Critical

Chain: Assessing the Efficacy and Feasibility

May 6, 2014

Abstract

The three pillars of project management as every project manager is well aware are
schedule, scope and cost. They are necessary conditions and the success of a
projects execution will be measured against the planned vis--vis actual
performance of these three criterions. In a specific project they may be co-equals or
one may be more heavily weighted than the others, but make no mistake they are all
important and they are all evaluated.

Many companies are successfully managing their projects across every industry
sector since 1997 using Critical Chain project management (CCPM) methodology.
The results suggest this is a legitimate alternative to the Critical Path (CP) project
management methodology. After sixteen years of CCPM acclaim in the market it is
time for a critical review of the effectiveness while evaluating completeness of the
solution in managing the three pillars.

Some key distinctions between CP and CCPM will be highlighted. There are some
technical differences and there are some logical precepts separating the two
methodologies. The CP approach has been captured and documented in the Project
Management Institutes (PMI) Body of Knowledge (BOK) and the CCPM approach in
the Theory of Constraints International Certification Organization (TOCICO)
Dictionary. When Eliyahu Goldratt published, Critical Chain in 1997, different
software solutions were developed capturing the essence and logic of the CCPM
approach. As a practical matter the complexity of the project management
environment, both CP and CCPM approaches require software embedded with their
respective logic, assumptions and rules.

The CP approach is well documented in the PMIs BOK and many other additional
sources. The BOK provides a written roadmap covering all aspects of project
management. Although the PMI recognizes CCPM, clearly their emphasis focuses on
the traditional CP approach. On the other hand The TOCICO provides a written
Dictionary providing the commonly used CCPM definitions while providing a
roadmap by testing individual knowledge of CCPM theory leading to a TOCICO
certification. Many books and papers have been published augmenting the
theoretical and practical CCPM knowledge. The International Supply Chain
Educational Affiliation (ISCEA) has developed the IC3PM, (ISCEA CCPM
Certification) which provides training in CCPM theory and in Exepron software via
an IC3PM workshop.

Copyright 2014 Daniel P. Walsh

Having worked with companies in different industry sectors over the years I am no
longer surprised by the extent of unawareness that much of the work they do are de
facto projects. If they are not recognizing the work as projects they will not derive
the significant advantages that could be achieved by using project management
tools. Or even if the work is recognized as being projects, their project management
performance is less than desirable, falling short of what could be achieved. This is
the result of many factors such as the companys culture, previous experience and
lack of training. In addition there is a general lack of leveraging the advancements
in knowledge and technology to challenge some of the long accepted beliefs of what
determines whether a series of tasks qualifies as a project.

We will be examining how effectively the CCPM approach provides the tools for
planning, scheduling and controlling projects. This can only be fully accomplished
by successfully managing the three pillars of the triumvirate.
































Copyright 2014 Daniel P. Walsh

Critical Chain: Assessing the Efficacy and Feasibility

In order to better appreciate the Critical Chain Project Management (CCPM)
approach to project management it is important to understand that CCPM is part
technical and part methodology. As you will soon see this requires challenging some
of the conventional paradigms and thinking.

Critical Chain The Critical Chain (CC) is defined as the longest chain of
dependencies taking task and resource dependencies into consideration. It is the
constraint of the project. This is different than the Critical Path (CP), which is
defined as the longest chain of task dependencies. This is a significant new
approach and technical departure with far reaching implications from the
conventional CP paradigm. In the CC there may be a resource dependency and not a
physical predecessor and successor dependency between tasks. In execution the
CCPM methodology does not permit the planned CC to change whereas in CP
methodology it is acceptable for the original planned CP to change. This is a very
significant paradigm change and is the basic building block for the CCPM technical
and methodology approach.

Think of the CC being the datum plane that will remain a constant for everyones
focus while managing the inevitable variability and uncertainty impacting the
project during execution. One of the obvious advantages of maintaining the same CC
from start to finish is that decisions made protecting the CC in most case will remain
valid vis--vis decisions that are made protecting a continuously moving CP that
may actually contribute to an ever changing of task prioritization.

The first step after the team reaches consensus on the objective of the project is
agreeing on the scope of the final task. This means a well-defined exit criterion
identifying the three necessary elements:

The scope of work or effort to achieve the exit criterion
The required principal resources needed to execute
The best estimation of the time duration to achieve the exit criterion

It is essential to engage the most knowledgeable people, as this is a very important
building block and essential for developing a CCPM schedule. The time duration for
the task is based on extracting all of the safety, padding, management reserve in
order to get as close as possible, to the actual hands on time duration. This means
that all of the anticipated variability and uncertainty that will be encountered in
execution are ignored when determining the duration time of a task. Since we dont
have a crystal ball to see into the future, in the planning phase all we can do is give
our best guess on how long it will take do the task. As a reminder in planning the
Copyright 2014 Daniel P. Walsh

task duration time is in reality a non-deterministic number, the team uses their
knowledge and experience to determine the time without the burden of anticipating
how much safety time will be needed in execution. Using the median time for the
task duration is a good rule of thumb Figure 1. However, the team has to recognize
that process driven task duration may not have any embedded safety, (If it takes 2
days for paint to dry). As we will see later, the final CCPM solution will provide the
protection currently being provided at the task level with CP methodology with a
more effective protection for the entire project.

