasks are started and conducted according to task priorities continually defined by the consumption of the buffers. When resources are confronted with conflicting
demands for their time, they need an answer to the question What are the priorities of the tasks on my to-do list? A clear and well-communicated priority system is crucial for strategic projects given the conflicting demands on resources between operations and strategy.
The resources required for proper resourcing of these projects would typically not be shared between strategic projects in large organisations, although in smaller organisations some key resources might experience conflicting demands, especially with operational demands.
Managing the flow of projects Goldratt [8] defines 4 flow concepts that were applied in the production systems of Ford and Ohno as well as the TOC production system, drum-buffer-rope (DBR). The concepts are:
1. Improving flow (or equivalently lead time) is a primary objective of operations. 2. This primary objective should be translated into a practical mechanism that guides the operation when not to produce (prevents overproduction). used inventory. 3. Local efficiencies must be abolished. Ford used space, Ohno
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4. A focusing process to balance flow must be in place. Ford used direct observation. Ohno used the gradual reduction of the number of containers and then gradual reduction of parts per container.
Goldratt shows how his DBR application uses time buffers as the mechanism to prevent overproduction and buffer management status over time as the focusing process to balance flow.
The flow concepts and the principles of the TOC applications for production, supply chain and projects can be applied to develop an application for the flow of work on strategic projects.
Flow in this context is the completion of tasks on strategic projects.
Maximising this flow
means that people work at the strategic task until complete, and nothing else, that delays are minimized, and that the next task on the plan starts the moment the previous task is completed. In reality, disruptions to this flow will occur. Buffers are part of the project design to absorb
some of the disruptions and also serve as the way to recognise and communicate task priorities. Buffers are divided into 3 equal zones, the zones are labelled green, yellow and Consumption of the buffers
red, with green the lowest and red the highest priority. determines the buffer status.
If less than 1/3 of the buffer is consumed, then the status of the
active task feeding that buffer is green, When more than 1/3 but less than 2/3 is consumed then the status is yellow. More than 2/3 consumption is red status. A task with a red status
must be worked on and, if possible, expedited by adding additional resources or working overtime. A simple rule, that a yellow task on a strategic project should give priority over
any other operational task while a green task does not, would enable people to deal with conflicting demands better. Task managers are appointed from resource groups to be
responsible for maximizing the flow of work and assist people to work on strategic projects when their task becomes active and according to task priorities. They also have the
responsibility to ensure that task-remaining durations are updated in time to ensure that project management information (buffer consumption) is as real as possible.
The second flow concept can be applied by instituting a staggering rule for work on strategic projects. Interdependency between strategic projects is defined by the way that the S&T This provides some stagger but is not sufficient to
entities are sequenced from left to right.
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prevent overproduction because a number of parallel paths could exist in the S&T tree.
In
this context overproduction means that working on tasks that should not be worked on yet. The assumption is that capacity is scarce and resources should, therefore, only work on what is necessary now. A simple rule could be used that limits the number of active strategic
projects to a number that the organisation deems it is capable of delivering, taking into account operational demands. For example, deciding that the number of active strategic projects may not exceed 5, and that work on a new strategic project can only start when an active project is completed. It, of course, implies that a number of strategic projects are This points to another buffer that is mandatory; lets
waiting to start with completed designs. call it the designed projects buffer.
It is not a time buffer but is similar to an inventory buffer
( of designed projects buffer) as defined in the TOC application to supply chains. (Goldratt [10]). time. An inventory buffer is sized as maximum consumption within reliable replenishment In the case of strategic projects, it would be the maximum rate of starting new projects,
for example 2 per month, within the time required to design a project that is linked to subsequent S&Ts, say 2 months. The buffer size is therefore 4 projects. Buffer
management is also used to indicate whether flow through the design process should be expedited by assigning a buffer status to the projects in process of being designed. When
less than 1/3 of the projects in the buffer are ready to be conducted, then the status of the project closest to design completion is red, demanding expediting. In this example, given
the small numbers involved and that projects are discrete entities, the red line could be set as 2 projects rather than 1.
The third flow concept is that local efficiencies must be abolished.
The gravest form of local
efficiency in strategy development and implementation is that each dependent unit builds and focus on its own strategy and tactics and strategic projects without considering its role within the organization as a whole. This problem is central in the literature study presented earlier.
It results in managers not focused on the necessary elements and in the conflict of Established distribution of power versus new distribution of power. (McElroy [2]). This
supports the imperative that senior management must fully contribute to the development of the S&T and that full consensus is achieved. efficiencies. Leadership is key to abolishing local
Finally, the last flow concept calls for a focusing process to balance flow. Such a process should identify the disruptions to flow and provide the information on what disruption has the
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highest priority and must be dealt with.
Buffer management provides the means to identify
where expediting has to be focused but it does not address the causes for disruptions to flow. The process detailed in the S&T for project based organizations [7] identifies the reasons for tasks getting red priorities and identifies those reasons that occur the most frequent as the major disruptions to flow (using Pareto analysis). This is where the focus must be in order to improve flow.
This is a theoretical-rational approach. It needs to be validated through actual usage in companies. The case study presented next is one such validation.
4.
Case study
The proposed Strategic Project Management process has been implemented over the last 4 years at a large producer and distributor of fast-moving consumer goods. projects based organization. This is not a
Since starting to use the S&T tree for their strategy
development and implementation, the company performance improved from suffering substantial losses, -30% of sales in the fourth quarter of 2007 to a net profit of about 23% of sales in the third quarter of 2009.
The strategy is defined as a Strategy and Tactics tree, originally designed with extensive input by Dr. Goldratt 4 years ago, and has lately been modified by the top management. reviewed fully every 6 months. It is
Over the past 3 years, only slight modifications have been
required to adapt to changing conditions and time lines. The strategy is well communicated, receives relentless focus and is the only basis on which strategic projects are defined. Every
project is directly linked to an S&T entity through the project charter and scope statement that details the assumptions of why it is necessary. This linkage is also used to determine project No other priority
priorities in line with the implementation sequence of the S&T tree. system is used for the planning and release of projects.
Basic project management disciplines for managing single projects had to be learned as part of the implementation of the Strategic Project Management process.
Each project is assigned a project manager and sponsor.
They are responsible to design the
project and are supported by a project office. The designs are often not fully in place before a
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project has to start but work starts nevertheless.
About 34 projects are active at any point in
time and due date performance is about 60% with an average overrun of 28 days.
All projects are reviewed monthly with project buffer status information and this information is used to prioritize and focus senior management involved on the projects and tasks that must be supported more.
Priorities of tasks are not always based on buffer status and task management is not as effective as required. Constant education and coaching is still done to improve these areas.
Proper resourcing remains a problem.
Operational tasks and priorities get precedence over Project managers need to be
strategic project work unless enforced by project managers.
involved in ensuring flow frequently as multi-tasking is still the norm.
Project design is done using a process that defines the outcomes necessary for the achievement of the project end objective and to flesh out that skeleton with high-level tasks that are required to achieve each outcome. This results in a design that contains all tasks Mind Mapping software is used
necessary and prevents the inclusion of unnecessary work. to enable this process.
Re-planning of projects caused by a poor design is rare.
5.
Conclusion
The hypothesis that was stated in the introductory section was that the conflict between the modes of operations of setting strategic objectives based on intimate local knowledge versus devise strategic objectives in an objective way for the organisation as a whole, prevents an organization from exceeding the targets of a strategy.
The proposed solution of developing an organisations S&T tree with full collaboration of all senior managers as well as the proposed methodology of identifying, designing and managing the flow of projects as well as the flow of tasks, invalidates the assumption that individual managers must set their own objectives to ensure ownership and drive to implement. Visible
contributions to realization of the strategy for the organisation as whole, as well as a robust methodology for implementation, provide the means to effectively lead resources.
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The case study serves as one point of validation that the process can be effective. highlights the challenges in using the proposed model.
It also
One of the great advantages The
experienced is that management has the relevant project information to make decisions.
main challenges are to model the flow required for the attainment of S&T entities and to get resources to work at the tasks without multi-tasking.
REFERENCES 1. Grundy A. N., Strategic project management and strategic behaviour. International Journal of Project Management. Volume 18, pp 93 101. 2000
2. McElroy W., Implementing strategic change through projects. International Journal of Project Management. Volume 14, no. 6, pp 325-329. 1996 3. Dietrich P., Lehtonen P., Successful management of strategic intentions through multiple projects Reflections from empirical study. Management. Volume 23. Pp 386-391. 2005 International Journal of Project
4. Asrilhant B., Dysin R.G., Meadows M., On the strategic project management process in te UK upstream oil and gas sector. The International Journal of Management Science. Volume 35. pp 89-103. 2007. 5. http://www.vancouver.wsu.edu/fac/holt/em534/Goldratt/Strategic-Tactic.html 6. Porter M.E., How competitive forces shape strategy. Harvard Business Review. March-April 1979. 7. Harmony S&T viewer from http://www.goldrattresearchlabs.com/?q=node/2 8. Goldratt. E.M., Standing on the shoulders of giants. Production concepts versus production application. The Hitachi Tool Engineering example. Goldratt Consulting. 2008. 9. Goldratt E.M., Critical Chain. North River Press. Great Barrington. 1997. 10. Goldratt E.M., Its not luck. North River Press. Great Barrington. 1994.
AUTHOR Philip Viljoen is the Principal of Goldratt Schools for Africa and India and a successful implementer of all the TOC solutions. He is currently responsible for the development of external and internal TOC consultants for Goldratt Consulting as well as offering Goldratt Schools program. He attained the degrees Hons. B Eng (Civil) at the University of Stellenbosch in 1979, and in 1988 the MBL at the University of
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South Africa (UNISA). He attended the Management of Technology programme at the University of Cape Town in 1991. In 1993 he completed the International Teachers Programme at INSEAD, France. He started his career as construction manager in the South African Airforce and worked as contracts manager for a period of 3 years on road surfacing projects. He then taught Business Statistics and Operations Management at the School of Business Leadership of UNISA till 1995. He currently teaches Strategic Project Management at the University of Pretoria (http://web.up.ac.za/) where he previously taught Operations and Production Management, Project Portfolio Management and Project Management at post graduate level. He was program manager for the Masters degree in Technology Management at the School of Engineering and Technology Management. (2001 to 2005) (http://web.up.ac.za/default.asp?ipkCategoryID=2846) He met Eli Goldratt in 1992 and became a Jonahs Jonah in 1993. From 1994 he worked for 7 years as management consultant with the Avraham Goldratt Institute on a number of projects developing and implementing logistic system solutions and improvements using the Theory of Constraints. Currently he is project leader on TOC projects in South Africa, coaches and mentors TOC project leaders in India and develops and coaches TOC facilitators in South Africa, India and Australia. Some of his recents clients are the South African Mint, Rance Timber (forestry and saw milling), Umndeni Circon (standby power plant manufacturers), Bagshaw (safety shoes manufacturers), Cargo Carriers (transport), QD Group (manufacturers of electronic security equipment), Hawker Siddeley (manufacturers of transformers) and Aerosud (manufactureres of aircraft components for Boeing and Airbus). In India he educated internal TOC consultants for Tata Steel and dr. Reddys Laboratories. He conceptualized and implemented the one year program Managing the TOC way in South Africa in 2009. (http://www.goldrattschools.org/index.php?page=toc_way). He is a member of the Theory of Constraints International Certification Organization (TOCICO) and is a certified implementer in all the TOC fields of application. He authored 3 peer-reviewed journal articles and has participated in a number of local and international conferences as well as acted as study leader for a number of Masters students at the University of Pretoria and UNISA. He also contributed to the Critical Chain sections of a textbook on Project Management.
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EXPLORATION OF PROJECT MANAGEMENT TO THE MACHINE TOOL INDUSTRY IN TAIWAN

