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CRITICAL CHAIN
Submitted To: Submitted By:
Prof. Devendra Jaiswal Priyanka Singh
Pratibha Sharma
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It starts with the informal meeting to discuss thebusiness schools proposed budget for the next year.
She told a story of an agricultural school that grew at10% after some time the school did not need so manyof graduates but the expenses were remained same.
The financial burden was high enough to mandate adrastic cut throughout all the other schools.
She said that there is an another field that forcespeople to go through higher education, the newstudents enrollments at their law school are less thenhalf compared to three years ago
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Daniel Pullman the chairman and the CEO of Gene modem
Levy the executive vice president of engineering insisted on hiring aconsulting firm to do an in depth analysis of Gene modems product
development starting from examining the way they decide on features ofa new modem, through the development process.
Levy insisted on bringing experts from the outside and everyonesupported him
Levy looks at the three young managers who are inexperienced for thetask.
Mark an engineer from Kowalski was the group leader his task was tofind the solution to the biggest threat endangering the future of thecompany.
Levy explained the product life cycle of a product and said before wefinish the introducing a new modem into the market, we obsolete it bylaunching an newer one.
He also explained that Market price of a share is mainly based on theshare holders expectations based on our impressive track records
He said that their products life span is about six months & thedevelopment time is roughly 2 years so we have to launch a new productof our development.
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In this Rick have been assigned to teach a course in theexecutive MBA program he was at the position of semi-
respectable position of associate professors.
Now He was happy & the next step is to get professorship but
he can not get it if he keep neglecting the need to publish
articles.
He want something tangible , more connected to the real world ,real problems.
He was wondering that teaching managers is not easy because
they are not going to accept everything that he will say
Jim was trying to cheer up Rick. Jim suggested subject project management to teach which he
use to teach to get help in his research
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This is about B.J. vonbraun an excellent manipulator and
university president.
She ,Bernard Goldsmith and Alistair Franklin they each have large
business schools at their universities.
Alistair said that the last years were very good for us.
Organizations demand for new MBAs grew, but we didnt have
enough capacity to supply the demand.
B.J. asked that we dont have enough applicants because thecapacity of business schools has grown beyond the no. of people
who want to become managers.
That means we need to encourage people to choose
management as a career path. Bernard was not agree to this & said it may be because of
oversupply of demand and slow growth of our business schools.
They were comparing their schools with others in term of
students, course and the teachers as well.
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This is the class scene he was preparing himself For the class, heasked Mark about his course and other things & why he has
chosen this project management course and he started hiscommon interaction with the class.
He explained to the class about the course and its usage .
He asked others about their project.
He explained that a project is some block diagram of the various
steps that must be accomplish in order to achieve the objective. He further gave an example of project that didnt finish on time
or on budget.
He conclude that the problems common to all projects are
1 budget overruns
2 time overruns 3 compromising the content.
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Here, both B.J and Chris were discussing on
triming the business schools budget.
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What we want to do is:
Finish projects on time
Finish projects on budget
Finish projects on scope
Shorten project lead
times
Finish more projects
What we do is:
Manage to finish tasks
on time
Measure resources onutilisation
Detailed risk analyses
Detailed specifications
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General Problems
Budget overruns
Time overruns
Compromising the content
Financially, overruns are much less important than the
overdue
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Deadline Effect (Students Syndrome)
Multi Tasking
Synchronizing
High Set-Up Times
Delays Accumulate, Advances Dont
End of the month syndrome
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Task start
Projects seem to be longer than necessary
Parkinsons Law: work expands to fill the time available
Tasks seldom finish early
Student syndrome prevails: 2/3 of work done in last 1/3 of
time
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A critical path for a project is longest chain of dependent
steps.
The critical path determines the time it will take to finish theproject.
Delay in critical path Delay in project completion
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Make building
functional
30
Install machines
in building
30
Contract vendors15
Build machines90
Build Building
90
Critical path
150 days to prepare the building
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Late start- Postpone the investment until necessary No time slack Any delay on that path delay in the project Focusing not possible
Early start-Too many things at a time tend to lose focus
Focusing is lost
Think about it:Weigh the savings from postponing an investment againstchance of damage resulting from finishing the project a littlelate
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Milestones
What is been done?
Reward for starting each path at the earliest possible
time Encourages project leader to start unfocussed
Result?
Progress on one path compensates for the delay on
another
Difficulties accumulate Project overruns
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Uncertainties exist in projects.
A buffer is additional time to complete a task.
Murphys Law states that if something can go wrong, it will.
In traditional estimates, people often add a buffer to each task and use the
additional time whether its needed or not.
Time estimates are self fulfilling prophesy.(48)
Critical chain scheduling removes buffers from individual tasks and instead
creates:
Project buffer Feeding buffers Resource Buffer
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Project Buffer
Between the last task of the aggressive project schedule critical chain and the
committed end date
Feeding Buffers
Protect the critical chain from being impacted by non-critical chain
Resource Buffer
The resource buffer is an information signal to resources planned to work
on the project critical chain that the project task is coming up for work
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Every task has some safety
The greater the uncertainty and risk of the task, the
greater the safety included in your safe estimate
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Cost world Throughput world(90)
Focus to reduce cost Focus to increase
throughput
Any local improvement
automatically translates intoan improvement of the org.
If one link drops, the
throughput of the companydrops
Any improvement is
appreciated.
Improvement of the weakest
link appreciated.
At the beginning of the month these companies are managed
according to the cost world, at the end of the month according
to the throughput world.
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Throughput World The strength of any chain, process or system is dependent
upon its weakest link
Cost World The only way to achieve good cost performance is through good
local performance everywhere
If produced more, it will lead to accumulation of unnecessary inventory
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Net Profit ROI Cash Flow
Fundamental operating measurements bridge
ThroughputOperating
Expenses
Local
Actions
Decrease
IncreaseIncrease
Increase Decrease
Increase
Inventory
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Milestones Removed
Student Syndrome
Trimmed the SafetyPad
Multi Tasking
Resource Buffer in Place
Reduced Feeding Buffer
Reduced Project Buffer
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You manage the constraint
Or the constraint manages you
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Learning
This novel gives us the view on production &
marketing management. It has transformed
the thinking and actions of management
throughout the world. This book called A
Guru To Industry, which can change anyones
thinking about business.
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Thank You
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