© avraham y. goldratt institute 1998 1 an introduction to the theory of constraints - breakthrough...
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© Avraham Y. Goldratt Institute 1998
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An Introduction to the Theory of Constraints
- breakthrough solution for Project Management
Presenter Robert Bolton
MS Project Users Group
8th February 2000
© Avraham Y. Goldratt Institute 1998
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Objective of this session
Examine the effects of the problems we are facing in projects & Project Management today
Understand the source of these problems Understand how TOC addresses the source of these problems Results to date
Aim of TOC: Complete projects on or before the scheduled due date.
© Avraham Y. Goldratt Institute 1998
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The nature of Projects?
Anyone ever have or heard of a project taking longer than scheduled?
Anyone ever have or heard of a project going over budget?
Anyone ever have or heard of a project cutting specifications or scope?
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Why is it so difficult to manage projects to deliver on time, within budget and with the full specifications/scope intact?
Unforeseeable difficulties with vendors who supply equipment
Longer than expected in meeting Government and/or regulatory requirements
Unrealistic schedule
Unreliable (but cheaper) vendors or contractors
Unforseen emergencies
Difficulties in matching skilled resources with project need.
EtcWhat are the resulting effects ?
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What is the current experience?
Standish Group Statistics (IT Projects)
30% of projects cancelled before finished 75% of completed projects are late Average cost overruns of 189% Average time overruns of 222%
Standish Group survey results can be found at http://www.standishgroup.com
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Project characteristics
All projects have two things in common:
1. They involve high uncertainty.
2. They involve three different and opposing
commitments:
Due date, budget, and content
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Could the three opposing commitments / problems be caused by the uncertainty inherent in all projects?
Often projects have difficulty
finishing on time
Often projects have difficulty staying within
budget
Often scope or specifications are cut from a project
Uncertainty in Projects?
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Is uncertainty really the source of allthese problems?
If it is, then we would never be able to find a project that had a lot of uncertainty in it that finished significantly ahead of time - and that finished within budget and with specifications intact!
But, there has been at least one - the U2!
It was completed in 8 months, it beat its budget and met full specs!
What this means is that uncertainty is not the cause of our three problems. What cause could account for our three problems and the success of the U2?
Perhaps it has to do with the way we manage uncertainty!
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Perhaps it has to do with the way wemanage uncertainty!
Often projects have difficulty
finishing on time
Often projects have difficulty staying within
budget
Often scope or specifications are cut from a project
THE WAY WE MANAGE
UNCERTAINTY IN PROJECTS?
Adding significant safety everywhere, then wasting it!
© Avraham Y. Goldratt Institute 1998
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Which time are you likely to promise?
Your boss asks you when you can have a specific project task ready. You are already busy. Your boss does expect you to meet your commitments. You also take your commitments very seriously. There may be some unexpected surprises (uncertainty) you will have to deal with in doing the task.
With no difficulties at all, time A is a very slight possibility. With some surprises, time B is very likely. If a major disaster occurs, time C is likely.
Which time are you likely to give? Probably C, maybe even C+.
In projects, with the expectation that we will give realistic estimates of how long the task will take, when asked, we will likely give a similar response. If we have to keep our commitments and we know that our given time will be cut, we might give a time as long as C++!
A B C
Probability of Task Duration Time
50 %
80 - 90 %
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The “student syndrome”
Task Scheduled,Available Start Date
Task ScheduledCompletion Date
XMurphy
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The multiplying effect of multi-tasking
In order to keep each project on track, a resource does half of task A, then half of task B, then half of task C, then finishes task A, then B, then C.
How long does each task take to complete?
What happened to the safety time?
Task AProject 1
One Week
Task BProject 2
One Week
Task CProject 3
One Week 1/2 A 1/2 B 1/2 C 1/2 A 1/2 B 1/2 C
How Long?
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Delays are passed on — gains are not
Merging paths don’t allow us to benefit from tasks completed early - What’s the impact on the total project if Task A is done in only 3 days?