Frances Su Goldratt Schools
ABSTRACT This paper presents an exploration of TOC applications, especially the utilization of the project management approach, to the Machine Tool (MT) industry in Taiwan. Also, a
platform of the TOC holistic approach is proposed for the continuous improvement of MT companies in Taiwan, not just for an isolated functional improvement. Developing a
successful strategy for the MT industry in Taiwan will require a fundamental shift in management paradigm, such as challenging management assumptions by TOC systems thinking, and improving modes of operation by establishing appropriate TOC practices. With the information available now, the needs of special-purpose machine tools have become apparent. This is especially true during the period of the recent worldwide financial crisis. Many
companies have recognized that moving more toward customization should be beneficial in the long run. However, to maintain profitability or even increase profit by customization, thorough
planning and rigid execution are critical in order to ensure on-time completion, shorter lead time and meeting defined specifications within the planned budget. To tackle such a problem, the
utilization of project management, especially TOC Critical Chain Project Management, can be the key to building up the capability and capacity for achieving fruitful results in customization scenarios.
The Taiwan MT Industry belongs to the top group in the global market.
However, under the
current pressure of global competition, something different has to be done quickly in order to maintain its status, or even to step up the ladder. While continuing to sell products, the
industry should also pay more attention to business in service, such as after-sales service, second-hand markets, machine renting, etc. Undoubtedly, it is important to keep in mind
that service businesses must be supported by a sound management system and mature
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managers, to ensure stability in growth and to be capable of self innovation.
Keywords: Machine Tool, Theory of Constraints, Critical Chain Project Management, TOC SDBR, Buffer Management, TOC Replenishment.
Authors notes: The exploration of TOC applications to the Machine Tool (MT) industry in Taiwan is a part of an on-going study; it should be seen as an open platform for discussion. The TOC
concept and knowledge behind this writing are all part of the TOC founder, Dr. Eli Goldratts creation. The author sincerely appreciates Mr. Oded Cohen for his continuing mentoring
and encouragement for undertaking this writing.
The details of TOC methodologies mentioned in this paper are not explicitly described herein (the readers should not have any difficulty in locating many reference and case studies in the public domain.) Nevertheless, the importance of TOC applications is pointed out, in order to explain related improvement purposes. Most importantly, a platform of the TOC holistic
approach is proposed here for the continuous improvement of Machine Tool companies in Taiwan, not just in an isolated functional improvement. Essentially, TOC practices deal
with core problems, affecting the entire organization, in order to create an effect of breakthrough improvement.
In Taiwan, the Machine Tool and Accessory (MT&A) industry has two main groups of companies. One group consists of those producers of machines, known as Machine-Tool Each company has its specialty in
companies, assembly companies or assembly plants.
certain types of machine tools, and only few large-size companies would manufacture some components from raw materials. Their customers are manufactures of other industries, such The other group consists of accessory companies Although some statistics
as electronics and automobile industries.
that produce parts for Machine Tool companies as customers.
include both groups, the leading companies are in the Machine Tool group and represent the major development of the whole industry. around Machine Tool companies. Thus, the context of this paper is mainly built
1.
Introduction
Project management systems theory taught through games
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The Machine Tool and Accessory (MT&A) Industry in Taiwan belongs to the top group of the global market. In the past, its improvement effort mostly had been devoted to the technology and quality of products, using attractive or even low prices to maintain its competitiveness. However, under the current pressure of global competition and the
experience of the last financial crisis, MT companies have felt the urgency to advance their business positions through a higher class of products, better customer services, or other innovative ways of operations.
This paper provides an initial understanding of the current situation in the industry, especially related to the issues of products and operation management. Based on the finding, the paper
proposes to shift the focus of operation management from product paradigm to project paradigm; that is, the attention of making a good product is shifted to ensuring the customers satisfaction. Then, a roadmap of continuous improvement in operation for MT companies in The purpose is the upgrading or establishing of a
Taiwan by the TOC approach is outlined.
sound management system and effective management skills to ensure stability in growth, and to be capable of self innovation.
2.
The status of the Machine Tool and Accessory industry in Taiwan
During the worldwide financial crisis of 2008-2009, more and more companies in the Machine Tool and Accessory (MT&A) industry in Taiwan are forced to build tailor-made or special-purpose products upon customers requests, in order to maintain their profitable positions. products. In fact, the orders of customized products were less affected than that of standard While special-purpose products can usually have higher prices, a higher-level of
technology and quality, as well as a sure and short delivery time, are demanded.
While the output value of Taiwan MT&A industry was NT$51.1 billion (US$1.6 billion) in 2002, it jumped to NT$113.3 billion (US$3.5 billion) in 2007. In the worldwide ranking, it
was Number 5 for the output value (1. Japan, 2. Germany, 3. China, 4. Italy, 5. Taiwan, 6. Korea, 7. USA), and Number 4 for the export value (1. Germany, 2. Japan, 3. Italy, 4. Taiwan, 5. Switzerland, 6. China, 7. USA) in the world. Even though the output value was NT$113.6 billion in 2008, and it is expected to go down to NT$90.9 billion in 2009, the government has placed a particular importance on the industry and has set the goal of output value at NT$ 350 billion (US$11 billion) for 2015. [1,2,3,4]
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The profile of Taiwan MT&A industry may be described as follows: (1) Machine tool export In 2008, the total exporting value was 78.7% of total output value (NT$113.6 billion) in the industry as a whole. the machine centers, presses, and NC lathes. The major exporting products have been The major exporting countries include: The
China, USA, Germany, South-East-Asian, and newly industrialized countries. exported products are mostly general-purpose and standard machine tools.[1]
(2) Industrial cluster among the total of 695 companies in Taiwan, they are mainly located in the 3 industrial clusters in the northern, middle and southern regions; with 110, 505 and 80 companies, or 16%, 72% and 12%, respectively. In each cluster, most of the
companies are close together geographically, generally within 20 kilometers from one another, so that any needed components of a machine tool can be obtained within a short distance. [5] (3) SMEs (small and medium enterprises) the number of employees in the majority of companies is less than 100 people; many of them even less than 30 people. This makes
up about 86% of total companies, with the value of capitalization under NT$60 million (US$ 1.9 million). As an illustration, in 2008, the top 10 companies totaled about 36%
of the industry output. [1,5,6,7]
With the profile described above, the Taiwan MT&A industry has developed a close cooperative relationship among companies, especially between a MT plant and its Accessory suppliers. The industry as a whole has achieved the flexibility, agility and effectiveness to
match customers needs in terms of acceptable levels of quality (i.e. speed, precision and stability), delivery time, and competitive prices. are already selling under their own brands. In recent years, more Machine Tool plants
In the global market, Taiwan products are placed
at the high end of low-class products or the low end of middle-class products which take up about 20% of the market share (notes: Nomura Research Institute of Japan suggested that machine tools can be divided into three categories on the basis of their quality as shown in Fig. 1) and the Taiwans global market share is at 6.64%. [5, 6]
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Fig 1: Product levels of machine tools. Source: [6].
The Taiwan MT&A industry is ranked as number 5 (6.2%) for total output value in the global market, compared to the 4 countries ahead at 19.5%, 19.3%, 17.2% and 10.1%, respectively, and the 2 countries behind, Korea and USA, at 5.4% and 5.2%. It showed that the Taiwan
MT&A industry has been struggling with catching up with those ahead and, at the same time, must run fast to keep ahead of those behind. Currently, with the rapid progress of Korea and
China, Taiwans industry is under great pressure to maintain the current status, to expand the market share, and to advance the product-class level. [5, 6]
3.
The potential of customized products in the Machine Tool industry, Taiwan
With the information available now, the needs of special-purpose machine tools have become rather apparent, especially during the period of the recent worldwide financial crisis. Those
with more business in customized products had more stable level of sales than those selling mostly general-purpose products or standard products. mainly or solely making customized products. Currently, very few companies are
However, some have recognized that moving Nonetheless,
more toward customization business should be more beneficial in the long run.
most companies still prefer the standard product over the customized one during good selling seasons.
The business model of the customized machine tools made in Taiwan can be described as follows: (1) Designing and producing based on customers specifications, which are unique to the customers production environment, such as machines for flexible manufacturing systems
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and compound machine tools. (2) The products usually belong to the categories of large-size and complex structures, at much higher prices. (3) Product features deviate from those in standard products between 30 to 100%. (4) Produced on the basis of firm orders, usually in a small quantity. (5) The order lead time of customized products is much longer than that of standard products.
The illustration by C. Sevensson and A. Barfod in Fig.2 [8] shows the different degrees in customization from pure standardization to pure customization for a product. As the authors The
pointed out, Products can be divided into groups based on the point of customization.
figure shows the categories from pure standardization, where the customer has no influence, to the pure customization, where the customer can influence the design process.
Standard products
Full-customized products
Fig 2: From standardization to customization. Source: [7]
In view of the figure above, a MT company has the majority of customization taking place in the phases of fabrication and design, and then assembly should be done accordingly. The
functional design is usually modularized, so that a machine tool is tailor-made for individual situations, such as different numbers or additional holes, different base-sizes, different controlling-speed, different colors, etc.
When building a full-customized machine tool, the work starts with the customers specifications that require different degrees of effort. For example, between simple
fabrication changes in a press machine of small-size, and a full-customized, large press machine, the time from starting the design to the completion of the assembly is 30 days and
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120 days respectively.
In order to maintain profit, and even making more profit, by the
customization, issues such as good planning and rigid execution are very important for ensuring on-time completion, with shorter lead time and the defined specification within the allocated budget.
As known in the community, the variable cost alone (mainly components and materials) for a machine tool usually is around 65%, and the payment period is about 2 months. As
mentioned above, the most of companies in the MT&A industry is SME, such that any cash investment is considered a heavy burden. Hence, if taking up a different or innovative way
of expanding the business spectrum would require additional cash investment; most companies would immediately become very conservative. Nevertheless, they do see that
shifting more business into the customized products can bring benefits to them, such as:
(1) Differentiating their products and competence from general-purpose products. Especially in the face of rising China and Korea industries, the used-to-be competition edge (lower prices and flexible delivery) is now fading. (2) Advancing their technology and skills into the next level of product-class, the mid-class products, in order to supply those industries requiring higher precision and speed machines. (3) With the advancement in technology, they can expand the market share in the domestic arena, such as semiconductor, transportation and 3C production machine tools. (4) The customized products can be sold for considerably higher prices, and should be expected to bring higher profit, if risk (e.g., too late delivery, beyond the planned budget and not meeting the required specification) is well controlled.
As reported in the news media [8], a few CEOs of MT companies said that, since machine tools belongs to the category of high capital investment, it can not be easily discarded as in the case of consumer goods. When an economic crisis occurs, companies stop building That is the natural
factories, the orders of MT companies in turn drop dramatically. limitation of the MT industry.
Since the most of companies have the limited capital
availability, they should make the best of the available resources by focusing on high-priced, customized products (not focusing on lower-priced, standard-products with larger sales volumes). That can serve two purposes, one being less affected by economic turbulence, the
other establishing the competitive edge of the MT&A industry for Taiwan.
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On the other hand, some bigger companies have a different view: in order to expand the global market of the Taiwan machines tools, they must expand their selling channels. To
that end, complete product lines and global business operation and distribution sites are necessary. investment. This would require the power of big organizations and would need more
In the 2008-2009, the unique characteristics of industrial clustering in Taiwan were named by World Report of Competitiveness, issued by the World Economic Forum (WEF), as the Number 1 in the State of Cluster Development. efficient, highly-work-divided cluster[10]. It is regarded as a model of complete,
Any MT&A companies have the freedom of Hence, the accomplishment of It is the result of close
working with one another to create the most attractive prices.
machine tools in Taiwan today does not depend on a few companies.
cooperation among the up and down streams of companies in the supply chain.
Recently, the government has organized the Advanced Machine Tool Project, to invest in a variety of multi-axial compound machines and multi-tasking turn-mill machines. Added to
this is the development of related application software, testing, and remote-maintaining technologies. customization. The idea is to build advanced machine tools with a degree of flexibility in The project is called One Machine One Alliance. The members of an An alliance focuses on
alliance consist of leading MT companies and Accessory companies.
a particular machine tool, so that all components for a machine can be produced internally, avoiding the necessity of importing components from other countries and accelerating new product development for meeting the need of a global market. In short, this project should
eventually advance the ability of customization, in the aspect of building larger and more complex machine tools.
As seen in the worldwide development of MT&A industries, when a company reaches a certain level of maturity in technology and a certain scope of business operation, it will move more into customization that should differentiate much more from its competitors and, more importantly, ensure its high profitability. Thus, the currently used scheme of modularization
in standard products, for reducing costs and shortening lead time, will no longer be useful or good enough in a customization scenario. However, in reality, the current situation shows
that most companies will continue to produce standard products with their own brands at
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lower prices in order to maintain their revenues.
Along with this, they are exploring more
orders for customized products, based on their core competence, with higher prices, at the same time. As stated earlier, in this current economical situation, most companies are very Therefore, how to utilize well the existing capacity to Evidently, the companies
conservative about capital investment.
handle both standard orders and customized orders is a challenge. are facing the dilemma between standardization and customization.
4.
The Make-to-order production for MT companies
MT companies are very unlikely to have customers buying products from their warehouses; their orders are essentially the type of make-to-order (MTO). In most cases, customers In
would ask for modification more or less on standard products listed in product categories.
other words, it is safe to say, each of their orders is unique in some way due to the customers individual requirements. As seen in practice, in order to shorten the lead time and to deliver On the other hand, it is quite
on time, some companies keep semi-finished goods in storage.
often that they have to dismantle the semi-finished goods and then reconstruct on the basis of the requested design of a customer. Although most companies do have an annual plan based
on an industrial forecast, their actual work has to be revised monthly in order to set the numbers of different machines to be produced. The mismatch of the forecasted and actual
demand causes some major undesirable outcomes, such as delay in delivery for actual demands. At the same time, WIP (Work In Progress) is much higher than what is needed,
and this would cause a difficulty in maintaining an expected level of cash flow.
Based on the spirit of a statement often expressed by Dr. Eli Goldratt to solve complicated problems, look for simple solutions, this paper proposes to treat all orders, including so-called standard products and customized products, in general as a MTO production type. It does not argue that the MT&A industry in Taiwan should position better with standard products, or customized products, or both in various percentages of combination. That is,
the production is based on customers firm orders, on specified design and quantity, agreed prices, and defined delivery time. The principal measurement is the due-date performance.
The logic for having every one of the MTO orders being delivered on time would lead to receiving payment on time, thus maintaining a smooth flow of cash. In addition, the MTO
environment will keep its inventory at a low level, but still sufficient to be ready for production.
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5.
The production issues in the MT industry nowadays
There are some major difficulties encountered by the industry, as listed below: BOM Accuracy: Due to many different requirements in design of customer orders, it is difficult to maintain the BOM with sufficient accuracy to be in line with the production priority. Control of Component Supply: A machine tool may consist of hundreds or even thousands of components, and different machines may take different combinations of components. In order to complete assembly as scheduled, without causing delay, the However, the large number of components is too
availability of components is critical.
complicated to maintain the desired availability consistent with correct priority for manufacturing needs. Furthermore, the after-sales service for customized products
usually takes a longer time to allocate the correct components, because of missing information or unavailability. Management of manufacturing sequence: In general, two scenarios in a plant often occur: one is due to many orders of diversified models in small quantities; the other is an acceptance of orders without clear product specifications. The first scenario leads to In order to satisfy
the concurrent production in small quantities in an assembly plant.
each customers requirements, it may need to shift manufacturing sequence, causing a difficult situation of lagging availability of materials and resources when needed. The
second scenario requires the change of designs, resulting in time-consuming rework that would increase cost and upset the due date. In short, the unprepared changes on the
floor will build-up more WIP and prolong manufacturing lead time. Cost Accounting: Due to the complexity of the MT&A manufacturing environment,
particularly in the situation of needed inter-working relationship among many companies in the industrial cluster, it is hard to allocate labor and overhead costs sensibly to products. There is no clear view of profits prior to accepting an order.
Mapping the issues mentioned above to the operation for obtaining the best profitability, this paper consolidates the following four main blocks for improvement, as shown in Fig.3 below. Reading from the left to the right as follows, they are: Order profit calculation and order selection are not in line with production capacity for better profitability.
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Machine tools design and drawing for products features & specifications are not ready prior to production. Component & materials supplies are not ready in time for assembly. Assembly schedules are not apt to achieve the on-time delivery. Assembly schedules are not apt to achieve the on time delivery.
Order profit calculation and order selection are not in line with production capacity for better profitability.
Machine tools design and drawing for products features & specifications are not ready prior to production.
Component & materials supplies are not ready in time for assembly.
Fig 3: The four main blocks for improvement in operation for MT companies, Taiwan In a MTO production environment, the main performance measure is to ensure the reliability of delivering firm orders, e.g., being on time and with required quality. To overcome the
obstacles listed above, this paper proposes a process of decision making and planning to be in place prior to execution. The first action is to consolidate different viewpoints of various
functional departments, and the second is to establish a firm plan with a list of orders for a given period of time. The purpose of the list is to ensure that the management would focus This should be utilized
on the collectively agreed decisions and act effectively on the plan. as a backbone to support the following targets:
Agreed commitment by the management team, including the top and functional managers. Sharp focus on the delivery of committed orders by operation teams. Evolutionary and systematically start on the process of continuous improvement for the modes of operation in various levels of management. Competent builder first to lay down stable growth and then enhance the growth as described in the Goldratts Strategy and Tactics Trees [11].
6.
The proposed decision-making, planning and execution for continuous improvement
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The steps of the proposed process of decision making and planning are described below. a diagram of relationship among the entities therein, see Fig.4.
In
That is, each arrow in the When
diagram indicates that a lower entity must be completed before an upper entity starts.
there are two arrows going into one entity, it means that the two lower entities both must be completed before the upper one starts. bottom up. It can be viewed as a roadmap, reading from the
Based on the priority of profit for a given period of time, a decision on an MTO-order list has to be made as a basis for making project plans. Each MTO-order in the list to become a At the same time, a
MTO-project should include defined scope, cost, and lead time.
decision has to be made on an inventory list consisting of two groups of parts/materials: those in stock are parts and materials bought in advance and kept in stock; those to buy are parts and materials to be purchased when firm orders are accepted. With the project plan
and the inventory list in place, a company makes a decision on a list of MTO-projects to be executed, based on the priority of due-dates for a given period of time. By checking the
current level of inventory for production needs as defined in the MTO-project list, a procurement plan has to be instituted for the two groups of inventory. This is followed by a Now that
decision on a cash investment list for inventory, based on the procurement plan.
the availability of materials inventory is clear, a decision is needed on an order-delivery list. It is based on the MTO-project list and the priority of re-confirmed due-dates for a given period of time. Finally, a production/assembly plan for the delivery list is made to ensure
delivery on time, with defined specification and quality.
With the decisions and plans in place for a MT company, the following results are obtained:
The profitable list of MTO orders is properly calculated and confirmed for a given period of time. For each order, its BOM structures and data are analyzed, specified and confirmed, so that a project plan (including spec, cost, and time) is defined and confirmed. For a given period of time, a prioritized list of MTO-projects is scheduled and confirmed. The materials/component supply to the MTO-project list is made available on time for the production needs.
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For the MTO-project list, assembling will progress as scheduled and products will be delivered on time. 8. A production / assembly plan for the delivery list is made to ensure delivery on time, with defined specification and quality.
7. A decision on an order-delivery list, based on the MTO-project list, and the priority of re-confirmed due-dates for a given period of time.
6. A decision on a cash investment list for inventory, based on the procurement plan for a given period of time.
5. A procurement plan for two groups of inventory, for on-time supply to production needs defined in the MTO-project list for a given period of time.
4. A decision on a MTO-project list, based on the priority of due-dates for a given period of time.
2. A project plan for each MTO-order, with the defined scope, cost and lead time.
3. A decision on an inventory list, including two groups in stock and to buy, based on existing part/materials data.
1. A decision on an MTO-order list, based on the priority of profit, for a given period of time. Fig 4: The roadmap of continuous improvement in operation for MT companies, Taiwan
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7.
The practical consideration in management
With regard to the success or failure rate of project management, a report by the Standish group in 2005 showed that 53% of the projects were late, over budget and/or had less than the required scope; 18% of the projects were cancelled or delivered and never used; only 29% of the project were delivered on time, within budget and with required scope. Another report
by KPMG showed that 14% of all projects failed due to a companys inability to cope with technology; 86% were due to some common management woes, such as: improperly defined objectives 17%, unfamiliar scope 17%, lack of effective communication 20%, and poor project management skills 32%. Hence, with the proposal to treat MTO orders as projects,
MT companies would need to examine their ability in project management and, if necessary, learn new skills, in order to accomplish good project planning and execution.
Through personal contacts with some MT managers in Taiwan, we found that very few of them are sure about the percentage of due-date performance (DDP%) on order delivery. Most of the responses to our questions were something like from 30-60%, and a higher % was usually due to having a higher level of WIP/inventory. They claimed that with too many It was
orders, and without more parts in stock, the orders would likely be delayed.
interesting to observe that during the period of the world financial crisis, the orders dropped dramatically, so that their inventory should have been more than enough. did not improve much and deliveries were still delayed. However, DDP
Even though the amount of WIP
and parts/materials inventory was high, the assembly process still faced delays due to the shortage of critical components. Unfortunately, the issue of more cash needed for buying
critical components came at the time when companies were worried about cash flow and were likely to apply a tighter control on part procurement. In short, the realization was that the
same mode of operation would produce about the same level of performance, regardless of the amount of orders.
As mentioned earlier, there exists a close working relationship among companies diverse expertise in the MT&A industrial clusters in Taiwan. That is, for building up a machine tool,
one of the leading MT companies can work together with a large number of Accessory companies, each supplying certain components. supporting a dynamic and viable industry. It can be imagined as a nested network
As far as MT companies are concerned, reliable
quality, timely delivery and acceptable level of prices are the important factors of
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consideration.
Therefore, it is imperative for MT companies viewing the supply chain as a For
whole, to expand their modes of operation to enhance the reliability of suppliers.
Accessory companies, the more reliable a supplier they are, the more confidence in their due-date performance MT companies will have.
In short, the main points can be summarized as follows: 1. In project management, execution and control are more challenging than planning. However, effective plans and decisions are the necessary conditions for ensuring an effective approach. 2. The availability of materials/parts is important to ensure a certain level of due-date performance; it is a necessary but not sufficient condition. The underlying model of
operation is the key to turn the performance around to a high and stable level. 3. For the purpose of stabilizing the level of operation performance, and further developing new competitive advantage as a whole, a system of synergistic collaboration should be created among the MT and Accessory companies, besides a close working relationship at an individual or personal level.
8.
The Theory of Constraints approach in continuous improvement for MT companies
This paper proposes the Theory of Constraints (TOC) management philosophy and methodology as a holistic approach for upgrading the modes of operation, without negative ramification of local optima. The TOC holistic approach should overcome the problematic It should include a set of practical
issues and establish effective management processes.
solutions that can be conveniently adapted by MT companies for their unique ways of operation. It should also be used as building blocks in systematically constructing Eventually, as Dr. Goldratt stated,
companies advanced management technology and skills.
the goal of a company is to become an ever-flourishing organization by being solidly on the process of on-going improvement.
In contrast to other well-known methodologies, the TOC approach emphasizes applications of systems thinking and constraint management. That is, while other methods deal with a
certain functional problems, such as quality and waste issues in a local area, TOC will examine beyond a local area, analyzing the cause-effect consequence in an identified system
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scope, and identifying and resolving core issues to create a positive impact turning the system into an improved state, like a domino effect. [11, 12]
Using the above roadmap in Fig.4, this paper proposes the TOC applications for actual implementation. Again, here is the list of decisions and plans, followed by proposed TOC
methods. (Note: the number bullet is the same as the numbers in the above diagram, for identifying the statement.)
1.
A decision on an MTO-order list, based on the priority of profit for a given period of time. Applying TOC Throughput Accounting approach and TIOE analysis [13]. TOC says
that when production is bounded by a bottleneck, the best product-mix heuristic is to select products based on their ratio of throughput per constraint unit; i.e. applying the T/CU (throughput per constraint unit) priority rule. Taking into account system
constraints, calculating orders throughput and net profit in a given period of time, it provides realistic data for decision making in order to prioritize orders and to determine a list of selected orders for the given period of time.
In general, MT companies will receive order requests, including so-called standard and customized products with prices and length of lead-time being much different. With
the limited production capacity in a given period of time, it is necessary to make the most profit out of available capacity, at least to sustain cash flow for meeting a certain profit target. Traditional measurement emphasizes achieving lowest product costs per
unit, and highest utilization of each resource in factories, so that a company would use all resources and produce products as much as possible. As a result, this practice
would end up with tons of unnecessary inventory, and at the same time may not deliver firm orders on time. [14] of operation. The misfit is between a production environment and a mode
That is, MT companies are essentially in a MTO environment [12]; their Now, with the TOC
focus is to deliver as many firm and profitable orders as possible.
Throughput Accounting approach, it provides an effective and convenient way of obtaining critical financial numbers for making a near-term decision in committing to profitable orders.
2.
A project plan for each MTO-order, with the defined scope, cost and lead time.
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Applying TOC Critical Chain Project Management (CCPM) and Buffer Management [15]. For each project, there are two types of dependency affecting the time element, Assuming that the levels of budget, specification, and
task and resource dependency.
skills for a project are in good shape, as long as it goes as planned, the project should be completed and a deliverable should be expected. On the other hand, if it does not
progress on schedule, then increasing the budget, or cutting parts of the specification, is an unavoidable choice to make up the lost time. Otherwise, the project will be delayed.
Hence, the main contribution of CCPM is to overcome the tendency of adding more time to individual tasks to deal with uncertainty. CCPM brings the focus of project
team to ensure an on-time completion, and to allocate safety-time to protect a system constraint as a critical chain, not each task. In the execution phase, the mechanism of
Buffer Management will be activated for real-time monitoring and making corrective actions when risk arises.
In general, for MT companies as mentioned earlier, each order of product is uniquely specified by its customers requirement. parts, customized parts are not unusual. For Accessory companies, besides standard But, those customized parts should be related Hence, for MT
to customized machine tools of the MT companies who place the order.
companies, it is appropriate to treat each MTO-order as a project operation, especially for customized products. With its defined prices and costs, specification and design,
and delivery time, it fits the basic profile of a project.
In this step, the main function involved is the machine design; besides drawing, the important output is the BOM structure. As known, with small modification, standard Customized products
products take less than 1 day for design (BOM already exists).
would take up many more days as the complexity of machines increases; in some cases, it may take up as long as 2 months. Hence, the shorter design lead-time and the BOM In the current
accuracy are two important issues to be tackled for improvement.
practice, the difficulty seems to be the missing link for synchronization and communication among customers, external sales agents, internal sales people, and design engineers.
Treating each MTO-order as a project also shifts the paradigm of product view to project view. Specifically, the attention of making a good product is shifted to ensuring
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customers satisfaction.
To have happy customers, besides the contents of machines,
their immediate needs also include delivery at right time to the right place, with right technical support. In order to sustain the paradigm shift, policy and measurement on
performance should be modified to discourage any behavior of local optima, and to encourage behaviors prescribed by CCPM. Applying CCPM has been proven to be one
of the effective and efficient ways for overcoming the synchronization and communication difficulty.
3.
A decision on an inventory list, including two groups in stock and to buy based on existing part/materials data. In order to shorten the order lead time (i.e. a period between placing an order and the customer receiving the order) of machine tools, companies keep materials/part stocks because the purchasing lead time usually takes up a significant portion of order lead time. In one example, for standard products, purchasing takes up about 30 days, while For a large customized product, it takes up about By holding stocks, the order
the order lead time is 45 days.
75-105 days, while the order lead time is 120-150 days. lead time can become much shorter.
Numbers of parts for machine tools are mostly in
the range from 500 to 4000 pieces, which may contain a small number of critical parts that are expensive, provided by limited numbers of suppliers, and/or tailor-made required. Conceivably, these critical parts usually cause delay.
MT companies based on their existing data on parts/materials make two groups, hold in stock and buy when needed. The criteria of decision should include distance of For a
supplier, delivery time, cost of parts, quality of parts, and after-sales service, etc.
company that mainly sells standard products, it would usually ends up with a very long list of common parts, and a pretty short list of critical ones. They would then decide
what parts to hold in a certain amount in stock, and what parts to be purchased when there are firm orders. This clearly identified data can be used for calculating reliable
times in knowing when materials are available, and more accurate amounts of cash needed in a given period. This step might involve materials/parts for more than one The
production site or many purchasing clerks/agents for different suppliers, etc.
objective is to establish a common database as a basis of materials handling, and for exploring on possible improvement.
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4.
A decision on a MTO-project list, based on the priority of due-dates for a given period of time. Applying TOC Multi-project Management [16] and monitoring the loading of critical resources. In a multi-project environment where resources are shared across a number
of projects, it would be necessary to exercise extra care to assign priorities for project resources and managers alike. achieve. This can make a fluent flow of operation difficult to
A common way to deal with work among multiple projects is the practice of
multitasking - assigning resources to more than one task during a particular window of time. In addition, many project teams tend to launch projects as soon as possible, in These early starts create more open projects
order to assure timely project completion.
that often translate into additional pressure on resources to multitask between tasks and between projects. The name bad multi-tasking is used to describe the situation.
The unavoidable result of project lead time would become significantly longer than necessary.
The TOC Multi-project Management approach aims at overcoming the lack of clear priority by aligning the attention and effort of project managers and resources. Furthermore, it is a way to minimize conflict among shared resources, and to build up team synergy. In the TOC approach, a whole system in terms of a multi-project system The TOC
consisting of many single projects would share the same resources.
multi-project management approach sets the execution sequence based on the priority of due-dates and availability of a critical and/or most loaded function, that can be one physical resource, a function, or an integration point. Staggering projects on a given
time line ensures a smooth flow of projects one after the other, and is able to achieve a high rate of on-time completion (e.g. 95%). Moreover, the positive effect can shorten
the lead time of projects, and release excess capacity for the system as a whole.
In general, MT companies certainly have many MTO-orders at the same time.
As a
consequence, many MTO-projects may have to share the same group of engineers and technicians. In this case, the TOC Multi-project Management will create a prioritized
list of MTO-projects to be completed on time, within budget and specifications, for a given period of time. This list should be confirmed and committed to by top Then, projects are executed based on the
management and managers directly involved.
staggered schedules, with the mechanism of TOC Buffer Management to ensure clear
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visibility.
Each resource is expected to act in relay-runner behavior, and various
levels of management are expected to follow up reporting processes.
5.
A procurement plan for two groups of inventory, for on-time supply to production needs defined in the MTO-project list for a given period of time. A purchasing plan is made for the group of in stock parts, applying the TOC Replenishment mechanism [16], on the basis of the decisions of the MTO-project list. This step is a part of the TOC Consumption-driven approach, together with Buffer Management to form a complete set of inventory management procedures based on actual consumption, holding a just-right level of stocks, and high availability for production. According to the TOC Replenishment mechanism and Buffer
Management, planning policies exist on how often and what quantity of each stock is to order. This practice is a systematic process. Its possible risk of material shortage can
be identified with the buffer status, as the priority system in TOC Buffer Management. For the group of to buy parts, applying a simple Buffer Management policy as a monitoring mechanism increases the visibility of delivery on time. If purchased parts
involved many customized features, then closer communication and regular meetings between MT companies and Accessory companies should also be the parts of plan, to avoid any waste of time caused by rework. Buffer Management can be utilized as the indicator to synchronize among companies, such as a situation when one MT company has to work with about 100 accessory companies. They are synchronized by the only
priority system provided by the TOC Buffer Management, to ensure reliable delivery.
6.
A decision on a cash investment list for inventory, based on the procurement plan for a given period of time Applying the TOC Consumption-driven approach [17] to maintain a good-enough level of inventory in stock, a decision and an approval for cash investment in procurement are required by the top management in order to overcome the wait and see uncertainty. It should enable procurement and production managers to focus their
energy on delivery orders as committed.
Here, a safety measure of asking for more than real needs should be discouraged; it should be monitored under an appropriate mechanism. With the TOC
Consumption-driven approach, suitable amounts of stocks can be clearly identified for a
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given period of time. changes in demand.
The stocks will be monitored dynamically to determine the
Then, the amounts of stocks will be adjusted to reflect real needs. For
Still the objective is to ensure the availability of materials/parts for production.
those belonging to the group of buy when needed, which do not hold in stock, cash amounts are budgeted as needed. Later on, according to the operation flow with good
performance of on-time delivery, these cash expenses are expected to be recovered in a known period of time. Such cash expenses can be used to calculate inventory turns
and liability for performance measures.
7.
A decision on an order-delivery list, based on the MTO-project list, and the priority of re-confirmed due-dates for a given period of time. In order to ensure high level of on-time delivery, the top management and those directly-involved are required to agree on one order-delivery list for a given period time. Such a list is based on the MTO-project list, to which the evaluation in profitability is agreed. But, original due-dates might be affected by the changed situations on
materials availability, customers request for new delivery dates, and other unexpected changes of operation or business situations, etc.
Hence, a confirmed order-delivery list should reflect most current order-demands, to align the production effort, and to become aware of possible risk. For example, one
common situation that occurs to MT companies is that customers will delay the delivery date due to the delay in new factory construction, or delay in launching new products. Then MT companies would need to hold the machine for some time, and this would cause not only the issue of space, but also prolonging the payment.
8.
A production/assembly plan for the delivery list made to ensure delivery on time, with defined specification and quality. Applying TOC SDBR approach [18], with the likelihood of using one-piece flow, will ensure the unobstructed flow of assembly/production. And, applying TOC Buffer
Management will prioritize the risk involved in execution, providing the visibility for making a decision on whether a correction action should be activated. The orders are
to be delivered on time or earlier, according to the defined sequence of due-dates. Work orders of the order-delivery list are released to the assembly floor, based on the TOC SDBR mechanism. It aims at providing a clear rhythm to synchronize the
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production flow so that a batch of machine tools will behave like a group of elephants marching through a door one by one, not all squeezing together on the door and fighting to get out.
TOC SDBR provides an appropriate time line for releasing the right amount of orders on the floor, in order to maintain a low level of WIP and to eliminate the confusion in the work priority. Using one-piece flow is suitable for assembling machine tools.
Besides cutting down the assembly lead time dramatically for finished goods, it also provides early error-detection in quality. For example, for a batch of 6 machine tools
with traditional batch process, it would take at least 12 days for the first machine to finish. With one-piece flow, it takes 2 days to have the first machine. If there is a
problem in parts with one-piece flow, engineers would find and solve the problem before starting the second machine. With the batch process, if a problem is found
closer to finish, then all 6 machines would need to be reworked.
TOC Buffer Management again provides real-time information of orders in terms of production progress. Such a simple and practical signal system indicates the For example, using red, yellow and green
possibility of delay of an order in process.
color-coding represents the meanings that an order currently positions at less than 1/3, inside 2/3, or more than 2/3 zone of its assembly lead time. An interpretation against
the risk of being late is that falling into the red, yellow and green zones means urgent, watch-out and OK, respectively. Managers on duty are then expected to take the
necessary action: activate corrective actions, watch and follow up closely and be prepared for next, or take no action. In short, this step emphasizes constructing a focusing mechanism, by using one common priority system for effective and efficient decision-making on a continuous basis. The
purpose is to deliver as committed, striving for a very high due-date performance (e.g. at least 95%). Even though it sounds like a big challenge to many MT companies in
Taiwan (most of the companies have DDP less than 50%), in one recent case study of a MT company a high DDP was achieved in just a couple of months. This was after they spent a couple of months to straighten up their inventory management and align decisions and plans. As a result, without adding more resources and more time, and
without semi-products, the assembly plants lead time went from 9-15 days down to 6 days for standard products, and from 30-45 days down to 20 days for customized
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products, and released at least 40% more capacity.
9.
Conclusions
This paper presents an analysis of the profile of the MT industry in Taiwan to determine its strength and weakness, and the application of the TOC approach to enhance the global standing of the industry. While many papers focus on the technological issues in terms of
machine precision and quality as the background for enhancement against global competitions, only very few deal with the lack of effective management. In contrast, this paper aims at
various aspects of operational issues with the fundamental shift in management paradigm, such as challenging management assumptions by TOC systems thinking, and improving modes of operation by establishing appropriate TOC practices.
Our observation on the MT&A industry in Taiwan is that its effort in the past had been very much for strengthening the technology and solidifying the quality of products, with attractive or even low prices. global market. With this accomplishment, the industry ranks in the top groups in the
However, in order to maintain this status or even step up the ladder,
something different has to be done quickly, particularly under the current pressure of global competition. As pointed out by Dr. W. Edwards Deming: Profit in business comes from
repeat customers, customers that boast about your project or service, and that bring friends with them, Taiwan MT industry should also pay more attention to service business, such as after-sales service, machine renting, second-hand market, etc. Undoubtedly, it is important
to keep in mind that service business must be supported by a sound management system and mature managers, to ensure stability in growth and to be capable of self innovation, as the TOC approach emphasizes.
REFERENCES 1. C. T. You. (2009). Now Opportunity for Taiwan Machine Tools in the World Market. Industrial Technology Research Institutes Data. Industry & Technology Intelligence Services Project, Department of Industrial Technology, Ministry of Economic Affairs,
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ROC.
[in Chinese: 2009
] 2. C. C. Wang. (2009). 2009 World Machine Tools Industrys Difficulty in Forecasting for Production and Sales. Taiwan Machine Tool Foundations Article. [in Chinese:
2009 2008 2009 ] 3. S. W. Chang. (2009). 2008 World Machine Tool Output Value and Export Ranking. Changs Webpage - 2009, May 6. Department of Industrial Engineering, Tunghai University. [in Chinese: 20092 0 0 8
5 4 - 2009 5 6 ] 4. Editors. (2007). The Technology of Exquisite Process for Machine Tools. Journal of the Mechatronic Industry. 291: 17-19. [in Chinese: -
2007291 17-19 ] 5. Precision Machinery Research & Development Center. (2009). Briefing of Taiwan Machine Tool Industry. Industrial Development Bureaus Data. [in Chinese:
2009] 6. Ching-Chiang Yeh and Pao-Long Chang. (2003). The Taiwan system of innovation in the tool machine industry: a case study. Journal of Engineering and Technology Management. 20: 367380. 7. S. Y. Chen and S. W. Wang. (2008). Top-1000 Company Survey. CommonWealth Magazine. Issue 396. May 2008. [in Chinese:
396 2008 5 ] 8. Carsten Svensson and Ari Barfod. (2002). Limits and opportunities in mass customization for build to order SMEs. Computers In Industry. 49: 7789. 9. W. L. Wu. (2009). Small and Beautiful is the Way for Taiwan Machine Tool Industry. Wealth Magazine. 327 issue. [in Chinese: 2009)
327 ] 10. Council for Economic Planning and Development. (2008). Taiwan Industrial Clusters Competitiveness. Council for Economic Planning and Development Report 2008, Nov. [in Chinese: (2008) 3 2008 11
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11. Eliyahu M. Goldratt. (2007- 2008). CCPM, 3R, MTA S&T Trees. The Goldratt Webcast Series. Goldratt Marketing Group. 12. Oded Cohen. (2008). Ever Improve A Guide to Managing Production The TOC Way. 13. Thomas Corbett. (1988). Throughput Accounting. The North River Press. 14. Eliyahu M. Goldratt. (1984). The Goal. The North River Press 15. Eliyahu M. Goldratt. (1997). Critical Chain. The North River Press. 16. Eliyahu M. Goldratt. (2008). The Goldratt Webcast Program on Project Management. The Goldratt Marketing Group. 17. Eliyahu M. Goldratt. (2008). The Goldratt Webcast Program from MTS to MTA. The Goldratt Marketing Group. 18. Eli Schragenheim and H. William Dettmer. (2001). Manufacturing at Warp Speed. The CRC Press Series on Constraints Management.
Other related reference 2009/E2 2009 6 24 UP20092009 5 21 TAITRA TAMI 20092009 2009 2009 03 5 2008 2008 6 20 (2008)e 300 613-164 (2008) magazine284 (2006) 276: 75-82 20062006
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(2005) Rebuilding of value chain of machine tool ePaper 2005 IEK F. Salvador and C. Forza. (2004) Configuring products to address the customization responsiveness squeeze: A survey of management issues and opportunities. Int. J. Production Economics. 91: 273-291. 2002 257-288 Cipriano Forza and Fabrizio Salvador. (2001)Managing for variety in the order acquisition and fulfillment process: The contribution of product configuration systems. Int. J. Production Economics 76: 8798.
AUTHOR Frances Su received her Jonah's Jonah, Management Skills Licensee, and Project Management Licensee, and Academia Associate from AGI from 1997-1999, and then was certified by TOCICO in the filed of TOC Thinking Process and Logistics Management. While she was the faculty member in the Chiao-Tung University, Taiwan, as a specialist in the field of e-Learning research and development, she also in charge of the Center for Professional Advancement, since then she has been practicing for her own work, and teaching the TOC to local industries. She also became the representative for the TOC for Education in Taiwan area, later on for the Chinese Region (including mainland China, Hong Kong and Taiwan), mainly working with schools as a whole or teaching teachers, parents, administrators and students in the TOC Thinking Tools. In the later part of 2005, She joined the Goldratt Schools for supporting the training effort in the Viable Vision, since then she has become the representative for the operation in the Chinese region, mainly establishes and supports the TOC professional community, including consultancy, academia and industries, performing management function, organizing local activities, training and consulting work for Goldratt Schools, especially by working with the newly established Chinese Goldratt Alliance (an non-profit organization) to expand and the TOC knowledge available to the market.
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CRITICAL CHAIN PROJECT MANAGEMENT THEORY AND PRACTICE

