Multi-Project Management The Theory of Constraints Way

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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

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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.

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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.
• Etc What 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?
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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!

• Adding significant safety everywhere, then
  wasting it!

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Which time are you likely to promise?
80 - 90
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• 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!

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The student syndrome
X Murphy
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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?

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Delays are passed on gains are not

• Merging paths dont allow us to benefit from
  tasks completed early - Whats 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?)

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Project Management Evaporating Cloud- Stuck
between a rock and a hard place
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Lets consider a simple project
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10
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• Theoretical this project should finish within 56
  days.
• Will it?

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16
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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
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Statistics - What is the chance that the project
will be completed on time?
Lets assume that each task has a probability
of 80 to be finished on time.
The probability of the total project to finish on
time is 26 Upper path - 0.80.80.8
51.2 Lower path - 0.80.8 64 Integration
32.7
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Project Management Evaporating Cloud- Adding
injections to the reality of the conflict
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Project Planning Direction of the
SolutionHave strategic protection times -
Buffers
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Change in behaviours allows aggregated buffers to
be smaller than the individual safety.ie There
is less Multi-tasking!!!
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Does it ever happen that a resource is needed in
two places at the same time?
What happens if the lower path experiences
uncertainty beyond its duration times and the top
doesnt? Wont we have a need for the C Resource
at the same time?
Solution The Critical Chain
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Identifying the Critical Chain

• 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
E10
D8
C8
C8
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A feasible and immune schedule
Buffers - Strategic protection of the Due date
A5
B5
FB5
E10
D8
C8
C8
Project Buffer 17
A5
B5
E10
D8
C8
C8
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Buffers are used to provide focus and early
warning to protect the critical chain and due
date
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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 five main
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 RD)
• 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

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You have been experiencing an application of
Theory of Constraints
TOC is the ability to construct and communicate
common sense solutions Developed by Dr Eli
Goldratt and The Goldratt Institute
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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 [phone] Fax [phone]
• Mobile [phone]
• e-mail probativ_at_ozemail.com.au
• or
• Visit web site www.goldratt.com