What if Task C takes 8 days?
What if Tasks A, B, and C, through some miracle, all get done in 2 days? (Will Task D be ready to start 3 days early?)
Task B5 Days
Task D10 Days
Task A5 3 DaysX
Task C5 8 DaysX
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Project Management Evaporating Cloud- Stuck between a rock and a hard place
Successfully manage uncertainty in
projects
Objective
Don’t add protection time to most tasks
Prerequisite
Add protection time to most tasks
Prerequisite
Account for uncertainty in
estimating task times
Requirement
Meet critical timing needs (while addressing
uncertainty)
Requirement
Because the best place to handle the
project uncertainty is at each task
Assumption
Because there is no way to add sufficient protection that results in short enough lead
times
Assumption
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10
20
16 16
1610
Let’s consider a simple project
Theoretical this project should finish within 56 days.
Will it?
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How do we measure a project?
A project has three elements:
Completion Date - when the benefits are realised (Throughput)
Scope or specifications - the definition of what is needed to be achieved so that benefits will be realised.
Budget - the money invested to get the benefits
Money Benefits
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10
20
16 16
1610
Statistics - What is the chance that the project will be completed on time?
The probability of the total project to finish on time is 26%
Upper path - 0.8*0.8*0.8 = 51.2%
Lower path - 0.8*0.8 = 64%
Integration: 32.7%
Let’s assume that each task has a probability of 80% to be finished on time.
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Project Management Evaporating Cloud- Adding “injections” to the reality of the conflict
Successfully manage uncertainty in
projects
Objective
Don’t add protection time to most tasks
Prerequisite
Add protection time to most tasks
Prerequisite
Account for uncertainty in
estimating task times
Requirement
Meet critical timing needs (while addressing
uncertainty)
Requirement
The project only protects what is
critical for handling uncertainty
Injection
Because the best place to handle the
project uncertainty is at each task
Assumption
Because there is no way to add sufficient protection that results in short enough lead
times
Assumption
We use aggregated buffers and shortened duration times for the
task times
Injection
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Project Planning: Direction of the Solution
Have strategic protection times - Buffers
5 85
8 8
10 Project Buffer 28
Feeding Buffer 16
10
20
16 16
1610
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Change in behaviours allows aggregated buffers to be smaller than the individual safety.
ie There is less Multi-tasking!!!
5 85
8 8
10 Project Buffer 14
FB 8
5 85
8 8
10 Project Buffer 28
Feeding Buffer 16
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Does it ever happen that a resource is needed in two places at the same time?
A5
C 8B5
D8 C 8
E10 Project Buffer 14
FB 8
What happens if the lower path experiences uncertainty beyond its durationtimes and the top doesn’t? Won’t we have a need for the C Resource at the same time?
Solution: The Critical Chain
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Identifying the Critical Chain
B5 C8
D8 C8
A5
E10
Resource dependencies are identified once resource contention is removed.
Finally, the longest path of dependent events - the Critical Chain - is identified. ( We have already removed the safety from the task times, which was half of original task estimate).
A5 B5
E10D8 C8 C8
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A feasible and immune schedule
A5 B5
E10D8 C8 C8
A5 B5
E10D8 C8 C8 Project Buffer 17
FB5
Buffers - Strategic protection of the Due date
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Buffers are used to provide focus and early warning to protect the critical chain and due date
BUFFER
OKWATCH& PLAN
ACT
RemainingProject Buffer:
0 6 7 12 13 17
RemainingFeeding Buffer:
0 2 3 4 5 5
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Project control - Buffer Management
The mechanism for gathering data provides us a glimpse into the future - so we can take action before we are in too much trouble.
The organization gathers the information for the status of the buffers in the following way:
Each resource that is working on the project gives a “daily” status of the time they estimate they still need to work until the task is complete. That information is used to calculate whether any buffer time would be gained or lost if these time estimates proved true.
This “daily” interaction is key to reinforce new behaviors and to provide opportunities to mentor resources.