Roy Stratton, Nottingham Business School, Nottingham Trent University, UK
ABSTRACT It is now over 10 years since the first publication on Critical Chain Project Management (CCPM) (Goldratt, 1997). Since then, software and implementation practice have developed rapidly. The logic and assumptions underpinning this new knowledge has recently been published (Goldratt, 2007) in the form of a strategy and tactics (S&T) tree. It is, therefore, timely to review the CCPM claims from both a theoretical and practical perspective in the light of this new guidance. The paper includes interim findings of longitudinal case research of a construction company following the S&T logic to implement CCPM.
The paper, firstly, provides an overview of CCPM in the light of prior publications before reviewing the newly published implementation guidance and evidence of current industrial practice. This includes the use of CCPM within a government construction project initiative in Japan. Secondly, the case research methodology applied to a construction company is presented followed by the interim results and findings. Finally, the interim case findings are evaluated in the light of prior research and the wider theoretical links.
The paper concludes that CCPM is now making a significant contribution to improving project management performance worldwide. The S&T guide provides a more comprehensive implementation methodology as well as updated thinking on how CCPM should be implemented - particularly in relation to flow control and continuous improvement. The research findings are only interim, but largely support the logic within the S&T implementation guide with minor reservations. However, the study, thus far, does not include the flow planning of multiple projects. Further research is clearly needed to test the guidance in more detail as well as to clarify the relationship between lean and TOC concepts with particular reference to flow control and continuous improvement.
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Keywords: Theory of Constraints, Critical Chain, Buffer Management, Construction industry
1.
Introduction
Theory in operations has undergone significant change in the past 40 years with a shift from an economics cost-based view to one emphasising flow and the reduction of waste and variation in delivery systems (Ohno, 1988; Deming, 1982; Womack et al., 1990). This has, however, not been so evident within the largely separate field of project management. The underlying theoretical basis for project planning and control has not significantly changed in over 50 years, even though the planning and control tools, such as network planning long have been acknowledged to be ineffective in practice (Fondahl, 1980).
All too often, however, only the original plan and scheduling data are ever produced. They continue to cover the office wall long after they are obsolete and bear little resemblance to the current progress of the job.
CCPM under the umbrella of TOC has been presented as an answer to this weakness but lean protagonists would make similar claims. Koskela & Ballard (2006), with reference to construction projects, argue project management theory needs to mirror the transition in thinking experienced in production operations. They advocate changing from an economicsbased transformation model to a flow model, as adopted by Toyota, and now associated with lean. They advocate adopting practices to manage a flow routine and encouraging local control to improve synchronisation, seeing this as a natural extension of lean practices. However, although the direction of improvement is clear, means of developing formal planning and control tools to accommodate the uncertain project environment are not apparent.
Goldratt (2007) claims the TOC versus lean debate is a false dichotomy, and that TOC encompasses the same underlying concepts of flow and continuous improvement associated with the Toyota Production System (TPS) (Ohno, 1988). However, he and others assert TOC adds value by offering thinking processes (Goldratt, 2008) that support the development of applications for different environments, as in the case of projects. More specifically, Goldratt (1997, 2007) claims CCPM is a means of applying the principles of flow and continuous improvement to a project environment. Leach (1999) and others have previously emphasised
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this link by arguing that CCPM is an extension of Shewharts (1939) continuous improvement concepts and Ohnos (1988) TPS flow concept.
In reviewing the 10 years of development of CCPM and the case research findings this paper tries to look beyond the more evident practical benefits to the underlying conceptual assumptions and theoretical links with lean production. The paper is structured as follows:
Overview key features of CCPM with reference to prior publications, newly published implementation guidance and industrial practice - including the Japanese Ministry of Infrastructure, Transport and Tourism construction initiative.
Present the case research method and interim research findings of a UK construction companys ongoing longitudinal case, utilising Goldratts S&T guide and Concerto software.
Discuss findings and reach conclusions on the in the light of prior research and a wider theoretical framework that links TOC and lean concepts.
2.
CCPM Review: outline, literature, practice and guidance
This section sets the scene by outlining the core elements of CCPM before reviewing critical literature, evaluating recorded practice and outlining the recently published implementation guide (Goldratt, 2007).
CCPM in outline A central driver for adopting CCPM is enabling more predictable and shorter project lead times. The argument is that this not only will enhance time-related order-winning criteria but also will reduce cost and improve adherence to specification. To achieve this the focus is on improving the flow of projects using similar logic to that of lean manufacturing and the operations-based TOC application entitled Drum-Buffer-Rope (Schragenheim and Detmer, 2001).
The main conceptual elements of CCPM are presented below in the context of planning, execution and continuous improvement. Its distinctive differences with conventional project management are also presented.
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Project planning CCPM takes account of resource as well as precedence dependencies in determining the project duration. This is termed the critical chain. In Figure 1, the critical path would be denoted by activities 1-3-4, whereas in CC it is denoted by 1-3-2-4 due to common resource B. In such cases, the critical chain is shown to be longer than the critical path and all four activities need to be managed accordingly. CCPM introduces the concept of project and feeder time buffers to accommodate the effective management of buffer time that is commonly wasted at the activity level when managed locally. The project buffer is located at the end of the project to protect the critical chain, and feeder buffers isolate activity sequences with float from the critical chain (see Fig.1). Thus, such buffers enable aggregation of the buffer time as well as better control, enabling both shorter and more controllable lead times. In establishing these buffers, the proposed start point is to halve existing activity times and put half of the remainder into the aggregated buffer. Therefore, the buffer is equal to a third of the activity and buffer combination (see Fig. 1 for illustration). When planning in a multi-project environment, CCPM advocates staggering the release of projects around a designated resource that acts as a drum. This is used to ensure flow and avoid too many open projects that result in excessive multi-tasking and missed due dates.
5(D) 5(D) FB 2(B) 4(C) 1(A) 1(A) 3(B) 4(C) PB Time 3(B) Critical path FB: Feeding Buffer PB: Project Buffer 2(B)
Resources: A,B,C,D
Figure 1 Network diagram and critical chain schedule showing buffers
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Project execution and continuous improvement Task completion reporting
It is common practice for activity times to be reported in terms of work done, an economic measure that is often only formally reported weekly or even monthly. With CCPM the remaining time to complete the activity is reported on a much more frequent basis ideally daily.
Provide visibility of upcoming tasks
As there are no intermediate task dates in the planning system the task-time-remaining data provides advanced notice of upcoming tasks (this has previously been referred to as a resource buffer).
Current and upcoming tasks are monitored in line with priorities to ensure tasks are effectively progressing.
In the more complex multi-project environment, there are many in-progress tasks competing for a resource providers time. In CCPM they are prioritised in terms of the ratio of critical chain completion and buffer consumption, commonly using green, yellow and red priority colour codes. Upcoming tasks are also displayed, indicating their relative priority as well as the projected time when these tasks are expected to become available to that resource.
Buffer consumption is monitored daily by the project manager and recovery action taken where necessary.
Consumption of the buffer indicates a task is exceeding the ambitious time and that the task manager may need assistance. Action at the project level may be needed to recover a situation.
Senior managers monitor the status of all projects and take action where necessary.
At this level, the priority status of all projects is reviewed periodically to monitor and address higher level programme recovery.
Reasons for delay are monitored and provide focus for improvement.
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The relevant reasons for delay are extracted to focus improvement activity.
Review of literature Much of the literature relating to CCPM is positive but the focus here is on the more critical sources. This is an attempt to expose underlying weaknesses that may be tested in subsequent research. The main issues raised have been categorised as follows.
Originality The main distinction between CCPM and traditional project management is well reported (Newbold, 1998; Leach, 1999; Umble and Umble, 2000; Steyn, 2001). However, there are questions over whether elements of the design are original to Goldratt. Trietsch (2005) is most critical in this area and goes into some detail on the elements of the approach he would attribute to others: This includes earlier reference to resource dependency the critical sequence (Wiest, 1964) and general awareness of the need to consider limiting resources in the network plan. It would appear resource dependency was acknowledged academically but this was not effectively incorporated in professional tools before CCPM. The abolition of intermediate due dates which he links back to Schonberger (1981), among others, who was an early proponent of lean and had seen the damage that intermediate dues dates had on traditional batch manufacture. Trietsch acknowledges the important contribution of feeding buffers, but again questions their originality, citing his work as earlier. He suggests project buffers naturally arise under other names as in Obriens (1965) term contingency.
CCPM is inherently simple in concept; therefore, it would be surprising if the elements had not already been identified. However, even Trietsch (2005) acknowledges Goldratts important contribution in drawing together these elements in a holistic manner, as do other more critical authors (Raz et al., 2003).
Oversimplification It is clear that Goldratts (1997) original publication was focused on presenting a radically different conceptual approach that lacked detail, as in the case of the management of multi-projects highlighted by Elton and Roe (1998). Several authors (Raz et al., 2003; Elton and Roe, 1998) argue the approach brings more discipline but raise reservations over
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downplaying the traditional importance of personal project management skills. Raz et al. (2003) also suggest the industrial successes are due to the adoptions having been made in organisations who have poor project management implementations in the first place. However, no empirical evidence was offered and the growth in applications and the case research reported here do not support this assertion.
Paradigm change / over complication Lechler et al. (2005) acknowledges the clear benefits but highlights the challenge in adopting a different mindset and suggests it could explain some failures. The issues include the greater discipline of having activity times with the buffers removed, and the complexity of managing multiple buffer types. They suggest a CCPM-lite version that would not have feeder buffers (p56). It is interesting to note that in healthcare patient flow, such a variant has been developed (Umble and Umble, 2006) but this complexity argument is explored in this research in more traditional project environments.
Raz et al. (2003) also argue that the software and training cost resulting from the need for a change in the organisational culture works against this approach. For example, the need to give up task time ownership, not use task due dates and to avoid multi-tasking. Again no research evidence is offered, but these issues are explored in the case research that follows.
Pipeline scheduling Raz et al. (2003) question the stability of a bottleneck resource within a project environment, as does Trietsch (2005). Raz quotes the work of Hopp and Spearman (2000) in questioning the merits of DBR over CONWIP, arguing that CONWIP is less susceptible to bottleneck instability. Although this critique was not directed at CCPM, the instability of the bottleneck resource in project management has more recently been acknowledged by Goldratt (2007). His original guidance (1997) was to plan projects around a drum in the form of a resource. This has now been changed to a virtual drum resource that acknowledges any limiting resource is likely to move, and the real issue in projects is not resource constraints but synchronisation (2007). It is intended that this new development will be closely investigated through this research if the opportunity arises.
Buffer sizing The introduction of buffers is generally seen as a positive step in providing a means of
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managing uncertainty, with this acknowledging the need to not attempt to set intermediate task start and end dates (Deming, 1982). Several authors raise question over the sizing of buffers to comprise one third of the path duration. It needs to be acknowledged that there is no scientific base for the buffer sizing but it is clear the size of the buffer required depends on several factors, including frequency of updates, task uncertainty and project service level. A proposal to size a buffer, using a fixed as well as a variable element (Raz et al., 2003), is an interesting possibility but Goldratt advocates that even in construction, where uncertainty is relatively low, the generic sizing rule still holds as the buffer is a natural extension of the task time. Although this results in an inherently simple policy, there are clear merits in simplicity, but undoubtedly further justification is desirable. These matters will be closely monitored in the design of the case research that follows. However, we need to determine whether any
additional complications add significant value. Raz et al. (2003) also question the validity of the assumption that tasks are routinely overestimated then wasted, as well as the practicality of extracting the buffer time from the task estimates. They suggest that transferring some of the estimate to the buffer will reduce commitment or encourage further escalation of the task time estimates. Again, this claim is central to the CCPM approach and will be specifically investigated in the case research.
Concern is also raised over the use of a buffer penetration ratio for priority setting, arguing that other factors such as project value could be more important. This argument is indeed valid if it is assumed not all projects can be finished on time. Herroelen and Leus (2001) conducted computational experiments and argued the buffer sizing can be improved by clever project scheduling methods such as branch and bound. They suggest such advanced project scheduling tools can be implemented as black boxes without forcing management or workers to know the technical details of the scheduling mechanism involved. Further work is clearly warranted here but due consideration needs to be given to the uncertain nature of the real world and the benefit of simple pragmatic solutions that work with the full engagement of management rather than the use of black box logic.
Conclusion There are clearly many questions regarding the details underpinning the application of CCPM. The overriding consensus is that CCPM makes a significant conceptual and practical contribution. The process of improvement is ongoing, as illustrated in the S&T developments(Goldratt, 2007) discussed later and, as all solutions are underpinned by
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assumptions, it is important to expose those that may prove to be invalid in establishing the boundaries and targeting the improvement process. Trietsch (2005) advocates more scrutiny over the underlying assumptions stressing Goldratts claim it works only means the flawed assumptions are not fatal. This is indeed true and, therefore, what is needed is to identify the fatal flawed assumption first in embarking on a process of ongoing improvement. To do this, however, research needs to be closely allied to practice which is a particular concern in designing the case research that follows.
Goldratts Strategy and Tactic (S&T) tree implementation guide The original publication presenting CCPM (Goldratt, 1997) addressed the main elements of the overall design but many of the details had to be worked out and refined in practice, as in the case of staggering multi-projects (Goldratt, 2007). The S&T guide to CCPM implementation has clearly been created with close reference to the implementation experiences of CCPM software providers, such as Realisation. This knowledge has been provided in an innovative format that communicates the implementation process and logic in a way that links strategy and tactics with increasing levels of detail (see Figure 2).
The part of this tree that concerns the core elements of CCPM is the focus of the following research that follows which particularly centres on the Build and Sustain elements.
1 Viable Vision
Base Growth 2:1