Copyright 2014 Daniel P. Walsh

Figure 1.
Source: TOCICO Dictionary


Using this disciplined methodology the next step is constructing a logic based
project network. Following the advice of Stephen Covey, Start with end in mind,
we place the final task furthermost to the right on the planning screen. We are
preparing to build the project network, starting at the right and adding tasks to the
left based on cause and effect dependency. So this means the network is being built
from starting from right to the left. Many project managers initially may feel more
comfortable building the network from left to right, but this akin to the adage, If you
dont know where you are going any road will get you there. This is a crucial part of
the CCPM methodology; it will result in a logic-based network, providing greater
clarity on the true required scope of each task. Much of the nice to have and
superfluous content will be more easily identified and flushed out of the task,
Figure 2.

Figure 2.
Source: www.exepron.com

When establishing the predecessor-successor dependency between tasks, the CCPM
solution limits creating only start to finish relationships. This limits the degrees of
freedom, reducing complexity, while sharpening focus on the cause and effect logic
of the final schedule. Once the scope of a task is agreed to, the team asks the
question, What must be accomplished in order to start this task, (successor task),
the answer to this question will define the scope of the predecessor task(s), Figure
3.

Figure 3.
Source: www.exepron.com

This process will be repeated until there are no further predecessor tasks. Once this
is reached, the first task on the multiple pathways of predecessor-successor tasks,
furthermost to the left is identified and will become the first task in the CCPM
schedule. This means that there may be multiple tasks with no predecessor tasks.
However every task except for the final task will have a successor task. It is
recommended using a PERT type of format for developing the project network since
it is provides visibility and is very easy for changing task predecessor-successor
relationships. However using an alternative format such as a spreadsheet format
for identifying the predecessor-successor relationships is acceptable.

Copyright 2014 Daniel P. Walsh

Following this disciplined process will produce a project network that will be used
as the basis for creating a CCPM schedule. It will be a tight, cause and effect based,
with a well defined individual task scope, project plan.

Now the project plan is ready to be turned into a CCPM schedule. The projects
Critical Chain (CC) is identified within the project network plan, which is the longest
chain of dependencies, taking both task and resource dependencies into account.
This is simply recognizing that you have to schedule the tasks that must be
performed and the required resources to do the work. CCPM gives both the tasks
and resources equal footing when developing a schedule, so it follows that
sometimes the resource dependency may be the limiting factor. This is crucial since
resource overloading is the primary cause of multi-tasking in execution.


Managing Variability and Uncertainty

After the CC has been created the areas of highest risk in the project are identified
and Time Buffers are placed where they can provide the greatest protection for the
project. Lets spend some time describing the concept of Time Buffers.

Buffers A buffer of aggregated safety is placed at the end of the final task of the
Critical Chain. This final task is by definition also the final task in the project. When
building the Critical Chain schedule all of the embedded safety within the individual
tasks are extracted and a portion of the removed safety is placed in various buffers
throughout the schedule. A portion of the removed safety is placed after the final
task of the project and is called the Project Buffer in order to protect the delivery
date. In addition a portion of the removed safety is placed at the convergence
points, where a non- critical chain task feeds into a critical chain task. These are
called Feeding Buffers. These convergence points are referred to as integration
points and are areas of inherently higher risk. They provide extra safety to
immunize the Critical Chain from the impact of a non-critical chain task finishing
late. Once the project starts and delays are encountered, the individual tasks will
borrow time from the Buffers, and replenish time if the time is not required,
protecting the individual tasks, Critical Chain and the project due date.

Now the project network plan is ready to be converted into a CC schedule. As you
can see the Buffers are inserted and the CC schedule is created, Figure 4. The dark
blue tasks are the critical chain tasks. The project buffer is placed at the end of the
final project task to provide protection against the inevitable variability during
execution. The light blue tasks are the feeding chain tasks. A feeding buffer is
inserted at the convergence point of the final task in the chain into the critical chain
task. This provides additional protection to the critical chain and protection to the
projects due date. The due date corresponds to the calendar date at the end of the
project buffer. The buffers will push all of the chains scheduled starts earlier in time


Copyright 2014 Daniel P. Walsh

Figure 4.
Source: www.exepron.com

Since the CCPM approach strives to plan and schedule the task touch time with all
of the safety removed, the cycle time of the project will be less than a CP schedule.
The CCPM solution leverages aggregation theory, taking a portion of the safety time
removed at the task level and placing in the time buffers. Typically, the amount of
safety time inserted into the buffers is half of what was previously embedded in the
tasks. So, with half the safety the project has much greater protection. This is a
major paradigm shift, providing protection at the project level vis--vis providing
protection at the task level. The variability at the task level is greater than at the
project, or system, level. Therefore a fundamental change in project management
focus is required.