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Project Management the TOC Way - summary
Project Management the TOC Way has fivemain components:
1. A synchronization mechanism that allows projects to be started later, but finished sooner and that clarifies resource assignment priorities. - i.e. Multi Project. 2. Planning processes that account for the needed dependencies and completion criteria. 3. Scheduling processes that concentrate safety where it will provide the most protection. 4. Changes in behavior that support a world class relay team culture. 5. Mechanisms that create “Project Control & Visibility” to assist in global decision making. Ie due dates.
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The change is both logistical and cultural!
Building and scrutinizing individual project networks in a way that significantly reduces the opportunity for missing critical dependencies.
Constructing project schedules in a way that recognizes both resource and path dependencies.
Placing safety strategically to protect the project, not the individual tasks.
Eliminating behaviors that waste safety.
Managing resource assignments according to which project has the greatest need. (Buffer Management)
Managing project progress according to buffer depletion - taking corrective actions when and only when required.
Software required to support:
Prochain Solutions - MS Project Add-on www.prochain.com
Concerto - ERP solution Thruput.com
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Results -Saturn Development Corporation
Construction of new car dealerships
History
20% overspent
Project length 6-9 months
Debate over whether it was on time
After implementing Critical Chain
Within budget
Project length 4 months
On time per original plan/promise
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Results -Harris Semiconductor - new $250m plant
New technology product - first 8-inch discrete power wafer fabNew raw material, new automated technologyNew facility, doubling capacityProject scope - construction, installation, ramp-up,Focus on actual delivery of production via the Critical Chain
Industry norm
Groundbreaking to first silicon - 28-36 months
Time to ramp production - 18 months
Harris results with Critical Chain
Groundbreaking to first silicon - 13 months
Time to ramp production - 21 days
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Results -Israeli Aircraft Industries
Wide-Body Aircraft DirectorateMulti-project maintenance operation
History
Average visit per aircraft - 3 months
Amount of work committed by customers- 2 months
One year after implementing Critical Chain
Average visit per aircraft - 2 weeks
Amount of work committed by customers- 1 year
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Results -Balfour Beatty Civil Engineering (UK)
1st Project - By pass road (A13) 80 M GBP - 2.5 yr
Half way stage - well behind schedule
Handover 2 weeks early -
99% complete vs Industry norm of 80%
2nd Project - 8km highway (A50)- 35M GBP- 2.4 yr
Beat tender program by 9.5 weeks
45 weeks earlier than contract completion date.
Increased Project Profit Margin.
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Results - June 1999 - Elbit Systems - Israel
Advanced Military Systems - 1,900 People (50% Engineers)
All projects management by TOC (36 projects 1 -2 years each)
Visibility of meeting contractual milestones months ahead
Two major platform upgrade programs met schedule within 2 weeks
Excellent synchronisation of Program Teams based on a common language
Recognising the fact that most of the resources in the company might be idle part of the time.
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Results - June 1999 - Seabridge - Israel
Telecommunications start-up - with Multi-Service Access Platform (50 people - 35 in R&D)
Purchased by Siemens & NewBridge in November 1997
To deliver Release 2.0 by March 1998 - Bonus tied
Performance - 5 months late
CEO reads Critical Chain - decides to implement Sept 1998
1st project on schedule; 2nd project 2 months early; 3rd on track to meet “Unrealistic time constraint”;
Major review by Siemens on company turnaround
© Avraham Y. Goldratt Institute 1998
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TOC is the ability to construct and
communicate common sense solutions
Developed by
Dr Eli Goldratt
and
The Goldratt Institute
You have been experiencing an application of Theory of Constraints
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For further information, books & details of services to improve your projects please contact:-
Robert BoltonAssociate of the Goldratt Institute
Probative Solution Pty Ltd
Tel: 02-9357 1455 Fax: 02-9357 1499
Mobile: 0412-235 616
e-mail: [email protected]
or
Visit web site: www.goldratt.com