Reliability Comp. edge
Build 3:1
Meeting promises
Capitalize 3:2
Reliability Selling
Sustain 3:4
Load 3:5 Control
3:3
Expand 3:3 Client base
3:5
Capacity elevation
4:11
Reducing Bad multitasking
4:12
Full Kit
4:13
Planning
4:14
Executing
4:15
Mitigating Client disruptions
4:16
Contracted SubProjects
5:14:1
Task completion reporting
5:14:2
Task Management
5:14:3
5:14:4
5:14:5
Virtual Drum adjustments
Project Top Management Management
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Figure 2 Extract of the CCPM S&T Tree breakdown
The implementation process embodied in these steps provides both wider and deep guidance on a sequential implementation process, briefly outlined below. Earlier published material on implementing CCPM was much less comprehensive and generally limited to 4:13 and 4:14 for which an outline is provided below. 3.1 Meet Promises 4:11 Reducing bad multitasking
Immediately reduce the number of live projects by 25% to reduce multitasking and improve flow. 4:12 Full kit
Utilising released capacity in 4:11 to ensure all projects are fully prepared before release. 4:13 Planning
Plan projects using CC networks, buffers and staggering. 4:14 Executing
Task reporting and management at task, project and senior management level 4:15 Mitigating client disruptions
Buffer consumption data is used to gain cooperation from client in avoiding disruption 4:16 Contracted sub-projects
Subcontractors are aware of the ongoing project priorities. 3:4 Load control
The staggering process is closely followed to ensure reliable delivery 3:5 Capacity elevation 4:5.1 4:5.2 Process of Ongoing Improvement
Record, analyse and improve reasons for delay Expanding Capacity
Ensure a capacity buffer is maintained
At each level of the S&T tree, the format is the same, with the assumptions linking the strategy with tactics (see Figure 3).
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4:14 Necessary assumptions
Executing
Hectic priorities result in a crisis mode of management. The common practice of "turning task estimates into commitments makes it uneasy for managers to intervene into a task execution early on. The combination of the above two phenomena delays needed management assistance. Projects are actively managed to ensure their successful, rapid completion. The only way to determine the priority of a task is by examining its impact on the completion of the project. In other words, priorities should be set ONLY according to the degree the task is consuming from its project (or feeding) buffer. Critical Chain Buffer Management is a priority system that operates according to this concept. Management assistance can usually help a top priority task. Helping top priority tasks is helping the projects. The assistance that can (and should) be provided by task manager is different in nature from the assistance that can be provided by project manager. Top managers assistance is sometime indispensable. Critical Chain Buffer Management is the ONLY system used to provide priorities. Priority reports are provided in different forms to different management functions. Mechanisms are set to enable proper usage of the priority information. Knowing when not to intervene is almost as important as knowing when to intervene.
Strategy Parallel assumptions
Tactics
Sufficiency assumption
Figure 3 Example of the format and detail underpinning each level of the S&T tree
These assumptions (necessary, parallel and sufficient) are designed to support the logical links. The value in clarifying these assumptions is particularly evident in 5:131 Building the CC network diagram (PERT).
Very large projects are managed effectively by relatively small PERTs[network diagrammes]; the PERTs used to build a north sea oil-rig ($4B) and the overhaul of the largest cargo airplane (the C5) each have less than 300 tasks. The following guidelines can help to tame the tendency to over-inflate a PERT: A PERT is not a task manual. A PERT is not a reminder list. A task that takes less than 2% of the projects lead-time must have a very good reason to appear in the PERT. A task represents a group of work. It should not be broken down to several tasks But it
just because it requires different resources for different durations of time.
should be broken for chosen key-resource-types; a task should be defined so that those type of resources are required for most of the task time.
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In most multi-project environments many projects are variations of the same generic project. Using templates (PERTs of generic projects) as the base for
constructing the PERT of actual projects, reduces drastically the required time and efforts and eliminates overly detailed tasks that should not appear in the plan. (Goldratt, 2007)
The S&T guide to CCPM implementation, provides a methodology that can act as a basis for evaluating the CCPM approach. It offers a means of providing scientific rigor regarding an assessment of the explicit assumptions and the recommended implementation process. However, any sizable implementation will require software support that also should be consistent with the implementation methodology. The choice of Concerto software is an appropriate one, not only due to the close alignment with the S&T tree guide but also its widely reported favourable track record in the field.
CCPM implementation evidence
Case and survey research into the application of CCPM are still very limited. However, one measure of the level of interest in CCPM is the availability of CCPM-capable project management software. There is a growing range of software systems claiming to be CCPM-capable ranging upward in price from $250. These include: Concerto, ProChain, Spherical Angle, Being Management, Scitor and Advanced Projects Inc. However, although this provides an indication of the level of commercial interest, it is of little value in scientific evaluation without access to the software, the methodology of the implementation process, and the system users.
Concerto supplied by Realization is a leading CCPM provider that has published customers case studies including ABB, Delta, Boeing, US Marine Core Base, Lucent Technologies, Hewlett Packard and US Air Force Warner Robins Air Logistics Centre (Concerto Case Studies, 2009). Realisation has also been closely involved in the development of Goldratts (2007) S&T implementation guide, and the software is closely aligned with it. Using the Realisation Website (Concerto case studies, 2009) data, typical benefits include: reduced lead time by 25%; delivery performance increased to 90+%; and increased throughput by 20% with the same resource. Of these few have been formally published with one prominent exception, Warner Robins Air Logistics Centre (Srinivasan et al., 2007), where they
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implemented CCPM to reduce repair turnaround time on C-5 Galaxy transport aircraft.
Srinivasan et al., (2007) record that, within 8 months of implementing CCPM using Concerto in 2005, the turnaround time was reduced from 240 to 160 days. What is more significant is that this was in addition to the benefits of lean initiatives started in 2000 that reduced the turnaround time from 360 to 240 days. The paper highlights the synergistic relationship between CCPM and lean, with Concerto being used to identify several high-leverage lean events. For example, Concerto identified floorboard replacement as a chronic problem area that consistently consumed the project buffer. A resulting lean event reduced floorboard replacement time by about 45%. (Srinivasan et al., 2007, 18)
A recent notable application of CCPM in the construction sector is through the Japanese government public works programme. Due to the direct relevance of this work to the case research reported here, the author visited Tokyo in August 2008 to collect research evidence directly.
Win-Win-Win Public Work Initiative, Japan In Japan CCPM has only recently been available. However, it has rapidly become known for its impact on government construction projects. The use of CCPM has become a prominent part of the win-win-win public works initiative that is planned to be introduced nationally in 2009. The account given here resulted from personal interviews with Mr Yuji Kishira (Director of Japan TOC advancement committee) and Mr Kiyoshi Okudaira (Director General Ministry of Land Infrastructure and Transport) at the Ministry Building in Tokyo, (August
08), together with published and unpublished documents. This account is presented here as it directly relates to the construction project management field of research in the water industry, and offers evidence of much wider supply chain benefits associated with the application of CCPM.
Tight timescales on repairing earthquake damage before the typhoon season resulted in CCPM being used by a Japanese construction company, Sunagogumi, on a river bank reinforcement project for flood protection on the Tonebetsu river (Kishira & Ohara, 2005). The approach was readily accepted by the foremen and the project, originally scheduled for
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October 17 2005, was completed by mid-August. This provided clear benefits for the company, government and community, as the early finish avoided exposure to the typhoon season. The company found that the CCPM approach also enabled them to inform the local community and local government of progress, thereby maintaining good relations and ensuring the interim payments kept up with the early completions. The approach appealed to the local government official and the project received a very high evaluation for management and ingenuity, as well as shortening the schedule by 30% with a significant profits. improvement in
The importance of communicating with the local community resulted in them setting up a home page called site information centre to provide information on objectives and progress. The benefit of clearly communicating the project status through buffer management and regular reporting was acknowledged as key to gaining what was referred to as Just-In-Time (JIT) information across the project.
With this new capability, Sunagogumi was able to win projects in tighter timescales and complete more projects with the same resources. This improved communication with the government departments resulted in a collaborative development involving five pilot
projects in the Kochi district. In parallel with this, a government initiative to improve government response to the contractors, called One Day Response, was being tested. This One Day Response initiative proved to be particularly effective in combination with the application of CCPM, resulting in an average reduction in duration of 20% compared to 28% delay on non-CCPM projects, with an average increase in profits of 7%. The government supervisor sressed that it was easier to work with contract reports that did not include saba (a Japanese word for safety in each task). The government supervisor considered the method used by Sunagogumi without saba made it easier for him to understand what was happening and, therefore, act more proactively than with the traditional methods used by other contractors. Consequently, issues were resolved much sooner.
Following further trials and a survey of all parties, this initiative has resulted in the broad adoption of what is referred to as Human Centred Project Management, and a commitment by government officials to respond within 24 hours when their delay results in project buffer consumption. The initiative was launched at a conference in May 8 2007 along with the launch of the Win-Win-Win Public Work Reform May 8 2007.
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We strongly remind ourselves of the very important responsibility of public works to secure peoples safety and national land safety. To bring out maximum benefit for society, both government officials and contractors work together on public works by providing better products with faster speed. This brings benefits to all of residence, government and contractors and support to overcome financial difficulty of Japan Government. We declare herewith we strongly advance Win-Win-Win Public Work Reform.
When I conducted my interviews in August 08, the Director General had gained agreement to expand the initiative across all Departments in Japan. A public works advancement conference was held in November 08 to promote the one day response initiative planned to commence in the next financial year.
Although the government could not promote CCPM directly, it is clear from my interviews and these conferences that CCPM is an integral part of this new initiative. However, due to limited direct observation there are still questions over the relationship between different aspects of CCPM and the Japanese Government initiative.
Conclusion The above account has presented the logic, issues and case evidence associated with CCPM theory and practice. There is considerable evidence of practical benefit which is supported by conceptual argument, but there is little evidence of a rigorous nature. More rigorous research is timely, and has been assisted by the publication of a detailed implementation process guide in the form of the S&T tree (Goldratt, 2007), and the availability of software that is designed in line with this process (as in the case of Concerto).
3.
Research
Research method The research was designed around the opportunity to invite water industry construction companies to participate in the live webinar delivered by Dr Goldratt over five 2-hour sessions from February to April 08. The basis of the webinar was the S&T guide to implementing CCPM.
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The underlying research questions are: How and why does CCPM contribute to improved project management in practice? To what extent is the CCPM S&T implementation guide effective at guiding the CCPM implementation process? How does CCPM practice relate to wider operations theory?
One construction company participated in the webinar together with representatives from their supply chain, including the water supply company. In total, 12 people attended and, on completion of the webinar, a Concerto approved CCPM consultancy was engaged to undertake a pilot implementation involving a number of projects. This involved Web access to the Concerto software and the implementation of the S&T tree guide, commencing with 4:13 (see Figure 2). During this period, from September 08 to the time of writing (February 09), three pilot projects were launched with two effectively completed. During this process, the wider supply chain was involved, including manufacturing suppliers, subcontractors and an external design team, together with active involvement by the water supply company.
The researcher was present during the webcast training, evaluation of CCPM software and throughout the pilot project. Progress review meetings involving the case company, consultant, the water company and suppliers provided regular updates, along with remote access to the Concerto software. Up to the time of writing, February 09, the S&T guide(Goldratt, 07) was being used by the consultant as the primary implementation guide, with regular reference being made to it as the project progressed. In January 09, the pilot evaluation was progressing from the planning of single projects to developing a virtual drum as a basis for staggering a series of projects.
Research findings (interim) The findings are presented using the S&T structure, commencing with the planning step. Due to the pilot implementation, steps 4.11 (reducing bad multi-tasking) and 4.12 (full kit) were omitted.
Planning (4:13) Network planning of projects was conducted centrally by the Planner and already operated within the guidance on activity task size (5:13.1). However, some tasks needed to be changed
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so that they were not created around single resources. For example, in the case of laying a foundation slab, this activity was previously divided into multiple activities to reflect the different resources required. This economic-based subdivision suits financial rather than flow requirements, as there is a need to coordinate such activities as a whole. This issue was very apparent in lean construction practice where local short term planning is encouraged with relatively large activities.
As recommended in the guide, two days were devoted by the team and consultant to building a template network that ensured the plan was comprehensive and dependency links were valid. This resulted in a template network being created which was subsequently used with appropriate modification on the three projects.
Resource contentions were identified in determining the critical chain and the activity times were halved as specified in the guidance, putting 50% of the remainder in the buffer. During the webinar training, some concern was raised over the potential to cut the activity time in half. However, with the first project having been completed with buffer to spare, this
subsequently proved not to be an issue. The project buffer was smaller anyway due to 50% of the CC lead time comprising the external supply of a purification tank with a fixed delivery date, therefore, contributing no buffer. The staggering requirements (5:13:3) were in the process of being assessed in Jan 09, in line with the multiple projects that were to be planned subsequently. At the meeting, much discussion ensued regarding the concept of a virtual buffer and the need to smooth the load rather than attempting detailed load control around a limiting resource. However, the outcome of this development has yet to be determined.
Executing (4:14) During the Webinar, the case for not turning a task estimation into a commitment was readily accepted together with the need to set priorities based on buffer consumption. The complexity of two buffer types (feeding and project) was not seen as over-complex as suggested by Lechler et al. (2005). The need to report regularly (daily) raised some discussion in the webinar, as they would normally formally report only monthly using their company-wide information system a task undertaken by the Planner. However, it was acknowledged that more regular reporting was highly desirable and the reporting requirements of CCPM were simple in principle. The need to simply report time remaining to completion was also accepted readily. In practice by
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January 09 they were reporting 2-3 times per week and all acknowledged that it took only a few minutes. The main difficulty raised was the incompatibility of the two systems and the fact that the Planner still had to construct a network plan and report monthly (including cost data) on the central information system. However, as activity progress updating had been devolved to the task managers through the Web access capability of Concerto, their work had also been reduced. The task managers appreciated the enhanced visibility offered by the system including the relative priority of activities that were their responsibility. This included activities in progress and those on their way with projected availability. This meant that the task managers were in a position to prepare in advance for tasks coming their way.
As well as the task manager having visibility, the project manager was monitoring regularly, if not daily. This ensured that timely updates by the task manger were being made and enquiries after tasks that were consuming buffer. In practice, this was acknowledged to encourage a culture of regular updating by the task managers. They also acknowledged that where recovery action was needed, which happened on several occasions, it was addressed in a much more timely fashion than previously. The system also provided a means of recording what action had been taken on such occasions, and in support of the continuous improvement process, a reasons for delay list was developed in line with the S&T guide.
Project and top manager visibility of the projects were much improved, together with the ability to ask pertinent questions over the reporting procedures of subordinates. As Elton and Roe (1998) argued, CCPM provides a means of establishing disciplined and consistent procedures and priorities. To provide visibility of numerous projects, a fever chart is used to convey the progress of projects in relation to the completion of the critical chain and the consumption of the project buffer. This was acknowledged to provide improved project control data in both clarity and timeliness.
Mitigating Client Disruption (4:15) The involvement of water company representatives, with Web access to the software has enabled the wider supply chain issues to be recognised and also enabled the next stage in the pilot trial, where agreement will be necessary to enable effective staggering of projects. The potential of enhanced cooperation is acknowledged and being explored with both the scheduling of work, based on flow (as opposed to economic financial objectives), and resolving causes of delay, as illustrated through the Japanese government initiative detailed
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earlier. However, this potential development goes beyond the guidance offered in the S&T Tree which suggests a direction for extending the S&T tree.
Contracted Sub-Projects (4:16) Involvement of suppliers and subcontractors from the beginning has enabled them to be involved in the updating of the project and associated tasks. There are clear benefits for them and, therefore, there is little difficulty in gaining their involvement, but this has only been made possible through the Web access capability of Concerto. In the case of the purification tank supplier, they regularly update progress in relation to their promised delivery dates to the projects, thus avoiding project update requests. This also gives them visibility of actual as opposed to planned requirements for the tank and, therefore, the potential for them to accommodate changing priorities. This wider participation also goes beyond the modest expectations and guidance of the S&T tree.
Continuous improvement (4.51) The need to continually improve the process by analysing causes of delay is readily accepted by the senior management and data is now being collected. No formal analysis had taken place at the time of writing. This capability is relatively new to the Concerto software, bringing it inline with Goldratts S&T tree, and we have yet to determine how effective it is in this study.
Conclusion This relatively brief account illustrates the general benefit of the S&T guidance and the CCPM approach to this company and supply chain. A more detailed review is in progress and will be extended to encompass multiple project staggering and, hopefully, full implementation. The case has, however, enabled some of the previously claimed weaknesses to be tested.
4.
Discussion
Having taken account of the critical literature, the industrial successes, and this interim study, there is little doubt that there is clear merit in the approach that is both practical and theoretically supported. The S&T guidance to implementation adds further rigour and a basis for testing and developing best practice. However, there remain questions over elements of the approach and the underlying assumptions. These include buffer sizing, the practice of
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setting and adjusting virtual drums and focusing continuous improvement. Academics will naturally focus on these bite sized elements. There is also a need to view this work more broadly in the context of other developments in operations management theory.
Flow versus cost focus CCPM, as with lean thinking before it, emphasises enabling flow and continuous improvement rather than the sub-optimisation associated with economic models. Theory in manufacturing made a break from cost models in the West with the realisation that different levels of variation and uncertainty in the market and delivery system result in the strategic choices that needed to be aligned with the market (Skinner, 1969, 1974; Hayes and Wheelwright, 1979; Hill, 1985). The need to make such choices was closely associated with the concept of trade-offs which was subsequently challenged by the TPS focus on flow and reducing wasteful variation and uncertainty. The cumulative capability model (Ferdows and De Meyer, 1990) emerged and subsequently led to theoretical models that encompass flow, trade-offs and continuous improvement (Schmenner and Swink, 1998; Fisher, 1997; Stratton, 2008). However, it is clear that academic theory lags practice in the field by decades in some cases.
Project management is a distinct field within operations management but the same underlying principles of flow and continuous improvement would appear to apply. All that differs is the means of applying these principles. The same lessons are now being applied to project management through lean construction and CCPM but there is a need for academia to more constructively contribute to the process. For example, by working more actively with industry to lead such theoretical developments and practically test and support the development of effective practice.
5.
Conclusion
This paper set out to review CCPM in the light of existing literature, industrial practice and case research. This case research utilised Goldratts S&T guidance which embodies 10 years of development and has attempted to test the procedure and logic embedded within this guide. The evidence, so far, indicates the guide is both comprehensive and supportive of the implementation process and clearly has improved on earlier guidance in terms of depth, breadth and several additional areas of improvement. The research findings identified that
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many of the areas of weakness cited in the literature were not warranted or not significant to this case study. Areas for further research have been identified together with the potential to more tightly define and extend the guidance.
The overall consensus of the pilot evaluation is very positive. It provides a significant improvement on prior practice with the main obstacle being the need to duplicate planning on the two systems. The paradigm shift in thinking associated with this implementation of CCPM has been readily accommodated, and the opportunities are now being considered in relation to the entire supply chain, with the Japanese case clearly highlighting the possibility of wider benefits.
From a theoretical perspective, CCPM would appear to be aligned with existing theory in operations management as it follows the principles of flow and continuous improvement that can be traced back to Ford (1926) and Shewhart (1939). There is, however, a need to bring together the parallel but often separate lean and TOC centred research in developing the application and the underlying theory of project management.
REFERENCES Ballard, G., Tommelein, L., Koskela, L. and Howell, G., 2002. Lean Construction Tools and Techniques, in Best, R., and De Valence, G (eds): Design and Construction: Building in Value. Butterworth-Heinemann, Oxford, 227-255. Concerto case studies (http://www.realization.com/) (accessed 24th Feb 09)
Deming, W.E., 1982. Quality, Productivity and Competitive Position. Cambridge, MA: MIT Press.
Elton, J., Roe, J., 1998. Bringing Discipline to Project Management. Harvard Business Review, March-April, 53-159.
Ferdows, K. and De Meyer, A., 1990. Lasting improvements in manufacturing performance: in search of a New Theory. Journal of Operations Management, 9 (2), pp168-184. Fisher, M.L., 1997. What is the right supply chain for your product? Harvard Business Review, March-April, 105-116.
Fondahl, J., 1980. Network Techniques for Project Planning, Scheduling and Control. In: Handbook of Construction Management and Organisation. Frein, J., (ed.) Van Nostrand Reinhold, NY, 442-471.
Ford, H., 1926. Henry Ford Today and Tomorrow. Portland, OR: Productivity.
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Goldratt, E.M., 1997. Critical Chain. The North River Press, MA. Goldratt, E.M., 2007. Viewer Notebook: The Goldratt Webcast Program on Project Management the strategy and tactics tree for projects 4.7.1. Goldratt Group Publication. Goldratt, E.M., 2008. The Choice. The North River Press, MA. Gupta, S., 2008. Earned Value Management Clogs Profits. Industrial Management Magazine, May/June, 12-16.
Herroelen, W., and Leus, R. 2001. On the merits and pitfalls of critical chain scheduling. Journal of Operations Management, 19,559-577. Hopp W.J., and Spearman, M.L., 2000. Factory Physics. 2nd Ed., Singapore: McGraw Hill.
Kishira, Y., and Ohara, S., 2005. Implementation of P2M for Public Construction and Analysis of the Results. PM FORUM, July/August. Kostella, L and Ballard, G., 2006. Should project management be based on theories or economics or production? Building Research and Information , 34(2), 154-163.
Leach, L.P., 1999. Critical Chain Project Management Improves Project Performance. Project Management Journal, June, 39-51. Lechler, T.G., Ronen, B., Stohr, E.A., 2005. Critical Chain: A new project management paradigm or old wine in new bottles? Engineering Management Journal, 17 (4), 45-58. Newbold, R.C., 1998. Project Management in the Fast Lane applying the theory of constraints. St Lucie Press. OBrien, I., 1965. CPM in construction management: scheduling by the critical path method. McGraw-Hill. (in Trietsch, 2005)
Ohno, T., 1988. The Toyota Production System; Beyond Large-Scale Production.Portland, OR: Productivity Press.
Raz, T., Barnes, R., Dvir, D. 2003. A Critical Look at Critical Chain Project Management. Project Management Journal. Dec, 24-32.
Schmenner, R.W., and Swink, M.L., 1998. On theory in operations management. Journal of Operations Management, 17, 97-113. Schonberger, R.J., 1981. Why projects are always late: A rationale based on manual simulation of a PERT/CPM network. Interfaces, 11(5), 66-70. Schregenheim, E., and Detmer, W., 2001. Manufacturing at warp speed. CRC Press. Shewhart, W.A., 1939. Statistical method from the viewpoint of quality control. Washington, DC: Graduate School of the Department of Agriculture.
Srinivasan, M.M., Best, W.D., and Chandrasekaran, S., 2007. Warner Robins Air Logistics Centre Streamlines Aircraft Repair and Overhaul. Interfaces, 37 (1), 7-21.
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Steyn, H., 2000. An Investigation into the Fundamentals of Critical Chain Project Scheduling. International Journal of Project Management, 19, 363-369.
Stratton, R., 2008. Theory Building: Relating Variation, Uncertainty, Buffering Mechanisms and Trade-offs. Proceedings of the 3rd World Conference on Production and Operations Management (Manufacturing Fundamentals: Necessity and Sufficiency), Tokyo, Japan (August).
Trietsch, D., 2005. Why a Critical Path by Any Other Name Would Smell Less Sweet? Project Management Journal, 36(1), 27-36. Umble, M., and Umble, E. 2000. Managing Your Projects For Success: An Application of the Theory of Constraints. Production and Inventory Management Journal, 41(2), 27-32. Umble, M.M. and Umble, E.J., 2006. Utilising buffer management to improve performance in a healthcare environment. European Journal of Operational Research 174, 1060-1075. Wiest, J.D.1964. Some properties of schedules for large projects with limited resources. Operations Research, 12, 395-418. (in Tritsch, 2005) Womack, J.P., Jones, D.T, and Roos, D., 1990. The Machine that Changed the World, New York: Macmillan.
AUTHOR is based in the UK and is Principal Lecturer in Operations and Supply Chain Management at Nottingham Business School, Nottingham Trent University where he is actively involved teaching, research and consultancy. He is Director of the Centre for Performance Management and Lean Leadership and Programme Manager of the MSc Theory of Constraints (Health Care Management). Previously Roy worked for Rolls Royce Aero Engines in an internal consultancy role and has since been actively involved in a wide range of industry-based and government funded knowledge transfer research projects. He has published widely in both professional and academic journals and has co-authored two educational books. Roy is a chartered Engineeer (MIMech E) and has been awarded a BSc in Mechanical Engineering (Nottingham), an MSc in Manufacturing System Engineering (Warwick), and a PhD in Supply Chain Management (Nottingham Trent).
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EXPERIENCIES CONSULTING COMPANIES IN COLOMBIA APPLYING THE CCPM GOLDRATT WEBCAST SERIES
Alejandro Fernandez Rivera Universidad de los Andes and Goldratt Schools Principal Latinamerica
ABSTRACT Based on the experience of consulting with 5 companies and delivering one open workshop applying the CCPM Goldratt Webcast Series, GWS, the objective is to compare the different results achieved. In each case, the criteria are delivering projects on the initial due date, within budget, and to full specifications. I also wonder why it is so difficult for consultants to work
together with this program, the CCPM GWS, and propose a win win win solution to keep using this powerful material in the implementations, using it as the base for training executive teams. The experiences cover companies in construction,, telecommunications, candy production, and education, that are located in different cities in Colombia.
Keywords: Harmony, Gap between plan and execution, Management Support, KISS, ODSC
1.
Theory of Constraints and the Multiproject environment
One of the more powerful developments of Theory of Constraints Project Management. Dr. Eli Goldratts book
- TOC - is the solution for
Critical Chain opened a new road for TOC.
It was designed to prove and present a simple but powerful way to manage a multi-project environment. When you analyze top managements daily work, there are plenty of tasks / decisions to be made, so, for them, it is familiar to talk about a multitask environment. This is partially true. It can be more precise if we understand that each decision/task of top managements daily work is really a project for the one who needs to comply with the decision/ task. In reality, we propose that the managements job is a multi-project one. The CCPM solution is the basic know-how that a top management must master. We offer this specific training as a way to ensure the enhancement of top management work.
There are several consultant companies related to CCPM that are working in this direction
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with impressive results, and there is a need to share all this knowledge and experience.
For
example, Realization (www.realization.com), one of the leaders in the implementation of TOC CCPM, promotes their work under the Execution Management phrase. We all know that there are plenty of undesirable effects when we examine the gap between planning and execution in many companies around the world. day to day managerial work. Execution Management is a hot issue in the
We can think of this TOC CCPM Multi-project approach as a
powerful road for improving the performance of management execution. This is especially true for the top management, of any company. This condition broadens the scope for
applying TOC in companies of different economic sectors, sizes, and structures. All of them are defined by the projects they have/ have not successfully executed. The implications of improving the multi-project management approach can come as far as being the engine for generating progress and harmony throughout the organization. Mr. Yuji Kishira clearly has
proved with his work in Japan, and it has been documented in several of his books, especially in the WA, Management Transformation by Harmony book
(www.toc-goldratt.com/store/product.php?productid=111139).
In the same direction, with
their particular add-ons, the work of Mr. Anthony Rizzo through his company, Product Development Institute, www.pdinstitute.com, has presented the relevance of a multi-project
approach for understanding how to improve dramatically the performance of a company. Robert Newbold, from Prochain Solutions , www.prochain.com, has also promoted the need to understand the relevance of this approach for success. The title of his last book stated, The Billion Dollar Solution, if the top management applies the CCPM principles to their daily work.
There is a trend among writers, companies and consultants to find
the CCPM solution, the
culture and procedures, are the foundation of excellent management performance. So, lets share our experience in teaching and promoting the learning of executives about the CCPM solution.
2.
The Strategy and Tactic Tree
In a meeting in Holland in year 2000 Dr. Eli Goldratt presented 3 pages of what he considered important wants to the Goldratt Group, the organization he owns and leads. Those 3 pages
were designed in a particular format, with a Strategy and a Tactic, and 3 new components, named as Assumptions: Necessary Assumptions, Parallel Assumptions and Sufficient
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Assumptions. This was the first time many of us belonging to Goldratt Group, had seen this new development. Later on, Dr. Eli Goldratt mentioned this tool had been in his mind for a
long time and in some documents. However, only until now had he decided to use it in order to explain what he wanted to do, and to use it to propose that we follow him. We all
understood that we need to learn how to build, audit and communicate this tool. Some initial articles about this tool were distributed, for example, the one from Eli Goldratt, Rami Goldratt, Eli Abramov in 2003, titled Strategy and Tactic. A learning and teaching process about this
S&T tree started within the Goldratt Group community. It was said that initially there were no more than 3 people in the world that knew how to build, audit and communicate. Now we can count in more than 500 people who are using this tool, around the world as a regular way to communicate the implementation plans of a TOC solution. Nevertheless, as yet there is no formal Goldratt Group Program focused on how to tree. build, audit and communicate this S&T
In less than ten years, this tool has become the basis of all implementations.
Goldratt Consulting
In February 2008, Goldratt Marketing launched the Goldratt Webcast
Series. It was promoted as:
These sessions contain significant information about the proven yet innovative TOC solutions. The first webcast series will be on Critical Chain Project Management (CCPM) with a focus on implementing this methodology throughout an organization in such a way that astounding bottom-line results can be achieved1.
The conceptual explanation about how this tool is aligned with what we usually understand about the basic 3 questions of TOC: What to Change: To what to Change to: and How to induce the change? Dr. Eli Goldratt addressed these in the following terms: The Goldratt Webcast Series by Eli Goldratt
...probably twenty years have passed since I claimed that the three most important questions in improving an organization are:
1. What to change?
The Goldratt Webcast Series, at www.toc-goldratt.com, February 2008. See original article in the Appendix.
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2. To what to change to? And 3. How to cause the change?
I'm sure that all of us have taught and explained these questions more times that we care to remember. In the last twenty years, I have written nine books, designed and given even more lectures - some refined to the level of commercial videos or computer-based courses. All this mountain of material was my attempt(s) to answer these three questions. Now ask yourself: out of all that material, how much was devoted to answer the third question? Almost nothing!!! now The change that we now witness is actually based on three different elements that were all trees: introduced by the newly developed S&T trees The first two we discussed before:
1. The ability to firmly connect any initiative to, not just the higher objective but all the way to the top objective. 2. The existence of plus-type improvement and its buy-in process became evident.
Level 4 and 5 of the trees provides an additional important element:

The first time that a documented answer for the third question is provided...2
So in 2008, recall that The Goal was written in 1980, Dr. Eli Goldratt is saying that he needs to rewrite the second part of all his books, as the third question was not fully addressed. This mission was the one assigned to the S&T tree; what a challenge! Now we are working on understanding the meaning of the third question: How to induce the change? Lets explore this question.
First, there is a difference between causing and inducing the change. Whom do we want to lead the implementation in a company: The consultant; the manager; the CEO; the owner? Behind the Socratic approach there is always a question that leads the one who wants to improve towards the right road. In the last 30 years, TOC has been applied in thousands of populated with different experiences. So, in the
companies, and the road is heavily
common knowledge, there is a good enough idea about how this road should look, if we want to obtain fast, safe and durable results. This means we need to formulate the right questions to
2
Ibid.
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the right people in the right sequence, so they find by themselves this safe and profitable road.
In my work as Goldratt Schools Latinamerica Principal, one of my concerns is about how to help consultants, managers, CEO, owners ask the right, timely, valuable questions to their peers, colleagues and subordinates. Doing this they can induce and deduce the right, timely and profitable actions required to build, communicate and evaluate a POOGI Process of Ongoing Improvement. This concern is, at the end, related to what Dr. Goldratt has
mentioned recently as the constraint of organization - the management scope of attention. I consider that it is expressed as the difficulty that management has in explaining what to change, to what to change, and how to induce the change. I keep asking my students at University why, if they are being educated, trained, to be managers, they are not taught and they do not check to see if they are learning to explain.
Lisa Scheinkopf, Goldratt Consulting USA Director, presented in the I TOCICO Regional Conference held in Bogota, August 2008, the list of questions that she considers that a manager must solve, in order to ensure that his company is aligned and synchronized with the general strategy: What am I / are we responsible for accomplishing? Why is what Im responsible for really needed by the organization to improve vis--vis its goal? What must I/we do to accomplish it? Why will this action/activity achieve it? How does it link with what others are responsible for accomplishing?3
Dr. Lisa claimed that the S&T tree helps to answer these questions.
At her presentation in
Bogota, Lisa asked each one to please stand up, and that if they know the answer to each question, to remain standing, otherwise to sit down. When she arrived at the last question there were only 4 standing up, out of 150. They were really proud, and at the same time surprised, CEOs/ managers that believed they had the answers. I understand she has done
this exercise repeatedly in several scenarios with the same astonishing results.
TOCICO I Regional Conference, Bogota, August 2008, Powerpoint presentation, slide 10.
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What are the fundamental elements of this S&T tree tool? Based on the presentation that Eli Goldratt made in the Goldratt Webcast Series of CCPM, these are the basic elements:
- The Strategy answers the question What for? - The Tactic answers the question How?
Dr. Goldratt reported that he had read all the books about Strategy and Tactics and only one thing had come out clearly: that the strategy comes up and the tactic goes down But he had
not found any explanation about why this specific tactic is required to achieve that specific strategy. This hole is covered by what he baptized Parallel Assumptions, these are the
facts, the experience, the know-how that explains why this connection exists.
There is also the need to understand why the Strategy exists at all. The question we need to address is what does exist in our reality that we need to recognize and do something about? This answer is covered by what Dr. Goldratt baptized Necessary Assumption. My personal view is that here we need to identify the erroneous mode of operation in the area we are working to improve, or the description of the conflict that the company is experiencing, showing that it is between the wall and the spade.
The Strategy and Tactic is a multi-level relationship. As you move down the organizational chart, and determine a tactic for one manager, that person now needs to understand how this tactic becomes operational throughout several actions, having in mind that each of them requires its own strategy and tactic. So how to know how many actions are necessary and if all of them are sufficient? These two words are in the essence of a strategy, and are all embedded in Dr. Goldratts book, Necessary but not Sufficient.
The general structure of a S&T tree is the following:

With thanks to Yuji Kishira
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Making An Organizations Vision Viable
S T
How?
What for? How?
What for
S T
S&T Tree
S T
What for? How?
S S S S S T T T T T
Suppliers S SS Procurement Production R&D
SSSSS SSS SS TTT TTTTT TTT TT Stability SS TT
S S S S T T T T
SS TT S S S SSS SS TT TTTT TT Growth
Share holders Retails Supply Chain
Harmony
Sales and Marketing
Figure 1 The Strategy & Tactic Tree Holistic Approach4
In order to know what needs to be taken into account when you unfold the tactic of an upper level, Dr. Goldratt generated the Sufficiency Assumption., Something you cannot forget
to be successful when achieving the Tactic, but that surely you will forget. I call this assumption Moms advice; we all remember that she once told us, right?
The following slide indicates how the 5 questions of Dr. Lisa and the S&T tree structure are related.
I Regional TOCICO Conference, Dr Lisa Scheinkopf presentation.
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Strategy & Tactics Tree Elements