CCPM provides a tool called Buffer Management for managing the project in
execution. This provides a mechanism for measuring the acceptable burn rate of
buffer usage and monitoring the potential impact it will have on meeting the
required due date to the customer. Think of this as keeping the project within the
established control limits. This reduces the needless intervention, changing of
priorities and resource multi- tasking to a minimum. During project execution
whenever an unacceptable buffer burn rate trend develops, the task or tasks causing
the disturbance are quickly identified, focusing the team on devising and
implementing a specific recovery plan to keep the system in control, Figure 5.








Copyright 2014 Daniel P. Walsh

Figure 5.
Source: www.exepron.com

This will transform project managers from being de facto task managers to truly
managing the project. Obviously managing the performance of the tasks are
important, however far more important is understanding which tasks are
jeopardizing the delivery date while there is still enough time remaining for
corrective action. Regrettably in your current environment, in many instances,
corrective action is too late. The transformation to CCPM will allow the team to:

Focus on the few and not the many
Know when and where to intervene
Prioritize attention on the tasks causing the greatest risk to the project
Maintain the original planned CC for the life of the project
Identify and correct disturbances while there is enough time remaining

There are several acceptations to the claim that the original CC will be maintained
for the life of the project.

1. CCPM protects a project from the impact caused by common cause variability.
In fact in many environments it provides a 95% probability of finishing the
project on or before the original promised completion date. It is not possible
to provide a solution that will protect against special cause variability,
however CCPM provides an earlier and more accurate impact on achieving
the committed to completion date.
2. If there is a significant growth in scope. CCPM provides sufficient protection
against a moderate increase to the scope by Buffer Management. However at
some point the management team must assess the feasibility of continuing
with the current schedule or decide that a new plan and schedule must be
developed.

The team must now recognize that the original project scope and therefore the
original schedule are no longer valid. In essence from a scheduling perspective this

Copyright 2014 Daniel P. Walsh

is now a new project, requiring a new schedule. It cannot be overstated that this is
the acceptation and not the norm when CCPM methodology is being used.




Cost: The Third Pillar

There is abundant empirical data suggesting that CCPM methodology and software
provide a very effective methodology and tools for managing both the scope and
schedule in a project. The results reported by companies that are using CCPM
supports the belief they will have a congruent positive impact on controlling budget
costs. In addition similar results have shown a similar positive impact on earned
value creation. So the obvious question that begets an answer is if CCPM
methodology is so effective in addressing scope and schedule then why has the third
pillar, cost not been incorporated?

The answer may not be readily apparent, so we must better understand why cost
was not incorporated into the CCPM solution. The CCPM solution incorporates
buffers that are really time buffers inserting them at the high-risk areas of the
schedule. This has the effect of scheduling many of the tasks earlier in time in order
to accommodate the insertion of the buffers into the schedule. This is possible
because the safety time is removed from the tasks and by leveraging aggregation
theory the CCPM schedule provides greater protection for the project with less
safety time or time buffers. With minimum education it is quite easy for individuals
and companies to understand and accept this concept.

As we know every solution, no matter how powerful and innovative have potentially
negative aspects. Such is the case with CCPM and experience teaches us that it can
limit or in some cases keep companies from incorporating the solution. The
negative aspect is that CCPM is not directly compatible and thus not synchronized
with the companys cost planning and execution legacy tools. Even if a company
overcomes the negative aspect and successfully deploys CCPM, over time may lead
to abandonment.

This is symptomatic of a conflict of thinking between what we will refer to as the
cost world and the throughput world. This conflict does not exist when using
conventional CP methodology since it resides in the cost world. The basis for
developing a CP schedule starts with taking a specification turning into a WBS and
identifying the work that must be accomplished which is the basis for estimating the
project cost. So far there is no conflict with the CCPM solution that resides in the
throughput world. The process from taking a specification and or WBS, converting
into an execution plan and then an execution schedule is where the conflict starts.
Using CP methodology the identified cost within a task is based on the level of effort
or earned value added. So it follows that the cost and the scheduled time to
complete the task are completely compatible.
Copyright 2014 Daniel P. Walsh


This is the origin of the major conflict with CCPM methodology. The building of a
CCPM schedule starts with identifying the effort required at the task level, which is
compatible with the specification and WBS. However the task level of effort and the
time to complete is based on extracting safety out of the task. This is the median
time discussed earlier, which in many cases requires reducing the time to complete
the task in half. The CCPM methodology schedule is developed on the assumption
there is a 50% chance the task will finish within the scheduled time. This does not
mean the level of effort, or cost is 50% less. In fact this means a task will take longer
than the scheduled time 50% of the time and will require additional level of effort.
This is consistent with CCPM methodology; you plan for the known, albeit it may be
your best guess while planning for the unknown variability. The protection against
variability is provided with the time buffers, which immunize the project schedule.
However there is a cost associated by maintaining enough resources as protective
capacity and this protection and must be accounted for in the budget.