What am I/are we responsible for accomplishing? Why is what Im responsible for really needed by the organization to improve vis--vis its goal? What must I/we do to accomplish it? Why will this action/activity achieve it? How does it link with what others are responsible for accomplishing?
Necessary Assumption Why?
Strategy
What for? Parallel Assumption Why?
Tactic
How?
Figure 2
- The S&T Tree Elements5
These questions have supported the construction of S&T trees for different environments, such as Make to Order MTO -, Make to Availability MTA , Consumer Goods, and Project Management CCPM. The CCPM S&T tree is the base of the Goldratt Webcast Series, so now let us present the experiences acquired using this learning and teaching tool with some clients in Colombia.
3.
The companies where we built our experience
The following clients agreed to apply CCPM Critical Chain Project Management - to their current projects, based on the GWS Goldratt Webcast Series : Colombina, Prodesa, Azulk, in Colombia. There were also two open programs of the GWS, also in Colombia, where 14 students from 7 companies did the work of evaluating this know-how for managing their projects.
3.1 Brief description of each company Colombina: is the largest candy producer in Colombia, see www.colombina.com. We worked with a group of 40 people. from the Research and Product Development areas, as well as the Marketing and Sales Department. During the sessions the CEO was present, and we did a
5
Ibid.
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feedback session 4 months later. This first time was fully devoted to applying TOC, although the managers havd some basic knowledge, i.e., read The Goal and had done some basic Operations Drum Buffer Rope implementations. The TOC contact was the New Product Development Director. They expressed that the CCPM application improved their ability to design, plan and execute more than 50 new products per year. They work with the PS8 software.
Prodesa,
is a construction company based in Bogota. We worked with a group of 35 people
representing the managers of all areas of research, planning, construction, sales & marketing. One of the owners was the main contact with the TOC POOGI implementation. This was their first experience in TOC. They started in 2006, and now they report that CCPM is the main management culture and procedure for their projects. Currently they are ensuring that all the projects follow the six steps of Meeting Project Promises. The last 5 projects were delivered on time, under budget and according to specifications. They started to work with PS8 and now they are on CCPM+.
Azulk, is a soap company that has been working with TOC for the last 15 years. Last May, they received the Robert E. Fox Excellence Award at the 2010 CPI SYMPOSIUM, May 6-7,
2010, at Weber State University. The CCPM GWS was offered to their executive team, 20 people, focused on the new product development. The contact is the CEO. They are using PS8 for planning and execution control of the new products, and for the installation of new environmental water cleaning processes. This last year, 2009, they launched more than 15 new products. Ninety percent of them reached the sales goals. In the near future, led by the CCPM S&T tree approach, they will start the planning and execution of a expansion project that will double their capacity.
Open Programs: We offered 2 open programs, one with 12 attendants, 5 companies, and the second with 4 attendants, 2 companies. We have news of significant improvements from one of them, in the telecommunication sector, Global Crossing, and the second one, a consulting firm, has shared some impressive results applying CCPM for servicing an urban metro bus service.
3.2 Experiences in the road of the CCPM GWS The road of the CCPM GWS is basically moving through the steps of the S&T tree entity
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3.1.1 Meeting Project
Promises, as it is shown in the following graph extracted from the
Harmony software developed by Goldratt Research Labs. Dr. Goldratt presents each one of the levels with plenty of examples and questions that gear the attendants toward the application of the S&T tree. During the process of listening to the webcast, we transcribed all the wording and we offered the Word file to our clients as backup of the learning of each session. We offered one webcast session every 2 weeks with an intermediate follow up session. Each session was of 4-5 hours, starting with collecting the homework, results and reservations, then the video, usually stopping at the same time Dr. Goldratt said it was a break. At the end of each session, we asked what we learned that we wanted to share, and reminded them of the S&T entity we need to apply for next session. The GWS started with an insight about strategy and tactics, and then moved to the project world, directly on the entity of Meeting Project Promises. These are the first 3 levels of the top of the tree.
Figure 3 The Project Management S&T Tree First 3 levels
For each one of the entities that are necessary and sufficient to accomplish entity 3.1.1 Meeting Project Promises, we want to share our experience in terms of the Yes.. BUT.. that have been aroused during the presentation, discussion and evaluation of the validity and reliability of the implementation guideline for each one of the attendants / companies that received the training. The following figure presents each one of the entities of Level 4 for this
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3.1.1 entity:
Figure 4: Project S&T tree, entities level 4 of 3.1.1
4.11.1 Reduce Bad Multitasking The first decision to start the improvement is related to a measurement. The strategy of 4.11.1 states: Flow is the number one consideration (the target is not how many projects the Company succeeds to start working on, rather it is how many projects are completed). This target changes and generates a new measurement. We need to ask people what do they like the most: to start a project or to finish one? All will agree that it is nice to start, there comes all the brainstorming, all the good ideas, all the dreams about the future But there is another quite different situation when someone asks us to close a project Sometimes you almost
require to call CSI (the famous TV series Crime Scene Investigation) for help!!! So we asked them: What will reality be if we have the target of how many projects are completed? What will be the behavior and the organizational environment?
Usually managers understand that they should not do bad multitasking, but they consider that all the tasks they do are done in a proper way. The word firefighting tries to describe this problematic situation but, even then, some managers feel that their work is to keep generating fires, and firefighting, that this is part of the managerial job. They assume that it is a practical way of teaching their peers and subordinates. So it is necessary to dive more into what needs
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to be done in order to achieve this 4.11.1 entity. Then we move to level 5, as presented in the following Figure.
The first step is related to Freezing. The Yes BUT comes from the understanding of the Tactic: The top manager in-charge of all projects, after consulting with his subordinates, determines the prioritization of projects and instructs to freeze (cease activities on) enough* of the lowest priority projects6. The top managers always consider that they have just
enough projects now, and that 50 new products, in one case, or 22 new products, or 7 construction projects with 12 in planning process and 10 in exploration phase, are good enough to start with. But when you asked them to start with the list of active projects, there are a considerable number of ideas, complex tasks, old projects, etc., that are really needed to be considered as projects if there is any chance of finishing them successfully.
So we asked
the attendants to generate a list of all the black internal orders they have with
the rest of the organization. They were then asked to consider if, in order to deliver what is expected, they are required to think about them as projects. The list easily surpasses the 200 projects in almost all cases. Here we validate that many of the ideas or tasks that top management generate to their peers & subordinates really require a project approach for their proper implementation.
The Project Co. S&T tree L5 - july 2008 V2, Harmony software, Goldratt Research Labs, level 5.111.1
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Figure 5 The Project S&T tree Level 5 of 4.11.1
Now the discussion is about what should be the criteria for prioritization. We followed the suggestion from Tony Rizzo, CEO of Product Development Institute, who said that every project must have at the end the cashier machine, as the Goal of the company is to generate more money now and in the future. We generated a list of the amount of money expected to be generated or protected in cases of projects related with licenses, environmental regulations multiplied by the estimation of the number of days left until its completion. The analysis of this prioritization generates consensus about what is the role of projects in preserving and generating a better future for the company.
Once this task is done, accomplishing the next objective of Accelerate Project Completion is more feasible. It is expected that the resources have fewer tasks to work on, so the speed of implementation starts to increase significantly. The temptation to keep working on the frozen projects is quite high, so the proper pressure from top management making themselves do the right things is mandatory.
The task of the Defrost Mechanism, described in the Tactic as: The company chooses
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integration (or part of it) as the VIRTUAL DRUM7, reinforces the improvement process. They start to find the value of focusing on the integration areas of the project. The majority of the problems come from here, usually generated by the lack of a proper Full Kit, and by the pressure to start projects at any means, and jump between each one.
This learning helps to understand the criteria for Releasing New Projects, then many of the clients start building some checking lists that verify if the project is really ready for work to begin. Do we have everything required to start? !I will not start until all of these requirements are in place! These phrases start to be a regular communication in the organization. The checking list is a natural step to formalize entity 4.11.2, Full Kitting.
4.11.2 Full Kitting The Necessary assumption is validated with each ones experience showing how frequently we assume that on the way, things can be fixed. It states: The current pressure often causes projects to be in execution without the needed preparations being completed (detailed specifications, authorizations, etc.).8 As you ask for examples there are a lot. The effects on the elongation of task duration are clear, and are assumed to be part of reality. Now we need to put in place the Strategy: A project is rarely launched before its preparations are complete9.
The clients start to understand that almost any project has tasks related to preparations. In the construction company, the preparation task for the installation of bricks in a building of 4 apartments per floor, reduced the lead time of this task from 7 days to 2 days. As this task belongs to the Critical Chain, the global impact was significant. In the blueprints control with the Planning area, the full kit has generated quite a commitment of Planning with the Construction stage.
In the communication and in the construction companyies, the double checking of the client requirements generate much faster lead times in all the project tasks. Lets double check if these are all the things you need and you have them ready to start your task becomes part of the common language.
7 8 9
Ibid, level 5.111.3 Ibid, level 4.11.2 Ibid, level 4.11.2
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As companies started to really freeze projects and check the full kit, the speed increased easily by more than 30%. Talking with the Construction Manager he said: The last 3 towers of the 7 tower project were finalized on time, as has never happened before. Now we can talk with them about the need to have good enough project networks. This was the place for many pleasant opportunities for improvement.
4.11.3 Critical Chain Planning Buffering When you ask the client for the project network, they state that they have a detailed schedule of tasks, a budget, an initial proposed due date. But when you ask how they use the project network to evaluate the project progress, there is a huge gap between the Plan and the Execution. The detailed Plan doe3s not help to properly guide execution about where the manager needs to focus his attention. Lets talk first about the Plan features and then we should understand why it does not always help Execution.
Lets share the experience about the Necessary Assumption of entity 4.11.3: Contrary to the common belief, safety embedded at the task level prolongs the project without providing sufficient safety to the project completion. Contrary to the common belief, having detailed visibility (having too detailed a PERT network) almost guarantees that control will be lost10. We asked those attending about the task estimation duration, what question do you ask: When will you finish the task? Or How long it takes to finish it?, and suggest exploring the thinking process in each case. In the first case, you move to dates, looking which is the latest possible acceptable date . So there is a hidden safety factor that we do not want to share, or even discuss. We need to generate a learning environment that allows this open discussion; this is why it must be led by top management. As to the detailed visibility, we have included so many data and graphs that we think is impossible to have a common clear understanding of the current status of any project. Reality validates this permanently. So the Strategy suggested, Flow is the number one consideration (it is not important to finish each task on time, it is essential to finish each project on time)11, generates in many cases a sense of giving up. How is it we do not consider it important to finish each task on time? What then we will do? We then ask: in the current situation, after you get the consensus about the task duration estimation, when do you go back to check? Usually, you go just after the end of the task due
10 11
Ibid, level 4.11.3 Ibid, level 4.11.3
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date. What would happen if you go to check on the day after you get the answer of the task duration estimation? They will say are you crazy? I still have plenty of time. Then is when
we used to say that there is not anything more suspicious then someone trying to help someone within the organization.
Lets then go the Tactic: For all projects proper PERT networks are built (using templates where appropriate). The time estimates are cut in half and projects and feeding buffers are The projects are properly staggered. Proper actions are taken
inserted according to CCPM.
to ensure that resources are aware that their estimates are regarded as just estimates - they will no longer be judged according to meeting their time estimates.12 The first thing we have found is that there are very few that have real PERT networks.
The tasks are verbalized in a way that does not make clear which is the result, and which is the process to realize the task. Many tasks are verbalized just like a title of a book; nobody really knows what is inside. We need to work on the Network Design, where the questions of ODSC suggested by Yuji Kishira are pure gold. For each task a check is needed. This is one preparation with which many project networks do not comply. Check the Objective - For what is the taskrequired?; the Deliverable What we need to produce to achieve the Objective?; the Success Criteria What is the next link going to check to confirm that the objective has been achieved?. This will lead to a good enough project network. If you work these questions as a team, teamwork will easily flourish.
Now the move to cutting the task in half requires being pretty clear in telling that we will move the security to a safe place, guarded properly by top management, in order to protect all the tasks from Murphy. This communication is critical so that people will generate the teamwork spirit that is embedded in all the CCPM implementation. When you say that people will not be judged according to meeting their time estimates, you need to explain carefully the real timely help that managers are going to offer. First, at the beginning of the task, checking whether the full kit is ready, and then asking every day with no hesitation how many days are left? how can I help you? This is a new management style. This draws from where Yuji Kishira talks about Harmony and so many clients with big smiles on their faces. Finally Planning is helping Execution! Lets see now how Execution will flow quite differently from
12
Ibid, level 4.11.3
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current reality.
4.11.4 Managing Execution Necessary Assumptions talks about the reality we need to improve, the day to day conflict we have in this area: Hectic priorities result in a crisis mode of management. The common practice of turning task estimates into commitments makes it uneasy for managers to intervene in a task execution early on. The combination of the above two phenomena delays needed management assistance.13. As almost every task is faced with Murphy, currently by bad multitasking and the lack of the full kit norm, every manager make a decision that is in conflict with what another manager thinks is the real priority. The subordinate watches and
suffers from this ping pong. The cause and effect logic from turning task estimates into commitments proves that any number for task duration is a guess in the darkest night. You will write down what I answer as task estimation, using it to build budgets and to define when to come and evaluate Eli Goldratt used to say that is like providing the cat the mission to keep an eye on the milk. So, from here we say that providing help is a suspicious activity in many companies.
The solution to this apparent complex and eternal situation is simple but powerful, expressed in the Tactic: Critical Chain Buffer Management is the ONLY system used to provide priorities. Priority reports are provided in different forms to different management functions. Mechanisms are set to enable proper usage of the priority information14. Here is where the client tries to make the solution more sophisticated, adding more measurements, asking for more details, while we need to keep it so simp - kiss! The word ONLY is harmful for management; it leads to a lot of yes BUT. We need almost to beg them: please lets try to keep it so simple, apply it and then, when you get astonishing results, we will talk again.
We have explored different software options. We have clients that are currently using Prochain , PS8, CCPM+, AgileCC for AdeptTracker 1, and are exploring Mpulse
& CCPulse, and all keep reading the Realization Newsletter. We are still looking for the proper client for Realization , which we consider is the Rolls Royce of CCPM implementations.
13 14
Ibid, Level 4.11.4 Ibid, Level 4.11.4
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Having these objectives in place, we are now working on ensuring clients know how to manage the next ones: Mitigating Client's Disruptions, and Managing Sub-Contractors or Contracted Sub-Projects. In all the implementations, we have found that they still fear the reaction of the client when they use the CC to explain why this change is possible or not, and also to help the subcontractors. There is just one experience in the construction company, where the Construction Site Manager has regular meetings with the subcontractors explaining to them how the company will provide them with all the elements of the Full Kit. The results have been very positive and the subcontractors perceive there is real, concrete and useful
support. We are past the stage of building the PERT with them and modifying it to become a CC project network.
4.
Conclusions Following the guidelines of the Project S&T, together with Eli Goldratt and the timely and proper support of a local Facilitator, significantly increases the possibility to achieve fast, solid and remarkable results. There is a need to work previously with the client in the Project Network Design, especially applying the ODSC suggested by Yuji Kishira. The consultant must learn to follow the Goldratt Webcast Series GWS pace and content, and to enjoy the fact that the other Facilitator he can offer for companies is Dr. Eli Goldratt himself. He needs to deeply understand the ins and outs of the material, especially to be able to steer clients questions towards the place where this issue is covered during the GWS Goldratt address, complementing it with his experience. Offering the GWS CCPM program in a schedule of one session in less than 2 weeks, with an intermediate follow up session can generate sustainable and remarkable results. The consultant must know where it is recommended to use the supporting material about CCPM i.e. the internet search of examples, the Insights, the lecture of Critical Chain and similar books. The consultant must have a check list of the features of each of the CCPM software packages available in the market place. The cient must have information about these different approaches, so he can feel comfortable that his is the right decision.
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APPENDIX Overview of The Goldratt Webcast Series Starting February 2008 Eli Goldratt will deliver a series of special webcasts. These sessions contain significant information about the proven yet innovative TOC solutions. The first webcast series will be on Critical Chain Project Management (CCPM) with a focus on implementing this methodology throughout an organization in such a way that astounding bottom-line results can be achieved.
Overview: For more than 20 years, Dr. Eli Goldratt has developed a series of strategies and tactics to applying his Theory of Constraints (TOC) to different settings of the human and business context. The experience gathered in between has become a set of pragmatic methods based on TOC to achieve dramatic results within a very short timeframe - frequently defying common sense and almost always common business practice. The webcast will be made available to the public through area specific series of programs, each of which is referred to as WEBCAST SERIES, the first of these being CRITICAL CHAIN PROJECT MANAGEMENT (CCPM), which will be held in February 2008.
Exceptional Value! This broadcast will be US$ 2500 for the series for a single computer login password. The price includes the LIVE broadcast and ability to view each segment on the Internet until the end of the sessions.
Series: Benefits of the Goldratt Webcast Series - First-hand, previously unreleased knowledge - Specific implementation steps form immediate applicability - Enrollment of one member of your organization into the 3-day
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Program Facilitator Program - Complimentary membership to the TOC Club Reseller Opportunities Available! - Offer this Program to your customers and suppliers - Host public sites in local chapters - Organize this Webcast worldwide within your Organization
The Goldratt Webcast Series by Eli Goldratt
...probably twenty years have past since I claimed that the three most important questions in improving an organization are:
4. What to change? 5. To what to change to? And 6. How to cause the change?
I'm sure that all of us have taught and explained these questions more times that we care to remember. In the last twenty years, I have written nine books, designed and given even more lectures - some refined to the level of commercial videos or computer-based courses. All this mountain of material was my attempt(s) to answer these three questions. Now ask yourself: out of all that material, how much was devoted to answer the third question? Almost nothing!!! on The change that we now witness is actually based on three different elements that were all trees: introduced by the newly developed S&T trees The first two we discussed before:
3. The ability to firmly connect any initiative to, not just the higher objective but all the way to the top objective. 4. The existence of plus-type improvement and its buy-in process became evident.
Level 4 and 5 of the trees provides an additional important element: provided... The first time that a documented answer for the third question is provided
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Starting February 2008 Eli Goldratt will deliver a series of special webcasts. The first webcast series will be on Critical Chain Project Management (CCPM) with a focus on implementing this methodology throughout an organization in such a way that bottom-line results can be achieved in bottomtime, a surprisingly short time with full buy-in and generating the base for an ever flourishing organization.
Reseller ProgramOverview The Goldratt Webcast Series has developed a Reseller Program to allow TOC consultants, higher education institutions and professional associations get the Webcast Series closer to the general public, special interest groups, as well as smaller organizations. Resellers of the Goldratt's Webcast Series will receive a commission based on the number of links they have sold. A minimum of 2 links are required. If you or the organization you represent would like to apply for the reseller program, please review the following requirements and -if agree- manifest your interest following this link. We will contact you with details in October 2007.
Requirements to become a reseller
Sponsor the program in their organizations publications, websites, communications and events.
Promote TOC and the Goldratt's Webcast Series among their members, customers, employees and stakeholders.
Provide a nominee to conduct a direct marketing campaign aimed to selling links to its customer/contact base.
Resellers will sign a Reseller Agreement that will state the resellers rights and responsibilities, as well as the restrictions to the Reseller.
Facilitator Objective of The Facilitator Program At completion of The Facilitator Program you should have the ability to:

Clearly explain the objectives of the webcast to the participants Address basic questions about the content of the TOC subject matter conveyed during the webcast and know where to find answers to challenging questions
Feel comfortable interacting with the webcast audience
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Provide the next steps resulting from the webcast Grasp the simple, direct and practical common sense of TOC
Topics Covered

Mechanics and process of the webcast Knowledge content including a basic understanding of:
o o o o
Critical Chain Project Management (CCPM) CCPM relationships and interactions with Operations CCPM impact on Marketing & Sales Overview of Critical Chain planning tools such as Concerto by Realization Technologies.
The exponential growth strategy and tactics to achieve a Viable Vision
Webcast facilitation techniques (what to say, when to say it, how to say it, when to not speak, what to avoid, and how to handle reservations)
Webcast follow-up opportunities including the TOC Club programs
You Will Gain Exposure to Much More

The basic principles of TOC The Thinking Processes of TOC
Additional Benefits From Attending The sessions will enrich your experience through:

Focused dialogue in an area you care about Opportunity for input and feedback from experienced people New business relationships with interesting people Exposure to (is something missing here?) and exposure to different types of applications
Sharing of your project management experience and results Massive learning
Prerequisites Required To Attend The Facilitator Program
Connection with a webcast downlink
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Basic Critical Chain understanding is required. Please complete reading of Critical Chain by Dr. Eliyahu Goldratt.
Viewing of the Project Management INSIGHTS is highly recommended
AUTHOR Alejandro Fernandez has been a TOC Educator since 1993, as Manager of Piensalo Colombia (Think about it). He is a Political Scientist, MBA and Magister in University Management. He received his initial training as Jonah Jonah, and Licensee in Operations, MSW, CCPM at the AGI. Since year 2000 he decided to accept Elis proposal to build Goldratt Group and now is focused in developing Goldratt Schools in Colombia. The TOC ICO has certified him as Holistic TOC Expert. Some of the companies that have worked with Pinsalo, generating their own powerful Process Of Ongoing Improvement: Azulk (Soap), La Buguea (milk candy), Minerales Industriales (Caolin), Coditeq (Codification), Universidad ICESI, Plsticos Vandux (hairbrushes), Cosmecuticos (medicated creams), Leonisa (lingerie), Ciplas (Packing), Acasa (Steel), Sicolsa (Steel), Herragro (Agricultural tools), Comfamiliar Aseguradora (Benefit Fund), Centro de Ciencia y Tecnologa de Antioquia (Business Research Center), Prodesa (construction), Plasticaucho (Shoes, ribbon & foam products), La Fabril (kitchen oil, soaps), Ecuatran (electric transformers), Tremix (concrete transportation).
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PROJECT MANAGEMENT SYSTEMS THEORY TAUGHT THROUGH GAMES

James R Holt Washington State University, USA
ABSTRACT: Project management systems are plagued with misunderstanding of Interdependence versus Independence, Finite versus Limited Capacity and Strategic versus Individual
Safety. Lecture and research are ineffective at convincing members of the project management community to come together to overcome these serious obstacles. This article introduces three hands-on games that involve individuals in simple experiments that shift their understanding, highlight the solutions to these problems and allow them to teach others how to manage high performance projects.
Keyword: Job Shop Game, Sixes Game, Assembly Game
1.
Background.
The basic premises of the Theory of Constraints assume that people can think, they are good and systems are simple (The Choice, Eliyhau M. Goldratt, North River Press, 2009). there must be something missing. projects? Yet,
Why do good, thinking people have so much trouble with
After all, projects are simply a set of tasks which must all be done within some What is missing? It must be something
precedence order before the project is complete.
that is a hidden understanding of how project systems perform.
Or, it must be something
acting upon the project management system: good, thinking people that do things to actually make the problems worse.
This article addresses three specific problems that plague projects.
1. The overloading of
project resources, 2. The embedding of too much safety in task estimates and, 3. The assignment of resources. Rather than try to discover the devastating effects of these three
problems, try to explain the deep impacts in a lot of text, and then try to lecture on the correct
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action to take, lets play some games.
1.1. Value of Games. Good games should be easy to play, easy to set-up, designed for a purpose, be flexible, have a specific purpose and provide deep understanding with-in a short time. to play and eye-opening to all who participate. Such games are fun
Teaching games should bring the participants
to discover the problems, the impact of the problems of the system and lead to self-discovery of the solution. While large projects can be complicated and overwhelming, a small and
simple game (one that mimics the same behaviors as the larger system) can be sufficient for the inquisitive mind to make the needed changes in the real world system. beautiful thing. The mind is a
The description of the three games below seems long. become a leader of the games.
It is verbose to help the reader soon However, once you
Sorry for the length of the reading.
have played the games and practiced just a bit, the games are much easier to play than to explain. Enjoy!
2.
The Job Shop Game.
The purpose of the Job Shop Game is to show the need to choke the release of work to a system. The game is played with six people, one person releasing the work, four people
acting as work centers and one person recording the performance of the Job Shop as a whole. During the game, participants learn for themselves the problems with too much work in the system and how to resolve these problems in order to become a fast, predictable team. The game takes about 30 minutes to play.
2.1 Set-up. Make ten copies of Figure 1. This sheet has four Job Order Cards on one page. Cut all the Assign
sheets in 4ths so there are 40 individual Job Order Cards (ten of each product type). those acting as the four work centers a name (A, B, C or D).
Arrange the four work centers
in a square so they can easily pass the Job Order Cards from their work center to any work center (in a Job Shop, work flows in a haphazard fashion, not a linear flow-line like typical production). Have the person releasing work be on one side of the work center square and the person recording the performance at the other side of the square. Shuffle the 40 individual
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Job Order Cards and give them all to the person who will release the work to the work centers. The Order Card must flow through the assigned four work center operations in the order they appear on the Order Card (from top to bottom) before leaving the work centers and going to the last member of the group who records the flow time of the Order Card through the work centers.
Figure 1.
Job Order Cards for Four Products.
2.2 Playing the Game. The Job Shop Game is much easier to play than to explain. Each day has two parts. Working Part, and the Passing Part. The
During the Working Part, each work center that has
work to be done may write a number representing that day in the Day Complete box on the Job Order Card. After the Working Part is over (everyone who had work to do is done The Job Shop Card is passed from the person
writing), there is the Passing Part of the day.
who completed the work that day to the next work center operation in the order they appear (from top to bottom) on the individual Job Order Card. As an example, lets follow the flow
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of a few Job Order Cards.
Assume the random shuffle has the first seven Job Order Cards in the stack of 40 to be Products 2, 3, 1, 1, 4, 3, 4 in that order. Here is how the processes would work:
Day 1.
No one has any work except the releasing person.
The releasing person writes
1 on the Release Day line of Job Order Card of Product #2. now over. center B.
The Working Part of the day is
During the Passing Part of the day, the releasing person passes the card to work
Day 2.
During the Working Part of Day 2, the releasing person writes 2 on the Release The work center B has the Job Shop Order Card for During the Work
Day line of Job Order Card Product #3.
Product #2 released on Day 1 and writes 2 in the top box for Operation B.
Passing Part of the day, the releasing person passes Product #3 to work center A. center B passes the Product #2 to work center C.
Day 3.
During the Working Part of Day 3, the releasing person writes 3 on the Release Work
Day line of Job Order Card Product #1. Work centers A and C both have work to do. center A writes 3 in the top box of the Product #3 which was released on Day 2. C writes 3 in the second box of Product #2 which was released on Day 1. Working Part of the Day is done, it is the Passing Part of the day.
Work center When all the
Work centers A and C
(who did work that day) simultaneously pass their work to the next work center on the Job Order Card. A passes the Product #3 card to C. C passes the Product #2 card to B.
Writing all these transfers down in text is much more confusing than in just playing the game. But this will get you started. seven days. Table 1 show the flow of Job Shop Order Cards for the first
Table 1 Flow of Job Order Cards.
Day Released Product Work at Work Centers Completed Work 1 2 #2 #3 #2@B
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3 4 5 6 7
#1 #1 #4 #3 #4
#3@A, #2@C, #1@A,#2@B,#3@C #1@A#1@B,#3@D,#2@D #4@A,#3@B,#1@B,#1@C,#2@D #3@A,1@B,#4@B,#1@D #2, #3
Table 1 shows the first seven days of the Job Shop Game with the work progressing.
Note
that on Day 5, work center D has two Job Order Cards (#2 released on Day 1 and #3 released on Day 2). And on Day 6, work center B has two Job Order cards (#3 and #1). However,
work centers can only do one job per day.
Allow those playing the game to determine how
they will decide which work to do first, if there is more than one Job Order Card at the work center. In this example, work center D worked on Product #3 on Day 5, and then on Product Work center B worked on Product #3 on Day 6 and Product #1 on Day 7. We
#2 on Day 6.
also see that two Job Order Cards were completed on Day 6 and delivered during the Passing Part of Day 6 to the person measuring System Performance for accounting. available for plotting their flow time during Day 7. They are
Figure 2 shows both completed Product On these two Job Order Cards, the
#2 released on Day 1 and Product #3 released on Day 2.
person measuring System Performance has calculated the Total Flow Days for each product (Total Flow Days = Day of Completing the Fourth Operation Release Day). took 5 days to flow through the Job Shop and Product #3 took 4 days to complete. Product #2
Figure 2.
The Results of the First Two Completed Jobs from the Job Shop Game.
2.3 Recording Systemic Performance.
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The Job Shop Game is a busy one for those participating. systems performance without tracking the actual results.
It is hard to get a grasp of the Plotting the trend of Total Flow
Days, relative to the Day Released to the system, is helpful to see if system performance is changing. Constructing a histogram of the different Total Flow Days helps the players Figure 3 shows the first two
understand the variability in predicting future deliveries.
completed Job Order Cards with their Total Flow Days marked with black dots on the trend plot and as black squares on the histogram.
Figure 3. Plot of Trend and Histogram of Total Flow Days
2.4. Determining the Problem. Continue playing the Job Shop Game until Day 15. Ask: How does the system look?
What does the Plot of Release Day versus Total Flow Days and the Histogram of Total Flow Time show? When do you think the job to be released on Day 30 will be delivered? At
this point, the Plot and Histogram dont look too bad because almost half of the jobs havent been completed and are not on the Plot. Let the group think about what is happening to the
system and then move on releasing work each day until Day 20.
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On Day 20, after the 20th Job Order Cards have been released, ask again: How does the system look? What do the Plot and the Histogram show now? When do you think the job
to be released on Day 30 will be delivered? Have the group examine the system more closely. While the plot and histogram dont look too bad, there is a serious problem with a Have the work centers count how many B tasks are in
back log of work at work center B. the system.
Figure 4 is a plot of a typical Job Shop Game where the releasing agent
released one card per day for the first 40 days (all 40 Job Cards were released at one per day for 40 days), and then the game continued until all the 40 Jobs Cards were completed. the wide distribution of the Total Flow times. Note
In this game, the Job Card released on Day 30
completed right on the dotted prediction flow line at 22 days (the Job Order released on Day 30 was completed on Day 52).
Figure 4.
Plot and Histogram of Releasing On Job Card Each Day.
2.5. Learning Discussion. People learn best when they are in the middle of the problem they need to solve. Consider, If
When will the job released today (on day 20) actually come out of the system?
everyone treats it as an emergency, it could come out by day 25 but, if that happened, all the other work would have to wait. Lead a discussion on how to improve the system (for this
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discussion, work centers cannot do each others work).
Ordering the type of jobs released
can have only a temporary effect as, on average, the demand for the four types of products is about equal.
After some discussion ask, If we continue to release new work every day, will we have more uncompleted B tasks in the system or fewer? work into the system? Does it make sense to continue releasing more
And, if not, and we stop releasing new work, when should we start
releasing work into the system again?
2.6.
Teaching Moment.
Clearly, it makes little sense to continue releasing one new Job Order Card every day when the system is so back-logged with un-completed B tasks. only get worse and worse. The system Total Flow Time can Assign someone to
We must chock back the release of work.
act as CEO (an independent observer or one of the players not B) to watch the system closely. Restart the game but do not release any new work on Day 21. if you should release new work or not. CEO the same question. Now, each day, ask the CEO
Continue playing day by day, each day asking the
Guide the group to help the CEO formalize the RULES FOR What is the release of new work protecting? Why should
RELEASING new work or not. it be protected?
How should it be protected?
What is the minimum protection necessary?
How can we measure that (so the CEO doesnt have to make the decision every day)?
2.7 TOC Solution. The Theory of Constraints solution is to buffer the B work center without too much work but not too little. You can start with a buffer of 6 uncompleted B tasks released to the system.
Each day before the Work Part of the day, count the number of empty boxes next to the B operations already released to the work centers; count all uncompleted B operations at all the work centers. If the number is 5 or less, release new work. If the number is 6 or more, do
not release any work. some time. intermittent.
This choking the release starting on Day 21 will block the release for The release will be
Eventually, the release of Job Cards will begin again.
The release will be at just the rate the B work center can complete B operations.
While the queue of work moves all around among the work centers, B is always busy and never starved.
Figure 5 shows the dramatic change in the Plot and Histogram as a result of choking back the
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release of work1. Day 37. days2.
In Figure 5, the Job Card released on Day 30 completes in 7 days or on
In fact, when the release of work is controlled, all future jobs can be promised in 8 The shaded blocks in the Histogram show the very tight distribution of Total Flow
Time with the chocked release.
Figure 5.
Dramatic Improvement in Total Flow Time and in Predictability of Delivery.
2.6. Summary. The results are clear. Discuss with your group the value of being able to predict the delivery Consider the
of your Job Cards, and also the value of fast delivery to a customer.
management improvement from knowing if you can accept new work or not (according to the load on the constraint work center). Shop Game More complete and advanced instructions for the Job are available at:
http://www.vancouver.wsu.edu/fac/holt/em530/JSGInstructions.pdf
Choking back the release is called Tying the Rope in Drum-Buffer-Rope terminology. The Job Shop Game is deterministic. That is, there is no variability in the processes, only in the sequence of the cards released. Work center B is busy almost all the time. On average, there are six B tasks released every four days. So, the last card released will always complete at between 62 and 65 days. It is about the same completion time of the last card whether you release every day or choke the release (if you choke the release, the 40th card will be released about the 55th day). The real benefits from choking the release is the fast Total Flow Time, the predictable delivery date, knowing the real capacity of the system, and the ease of managing the system.
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3.
Sixes Game.
The Sixes Game deals with the problem of embedding too much safety in task duration estimates. In playing the game, the causes for embedding safety come to the surface. The
impact of taking more aggressive estimates with a strategically-placed buffer dramatically changes the performance of the system as a whole.
The Sixes Game can be played quickly (about 20 minutes) or it can be extended to evaluate the impact of improved quality in the process.
3.1. Set-up. All that is needed is a fair die for each person in the game and a white board to display the results.
As part of the set-up, all the participants need to understand the performance of a fair die. Explain, The fair die has six sides with dots ranging from 1 to 6 on the sides. Rolling the die one time gives a 1/6th chance of showing any one of the sides. will each be rolling a fair die and trying to get a six. first roll is 1/6th.
In the Sixes Game, we
The probability of getting a six on the The
The probability of getting a six on the second roll is also 1/6th.
probability of not getting a six on the first roll is 5/6th (or .8333). getting a six on the second roll is also 5/6th.
th
The probability of not
The probability of not getting a six on either the The more times we roll, the chance of But, how many rolls
first or second roll is 5/6*5/6 or 25/36 (or .6944). not getting a six gets lower and lower. do you think it will take?
We will surely get a six soon.
Again, what is the minimum?
What is the maximum number of
rolls? What is the expected number?
Since there is
lots of confusion about how many rolls it will take to roll a six, lets just do a Every one here
quick experiment to see what the process of rolling a six really looks like. roll your fair die and count the number of rolls it takes to get a six.
Plot the results of all the players. they reported. a six.
Make an X mark for each player for the number of trials
You will need at least 40 X marks to get an idea of how long it takes to roll
After plotting the first try, have everyone try to roll a six again for a second, third or
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more tries until you have at least 40 data points recorded on the histogram. typical histogram of 40 trials.
Figure 6 is a
Figure 6.
Histogram plot of the forty typical trials to roll a six.
Continue discussion about the shape of the histogram while you are plotting the data points after each round of trials. You can share, It looks like rolling a six on the first roll looks to The other number of be the most likely outcome. There is a 1/6th chance of succeeding. trials have less occurrences, Also note (as in Figure 6) there
3
are several points (3 out of 40 What do you
for a 7.5% chance of exceeding 13 in Figure 6) that are a long way to the right. think is the real maximum number of trials?
3.2 The Play. After the set-up, and drawing the histogram of trials similar to Figure 6, everyone is ready to estimate how long it will take them individually to roll a six. wager. To make this realistic, use a
Ask each player to put a sum of money on the table in front of them or to write the Tell them they are all working for They are the ones who
amount of their wager on a piece of paper (say $10 each).
you and you will pay them all $10 if they finish their job on-time. will estimate how many rolls of the die it will take to roll a six. their on-time time will be.
They will determine what
Note to the leader of the Sixes game. During the Set-up period, everyone will be counting the rolls to get a six. Most will finish quickly (in six or less), but there will be the few who are having trouble getting a six. Point out the person having trouble. Make light hearted fun, This person doesnt know how to roll dice! Make sure everyone knows that rolling a six has nothing to do with the person rolling, It is the SYSTEM! Everyone there may have the same bad luck.
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Ask the players what their estimate is. losing $10.4
The answers may range from 1 to 40 trials,
depending upon the individual players perception of the taking risk of either earning $10 or
Explain, All the players are in this together.
So, we all need to use the same number to
accommodate everyone. To make this easy, point to the histogram of the group trials you made, starting at the right side. Point at the highest number (say it is 22 like in Figure 6),
How many will play the game if you have 22 days to get a six (each roll counts as a day)? Most, if not all hands should go up. Then, move to the left on the histogram and ask, How Continue sliding to the left
many will play the game if you have only 21 days to get a six? asking the same question at 20, 19, 18, 17, 16 and so on.
Most likely, some people will start Lets say that they start pulling
pulling out of the wager somewhere when you get too low. out at 16 days. wont play.
If the players dont have at least 16 trials to roll a six, then some of them
Accept the groups level of comfort (16 trials or days) as the plan.
3.2.1. The First Round. Now, it is time to play the First Round of the game. group. Count the number of players in the
Multiply the number of players (say 10) times the level of comfort (say 16 days) for
a total of 10*16=160 days (we are assuming here that the work flows from one person to the next, and then the next, and so on, so it takes 160 days from start to finish).5 To make the
game faster, tell them you will count the number of days and they can all roll at the same time. Each person rolls once per day to see if they get a six. rolling. Once they get a six, they can stop
The person leading the game counts the days from 1 to 16 as the players roll. If yes, then the project completion took 16days
After day 16 ask, Has everyone finished? time 10 people or 160 days.
If not, then you have spent 160 days so far and need to continue Add those extra days on to the 160 days already
counting until the last few players roll a six. consumed.
The time to complete this first round then was 160+ days.
4 The wager is similar to the risk a project management person faces each time they estimate their own task duration. An ethical person wants to deliver according to their promise. Delivering to promise is a reward, like receiving $10. Missing a promise is a disappointment, like losing $10. Individuals mentally make an estimation of what they can do to be successful. We will soon point out that the SYSTEM is the problem and even the best of players may not deliver to their promises all the time. In the end we hope everyone will ignore the estimate and work as hard as possible to meet the systemic goals. 5 The Sixes Game works best with at least six players. If you have less than six, have each player act as two by playing the left hand and the right hand. There is no limit on the maximum number. The example here is based on ten players. You can do the math to accommodate any number of players.
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3.2.2. The Second Round. Now, lets play a Second Round, Everyone willing to play again? When they agree, tell them, The previous customer was not happy. We took too long. He will only accept the
project if we can deliver in 120 days (for this round everyone has only 12 days each for 10 people or 120 days). Do you think we can do it?
Let the group discuss this.
Is it possible to complete in 120 days?
If we only have 12
days to roll a six, some people will definitely not make it.
So, if every one has only 12 days What should we do?
(10*12=120 days) and even one person is late, we will NOT make it. Close the business? Or, give it a go?
Since we cant decide with so much uncertainty, lets try it for practice, just to see what happens. Since this is practice only, put away your money (wager). is possible. We just want to see if it
Play this round the same as the First Round. each day.
Call out the days with everyone rolling once Most likely at least one person
After day 12, ask if everyone has rolled a six.
will not have completed.
Make it clear, If everyone has their 12 days, and someone has bad
luck and goes over 12 days, we cannot succeed.6
At the end of the Second Round, the group has a pretty good understanding (while probably not verbalized) that most people are finishing much earlier than the maximum allowed time. They may even be telling you they can do better and dont need the full 16 or 12 days (they have too much safety). The third round will test their intuition.
3.2.3. The Third Round. Time for the Third Round. Continue the discussion. Help the group notice that a lot of the
players finished very early (in 1, 2 or three days), yet we were counting them as using up 12 or 16 days. better. If we didnt have to give everyone the same number of days, we might do
Be cause of the SYSTEM (the die), we cant control who will only have to roll for a But, maybe the aggregate will be much
few rolls and who will have to roll a lot of times.
Note to Leader. If by some luck every one has finished by day 12, the accept the contract and try to deliver. There is a 50/50 chance that with ten people playing, someone will exceed 12 days. Most likely, you will not be able to consistently deliver in 120 days if everyone is given 12 days; someone will go more than 12 days.
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less.
For the Third Round, lets remove all safety. counting the days until they roll a six. completion times of all players.
We do this by just letting everyone roll and
After everyone has rolled a six, we add up the
The number will be amazingly low in comparison to the
First and Second Rounds (for ten people, the Third Round is usually between 55 and 85 days). However, this Third Round has no safety; not a good idea.
3.3. The TOC Solution. Critical Chain Project Management recognizes that safety allocated to individual tasks is often wasted. CCPM takes the safe estimates and divides them in half. One half is allotted to the
task; and the other half is aggregated with all the other safety removed from individual tasks. With the aggregation, only about half as much safety is needed. delivery date that is 3/4th of the original schedule. So, half of the aggregated The result is a project
safety is added back at the end of the project as a safety buffer.
With the task estimates cut in half, the Adding back half of the safety
project length is half as long, but it doesnt have much safety.
removed (thats one half of the time removed from the tasks), the result is a project target completion date that is 25% shorter and yet highly likely (95%) to succeed.
To test the TOC Solution, lets return to our safe estimate of 16 days per person.
If we cut
the 16 days in half and give each person only 8 days to complete their task, many will be late. To protect the SYSTEM of many people trying to roll sixes using fair dice and taking more than 8 days, we will add 50% of our safety back in at the end. people, we give each task 8 days to complete their task. removed 80 days of safety from our earlier 160 day estimate. In other words, with 10 We
That is 10*8 =80 days.
We will now add back half of
the safety removed (80 days of safety *50% =40 days) for a total of 80 days of tasks and 40 days of safety. We expect to complete the project in 120 days or less 95% of the time.
3.3.1.
The Fourth Round. We will give each player 8
For this round, we will test the CCPM solution described above. days. If they are late, we will add all the late days to the project.
Count the days as in the First Round. Everyone rolls the dice once each day.
After day 8 (80 From this
days for 10 people spent so far) find out how many players have not rolled a six.
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point, add each additional day rolled by those still rolling (one day per person rolling) to the 80 days. Continue counting days until all the players have rolled a six. days. exceeding 120 days).7 Total the number of
The total number of days will be well below 120 days (there is a 5% probability of
After the success of the Fourth Round, ask the question, Wow, that was great! how low we can go?
I wonder
For the Fourth Round we started at 16 days from the First Round and Remember back on the Second Round where we
cut them in half to 8 days and did well. started with only 12 day estimates. days? Would that work?
What would happen if we cut those estimates in half to 6
Lets give it a try. Everyone will have only six days to do their task. That will be 10*6 or 60 days. We will add a systemic buffer of expected duration to protect the system. If we Lets
plan 60 days, the systemic buffer (project buffer) will be 30 days or a total of 90 days. play.
3.3.2. The Fifth Round. For this Fifth Round, count the days as before. completed. After day 6, ask how many have not Then, continue
Count the 60 days for everyone who has worked so far.
counting for those who have not rolled a six yet. Add one day per player rolling each day. Continue rolling until all players have rolled a six. time. You will be less than 90 day 95% of the
3.4 The bottom-line. When protective capacity is spread through every individual task, we lose the benefit of aggregation. By individuals yielding even a portion of their personal safety, and by putting a
portion (50%) of that safety at the strategic location (at the end of the project), tremendous reduction in project durations happen WITHOUT CHANGING THE SYSTEM. rolling a six sided die. We are still
For the benefit of the leader, the theoretical distribution of the number of expected success per
Note that in this round the minimum time would be 80 days (ten players allowed 8 days each). While this is not the preferred way of CCPM, the Sixes Game is trying to gain cooperation from people to give up their safety. Allowing 8 days to roll a six is still a lot of safety. Playing the game with multiple rounds incrementally moves the intelligent player to understand how the SYSTEM needs the safety, but individual tasks do not.
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day (the generation of the Histogram discussed above) is shown in Figure 7.
Figure 7. Histogram of the Number of Rolls to get a Six.
Figure 7 shows the probability of having a success on any one of the trial days.
What is
more important to a project manager is the inverse, the number of days it will take to complete a task. roll a six. Figure 8 Shows the distribution of the number of trials (days) it will take to
While the mode is between 5 and 6, the long tail to the right pushes the median This distribution in Figure 8 is the same as a Beta
to about 9 and the mean over 10.
Distribution with alpha=.8 and beta =.9 from 0 to 29.8
Figure 8. Distribution of the Expected Number of Trials to Roll a Six.
It is interesting to note that the Beta Distribution (the distribution used for typical project tasks) is really the same as a repetitive effort to succeed with a low first pass yield.
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3.5 An Additional Discovery. After playing the Sixes Game for these many rounds, the group may still wonder if there can be more improvements. While CCPM does dramatically reduce the project completion times, there is another improvement that can be easily modeled using the Sixes Game.
In CCPM, there are many things that improve the first pass yield in a task. bad multi-tasking (distractions and delays) improves first pass yield.
The absence of
Having everything Not having a
needed available before having to start a task, improves first pass yield.
mandatory completion time reduces the number of problems passed on from task to task. Communicating Time Remaining and getting additional resources for help when needed also improve first pass yield.
In most mature CCPM groups, using CCPM improves the first pass yield on individual tasks. CCPM changes the underlying distributions of the SYSTEM. the Sixes Game by improving the probability of rolling a six. We can mimic this change in By ignoring a 1 (not counting
the roll if a 1 is rolled), the probability of rolling a six jumps from 1 in 6 to 1 in 5 or from 16.6% to 20%. While this may not sound like much improvement, what happens is that the The probability of taking a really long time to roll a six is
long tail to the right is cut off. dramatically reduced.
Using the revised 5 sided die, a group of ten players can reduce their
planned task duration time to 5 days each or for 50 days total for all ten and a 25 day buffer to complete 95% of the time in 75 days.
Further improvements (going to a four sided die by ignoring both 1s and 2s) can even shorten projects even more. As the system gets better and better, task durations can shorten.
When this happens, always retain a project buffer of at least 50% of the task estimates. Additional information about the Sixes Game is available at: http://www.vancouver.wsu.edu/fac/holt/em530/SixesGame.pdf
4.
The Assembly Game.
In the Sixes Game, we discussed a long chain of players each trying to roll a six. a lot.
We learned Projects
There is another part to projects that also requires our attention: Assembly.
always have sub-projects or feeder chains of activities.
Often, there is a situation (such as at CCPM does
a milestone) when many, many things must all come together at the same time.
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an excellent job of providing just the right amount of feeder buffer for feeding chains.
And,
CCPM does it in such a way that the feeding chains offer even more protection towards the end of the project where is it needed the most (see the advanced applications of the Sixes Game).
But, there is still something to be learned about the effective allocation of limited resources to the project tasks. How should this be done? When should it be done? What kind of
benefits does it provide?
This time, we will play the Assembly Game.
It only takes about 10 minutes.
4.1. Set-up. The Assembly Game is easy to play. All you need are six players with two coins each9. In
the Assembly Game, the six players will each do their own task with the goal of making an Assembly at the end of day six.
4.2. Instructions. In the Assembly Game, each player is given a task. They are to finish that task so the
Assembly can take place. All six players need to complete before the Assembly can happen. The Assembly is planned to happen immediately after day six. If the Assembly happens on For each
time, the group receives $100,000 for a delivering a successful project on time.
day late, the group receives $20,000 less (that is $80,000 for delivering on day 7, $60,000 for delivery on day 8, and so on).
4.3.
The Task. Each player can flip one coin each day of the game. The task is
Each player has two coins.
to flip the coins (one a day) until two heads are flipped. results of two heads, the task is complete.
After flipping the coins with the
The probability of flipping a fair coin resulting in the head side up is 50%. The probability of not getting a head is also 50%. Getting two heads in a row is 0.5 * 0.5 = 0.25. There is a
75% chance of getting exactly one head or no heads. The object of the game is to have two
If you dont have six people, use six different denominations of coins. and they can become the six players.
9
Have two coins of each denomination
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heads. less? heads.
What are the odds of a single person flipping coins to get two heads in six days or This is getting complicated. Figure 9 is the distribution of 500 attempts to flip two
There is about a 90% chance for an individual flipping coins of obtaining two heads Rarely, it will take more than six days.
in six days or less.
Figure 9. Distribution of the Number of Flips to Obtain Two Heads from 500 trials.
4.4.
The Play. The leader calls out the number
Bring the players close together so they can see each other. of the day.
On the first day, some players will flip a head. On the second day, you may have Once a player has two heads, they dont need to flip any longer. After Day Five,
a player flip a second head.
Keep calling out days until all players have two heads or it is Day Five.
make a big deal out of the Day Six flipping, This is IT! We either make good money or lose our profit all on this roll. We have spent $80,000 doing this project. If all six of you
have each flipped two heads on day six, we will make $20,000. can hope for is to recover our costs by completing on Day Seven.
If we dont, the most we OK! Here it is, Day Six.
Evaluate the Game after Day Six. and can play again!
Did you earn the $100,000?
If so, you made $20,000 Realize that if it
If not, then play to Day Seven or longer if needed.
takes Day Eight or longer, you are losing money. business.
Maybe you should not be in this project
Figure 10 shows the results of 100 trials of six people trying to make the About 50% of the time, the Assembly can be made. Note that
Assembly by flipping coins.
there were four times in 100 that it took more than 9 days!
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Figure 10.
Assembly Day Results of 100 Assembly Games
Play the Assembly Game a few more times so everyone understands the problem.
It is not
an individual player who has trouble flipping coins to get heads, it is a system that requires sometimes many tries to get two heads. And, it is the system that requires everyone to
complete on Day Six. In general, 50% of the time, the Assembly will be late, 20% of the time, it will take 8 or more days. flipping coins. To be 95% certain of completing, you need 10 days of
4.5.
The Feeder Buffer Solution.
When there is an Assembly, CCPM separates the Assembly by pushing all but one of the Assembly tasks to start earlier in time. CCPM adds a feeder buffer of 50% so the earlier Figure
tasks will have a good chance of completing before the last single task is completed. 11 shows how the Assembly Game is modified to insert the feeder buffer.
Lets assume it is
actually possible to push five of the tasks back in time to begin Day Minus Three.
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Figure 11. Changing the Assembly Game to Allow Feeder Buffers.
Playing the Assembly Game with a Feeder Buffer necessitates players 1, 2, 3, 4 and 5 to begin on Day Minus 3. Play this scenario and see how well the group does. Clearly, players 1
through 5 have a better chance of flipping two heads by Day Six (They have nine days to do it).
What did your group achieve?
If they made the $100,000, then play again.
See if it was
just random chance or if they can actually make the Assembly after Day Six most of the time. Most likely you will. There is an 85% chance the group will complete by the Assembly Due Date. But, there is a 15% chance you will not. Figure 12 shows the typical results of 100 Notice there were many more
Assembly Games using the CCPM Feeder buffer technique. early completions, but there is still a tail to the right.
While not specifically shown 10% of
the time the completion date for the Assembly was determined by one of the five early start tasks that finished after Day Six and after Player 6.
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Figure 12 Distribution of Completion of the Assembly with the Feeder Buffer Approach.
The CCPM Feeder Buffer helped a great deal.
If we had a full project, and not just these six
tasks, there probably would have been enough protection elsewhere in the project to protect the 15% of the time the CCPM Feeder Buffer approach was late.
But, what if the Assembly Game is your job?
What if you have to do the six parallel tasks in What can you do
the Assembly Game, and you cannot offset five of the tasks by three days? then?
4.6.
The Resource Bench. In most cases where This In
Lets consider another option for management of our resources.
pressing work is required, the most expert people are assigned to the difficult tasks. would surely be the case in the Assembly Game where delivery on Day Six was essential. such pressing environments, the novice person rarely gets to participate. problem when there are many novices and few experts. will happen when the experts are not available or retire?
This can be a real
How will the novices learn? What Is there any way to improve the
system when the experts are all so busy they dont have time to evaluate the SYSTEM and find what is causing the problems?
Lets consider a counter-intuitive solution.
Its called the Resource Bench.
In general, the
Resource Bench is a reserve work force that is not normally involved in the day to day work. The Resource Bench is made up of about 20% of the work force. They are the best experts.
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In terms of the Assembly Game, one could say, A real expert can flip a coin and get heads 80% of the time! To make it easy in this Assembly Game, we will have the Resource Bench made up of just normal people who flip coins at 50% heads. persons on the Resource Bench (for 33% rather than 20%). Also, we will use two
The Resource Bench has several responsibilities. going right and what is going wrong. the system.
They watch the SYSTEM and see what is
They use their expertise to figure out how to improve
They are also responsible for applying their expertise, but only participate in They are also responsible for
routine activities at the time when their expertise is essential. training the novices.
There are several problems.
The experts have a hard time holding themselves back from
doing the urgent work and, they dont like spending too much time training novices.
4.7.
Managing the Resource Bench.
Figure 13 is a pictorial representation of the Assembly Game with the Resource Bench added. The Resource Bench is placed along side the regular work. In this case, there are six players
who are playing the Assembly Game. The Resource Bench has no assignment during the first three days of the Game. Beginning on Day 4, the two members of the Resource Bench (who each have one coin), can join any one of the players, 1 through 6, who has not yet flipped two heads.
Figure 13. The Assembly Game with the Resource Bench Added.
4.7.1. Time for Analysis.
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During the first half of the expected task time for players 1 through 6, the two persons on the Resource Bench observe them. They have three days to see the methods, processes, good and bad things happening with the normal players. The two on the Resource Bench can analyze
the problems and decide how to make improvements.
4.7.2.
Just-in-Time Training.
Beginning on Day 4, one person from the Resource Bench will join one of the players from 1-6 who is having trouble flipping heads. some experience with the problem. learn quickly. At that time, the player is anxious to learn and has
The player is ready to receive additional guidance and
The person from the Resource Bench can easily and effectively teach the
exact principles and techniques that the player needs at a time when the player really needs it and can learn the most in the least time.
4.7.3. Trimming the Right Side Tail. Beginning on Day 4, the person from the Resource Bench joins a player in need and, together, they now flip two coins per day (one coin from the player and one coin from the Resource Bench person). For this simple Assembly Game, we will assume the Resource Bench has The probability of both the That means
the same probability of flipping a head as the regular players.
player and the Resource Bench person flipping tails on one day is 0.5*0.5=0.25. there is a 75% chance that one or the other (or both) will flip a head.
The Resource Bench
person stays with the player until the players flips and the Resource Benchs flips add up to two heads for that player. player in need. Then the Resource Bench person is available to work with another
Figure 14 shows the distribution of dates of Assembly resulting from having
a Resource Bench of two persons are available to assist with the routine work being done by the six players on Days Four, Five and Six.. completing the Assembly on Day Six. There is a better than 90% chance of
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Figure 14. Distribution of Assembly Days with Two Persons Assisting from the Resource Bench.
The results with having two additional resources available on the Resource Bench, as shown in Figure 14, are markedly different than the results with players 1 through 6 working on their own as shown in Figure 10. It is worthwhile to note that while the Resource Bench could
have been used with two persons for three days for each of the 100 Assembly Games played with the Resource Bench available, as reported in Figure 14 (that is the Resource Bench was schedule to be available for 2*3*100 = 600 days of potential contribution to the players), the Resource Bench actually participated with the players for only 350 flips (just over 50% of their scheduled time). This means that the Resource Bench, while they really did contribute
to a significant improvement in on-time Assembly, were really occupied in flipping coins only about 25% of the time. process improvement. experience and expertise. That is, 75% of the time, the Resource Bench was available for Those on the Resource Bench should be those with the most
4.7.4. Assembly Must Be Made On Day Six. What happens if we are in a situation where Assembly absolutely has to be made on Day Six. The Resource Bench, as good as it was, is not enough. What else could be done? Well,
there are some of the players 1 through 6 who were lucky and flipped their two heads early and were not flipping for the whole six days. Full Bench Press. Perhaps they could help. This is called the
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4.7.5. The Full Bench Press. While the Full Bench Press is not recommended10, it may be needed from time to time. the Full Bench Press ALL players 1 through 6 flip a coin every day for the full six days. In If
any player completes his two heads early, then that player can join any other player who has not yet completed two heads. In other words, each player acts as a Resource Bench asset,
and they can do it even on Day Three (if they flipped two heads on Day One and Day Two) when the Resource Bench is not scheduled. The Resource Bench acts the same way in the
Full Bench Press as it did previously; they observe for the first three days, and are scheduled to assist with the last three days. the Full Bench Press approach. Figure 15 shows the distribution of Assembly times under
Figure 15. Distribution of Assembly Completion Times under the Full Bench Press Approach.
In figure 15, 100 Full Bench Press Assembly Games were played to produce the distribution. In testing this approach, about 1 time in 1000, the Full Bench Press completed the Assembly after Day Six. This is virtual certainty of completion on Day Six or before. Of the 600
days the Resource Bench was schedule to be available for the 100 Assembly Games reported in Figure 15, the Resource Bench actually flipped coins for only 250 days. Again, the
Resource Bench was available about 75% of the time to continue their focus on systemic improvement. More information on the Assembly Game is available at
http://www.vancouver.wsu.edu/fac/holt/em530/Assembly.pdf.
Working people continuously for any period of time degrades their capability over time. While a pit crew can work miracles on a car in seconds during a race, they cant work at that rate for an hour.
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AUTHOR James R. Holt, is a Clinical Professor of Engineering Management at Washington State University focusing on practical application of Organizational Behavior, Operations Research, Statistics, Engineering Economics, Simulation, Information Systems, Constraints Management to better organizations and complex systems. He was a Principal Consultant with Management Advisory Group, Inc. and a Certified Associate of the Avraham Y. Goldratt Institute. He served as Department Head, Engineering and Environmental Management at the Air Force Institute of Technology, Wright-Patterson AFB, Ohio and retired from the Air Force in engineering, computer and technology management. Dr. Holt has taught at the graduate level 18 years and has advised 85 engineering student theses and dissertations on a wide variety of topics. He lives in the Portland, Oregon area and is active with professional and community organizations. Dr. Holt is certified in the TOC Thinking Process, TOC Operations Management, TOC Project Management and TOC Holistic Strategy by the Theory of Constraints International Certification Organization and serves as Chairman Elect of TOCICO (Theory of Constraints International Certification Organization). He is happily married to Suzanne for 38+ years; they have five children and ten grandchildren.
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(Journal of Project Management and Systems Engineering) () 1. 2. 3. 4.
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1. 2. 1. 2.2-3 3.
1. 2. 3. 4. 5.
1. ( http://www.moeplans.knu.edu.tw/index/E.htm) 2. (WORD PDF ) E-mailhung616@mail.knu.edu.tw 3.
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1. 2. 3. 4. 5. 6. 7.
1. 2. 3. 4.
8.
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A4 Word word Times New Roman12 10 2.5cm 24 () 30000 10000 A4 25 1,2, 300 11.11.1.11.1.21.21.2.11.2.22 2.12.1.12.1.22.22.2.12.2.2 (1) 1. 1. Table 1.Figure 1. - -
JOURNAL OF PROJECT MANAGEMENT AND SYSTEMS ENGINEERING Kainan University, Taiwan Scope This journal of project management and systems engineering is published by Kainan University for the promotion of academic researches about project management and systems engineering sciences and integration of them. This is an example for The Project Management and Systems Engineering papers on proceedings, as your should submit it. The article illustrates preparation of your paper using word format, the manuscript should be written in English using A4 (210x297 mm) papers format. The paper begins with a title in the first page which uses 16pt Time New Roman bold (Type in capital Letters) font, otherwise use the 11pt Time New Roman standard font. The papers should be centered across both paragraphs. Dimensions for the paper are specified as the followingUse double spacing and wide (2.5cm) margins on all side of your papers, Ensure that each new paragraph is clearly indicated (each section and sub-sections should be Numbered, leave a blank line between each section). The whole papers must limit in 10000 words below. Structure Please follow the orders and submit below when preparing manuscripts. Title The topic should be clearly and use Capital Letters. Authors (Initials, family name and professional title) the establishment and professional title must numbered (for example 1. 2.). Abstract A self-contained abstract outlining in a single paragraph the aims, paper must be supplied within 300 characters. Keyword Immediately after the abstract, provide a maximum of five keywords. Text layout Use double spacing and wide (3cm) margins. Ensure that each new paragraph is clearly indicated (each section and sub-sections should be numbered, leave a blank line between each section). If possible, consult a recent issue of the journal to become familiar with layout and conventions. Number all pages consecutively, use 12pt font size and standard fonts. Subheadings Are used only in research articles, reviews, and invited special-issue articles. Usedescriptive clauses, not full sentences. Two leaves of subheadings may be used if warranted; please distinguish them clearly (for example 1.1.11.1.11.1.21.2 1.2.11.2.21.3 2.2.1 2.1.12.1.22.22.2.12.2.22.3). Figures Figures and tables should attach titles with serial numbers as Fig. 1 Fig.2 and Table 1, Table 2, try to avoid unusually small characters. Equations should be numbered consecutively beginning with (1) to the end of the paper. The number should be enclosed in parenthesis and set flush right in the column on the same line as the equation. An extra line of space should be left above and below a displayed equation or formula. The graphic is only first time appears gives the definition. Example: 0.5(1 s ) G (s) = (1) ( s + 2)( s + 0.5)
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References 1. Kuo, T. and Mital, A. (1993). Quality Control Expert SystemsA Review of Pertinent Literature. Journal of Intelligent Manufacturing Systems, 4: 245-257. 2. Mital, A., Nicholson, A.S. and Ayoub, M.M. (1993). A Guide to Manual Materials Handling. Taylor & Francis, Ltd.,London, United Kindom. 3. Mital, A and Anand, S. (Editors) (1993). Handbook of Expert Systems in Manufacturing: Structure and Rules. Chapman & Hall, London, United Kingdom. 4. Java: java Home Page. http://java.sun.com/. 5. Mital, A. (1988). Desirability of Robots. In International Encyclopedia of Robotics (Ed.: R.C. Dorf). Wiley-Interscience, New York, pp. 322-329. 6. Mital, A and Mahajan, A. (1989). Impact of Production Volume and Wang and Interest Rates on Economic Decision Making: The Case of Automated Assembly. Proceedings of the Conference Society for Integrated Manufacturing, Institute of Industrial Engineers, pp. 558-563.
. ISBN978-986-82435-3-8 () () Heung Suk Hwang Marine Foucauld 33857 03-3412500#3562 03-3412173 im@mail.knu.edu.tw http://www.knu.edu.tw/
0334112173 (03)3412500#3502 / ISBN 978-986-82435-3-8() CIP