This is a crucial requirement that CCPM ignores; reconciling the actual costs in
planning and then managing in execution. A similar dilemma is encountered
reconciling earned value with CCPM methodology. The problem is caused by the
same conflict and therefore follows that the solution must address both
requirements.

There have been attempts at solving the dilemma, regrettably with a noticeable lack
of acceptance. One of the solutions identified in the TOCICO Dictionary is the
concept of cost buffers. This attempts to budget for the associated cost of the
required protective capacity to offset the additional effort of supporting tasks when
they exceed the planned cost. This is recognition that additional effort will be
required in execution, however it is not possible to forecast when and where and
how much will be needed. With cost buffers the additional costs are accounted for
by aggregating anticipated cost increases. The formulae for deriving the cost buffers
appeared to be somewhat arbitrary and the calculus difficult to defend. Even
though individuals and companies accept the concept of time buffers they resist
accepting the concept of cost buffers.

CCPM drives companies to complete projects significantly faster with a much higher
probability of meeting the committed delivery date. This will de facto drive down
the actual costs by making the resources more productive. So the solution must not
penalize the company from generating additional throughput for their efforts. The
solution to the dilemma is surprisingly simple yet the ramifications are profound.

The CCPM solution focuses on throughput, hence it is referred to as being in the
throughput world. However it must address the cost world needs of being able to
plan, schedule and manage budgets and earned value. Frank Whitley the inventor of
the jet engine was asked how he developed this game-changing solution. To
paraphrase his response, I didnt hire any propeller engineers. Accepting and
Copyright 2014 Daniel P. Walsh

10

recognizing that the budget and earned value are and must remain in the cost world
is the key to adding the third pillar of project management to the CCPM solution.

Render unto Caesar the things that are Caesar , instead of perpetuating and
challenging the universally accepted precepts of cost accounting, rather embrace
them and incorporate into CCPM thinking. Then the CCPM tools must develop this
capability, reconciling and mapping all of the costs and earned value directly to a
specific task in the projects CCPM schedule. This becomes an integral part of the
planning phase scheduling phase execution phase.


Summary

In order for CCPM to become a legitimate alternative to CP project management it
must address all three of the pillars cost, schedule and scope. The key is being able
to budget while in planning and track costs and earned value in execution just like
we do today, in what we will call the cost world. This will allow for the oversight
and scrutiny for meeting regulatory and fiduciary requirements. Since this is the
method currently used it will not require any paradigm changes.

The CCPM approach to planning the projects tasks and turning into a schedule
requires a change in thinking. Using a WBS is an effective way for identifying the
scope and capturing the cost and earned value. However the limitation to the WBS
structure is that it does not address the interactive work dependencies across the
vertical multiple silos at the different levels. In other words, the WBS is a top to
bottom hierarchical structure identifying the required work within different
competencies and functional areas in the WBS.

The CCPM project schedule is built horizontally, starting at the end, establishing the
work dependencies across the competencies and functional areas. This is a very
effective way for establishing the logic driven predecessors and successors
relationships. This will produce a significantly different schedule than just rotating
the WBS ninety degrees to the right. CCPM methodology requires identifying the
predecessor and successor relationships for the work (tasks), identifying the
required resources for each of the tasks then this is converted into the project
schedule. As a reminder all of the safety is removed from the tasks and time buffers
are strategically placed in the schedule.

The cost and earned value are calculated in the cost world and the schedule is
calculated in the throughput world. We now can now mange the three pillars. Now
the cost data can be directly mapped back to the CCPM task. It might be helpful to
visualize two parallel universes that will have to be updated in execution. We will
update the cost and earned value and update the time remaining in the project
schedule. The additional effort is very minimal and the benefits enormous.

So, what shall we call this addition to the CCPM approach? Lets call it CCPM Pro.
Copyright 2014 Daniel P. Walsh

11

Daniel P. Walsh is a noted critical chain expert. He along with John Thompson founded
Exepron, an innovative and advanced critical chain SaaS business solution that in
addition to CCPM have developed the CCPM Pro capability. The solution can be viewed
at http://www.exepron.com .

Copyright 2014 Daniel P. Walsh

12