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EDITOR'S ' FORWARD

Alan H. Leader Editor

Oded Cohen International Director Goldratt Schools

Part 1 of this article covers all the injections of the solution.

IMRPOVING WITH TOC CCPM FOR MANAGING SINGLE PROJECTS

We start with defining the boundaries of the system we want to improve.

In single-project management the boundaries are:

Then we agree on the system performance measurements.

For single projects they are:

The full list of injections for the solution is:

Implementing TOC CCPM

The Solution Design

The Implementation Plan

Figure 2: The injection flower

Lets start with the first group.

Mindset Customers orders are the Prime Driver the Drum

What The essence of the injection:

Current on-time delivery.

How many projects are delivered on time? What

customers (internal or external) due to the lateness of the projects?

Damage to the company.

Are there any penalties associated with late deliveries?

there situations which quality or features are compromised?

The Future reality the DE the positive outcomes of the injection

We can expect the following positive outcomes:

Potentially more sales

due to increased reliability.

Re-enforcement of Injection 1 is critical!

Figure 3: The typical flows to be managed

Implementing the Injection

Figure 5: An example of a part of an implementation plan.

This group of injections deals with creating a quality project plan.

Figure 6: CCPM Planning Injections

The diagram can be bar chart (PERT) or a Gantt chart.

Figure 7: An example of a project planning diagram in a PERT structure

Figure 8: An example of a project planning diagram as a Gantt Chart

Figure 9: The statistical pattern of the task duration time

longer than 10%.

Injection 3 Critical Chain is determined through resolving resource conflicts

Figure 10: Creating the Critical Chain

Injection 4 Buffers are inserted in strategic points

Project Completion Buffer (PB) Feeding Buffers (FB)

Figure 11: Critical Chain with buffers

The reality of the project execution is Delays!

Figure 12: Traditional buffer penetration colors

Figure 13: Buffer status in relation to the progress of the project

Figure 14: Example of a project plan with buffers

Figure 16: Buffer penetration report for a given project.

Execution Control Injections:

Figure 17: CCPM injection for Execution Control

Reporting task progress

In order to estimate the level of penetration into the buffers, there In

Based on this report, the

An example of the technical & managerial procedures for injection 5:

Injection 6: Resource Availability is monitored in anticipation of a new planned task

This procedure can be called Resource wake-up call.

Figure 18: An analogy planned arrival of a scheduled flight

Figure 19: An example of wake-up calls as per Injection 6

Injection 7 Buffer Management (BM) for corrective actions (expediting) is in place

Injection 9 Resources are monitored as potential CR Critical Resources

Figure 20: An example of bad multi-tasking

Figure 21: A portfolio status diagram

Figure 22: The general structure of the U-shape