Project Management
Workshop
By Jonathan W. Powell, CGFM, PMP
Agenda
• 'Cost world' perspective
• 'Throughput world' perspective
• Three mechanisms to add 'safety'
to projects
• Three mechanisms that waste
project 'safety'
• Critical chain analysis to ensure
project success
I
n
t
r
o
d
u
c
t
i
o
n
The Problem
• High Tech Industry
Product Life Cycle
High Tech
The Problem (Cont.)
•
•
•
•
Development time of 2 years
New generation of modems every 6 months
Not ‘are we going to miss’ but ‘when?’
Huge ramifications
– Miss completely
– Launch inferior product
– Launch good product late
Market
Share
Stock
Price
The Problem (Cont.)
• Genemodem decides to form a think tank
– Three managers (Finance, Engineering,
Marketing)
– No budget restrictions
• Mission – “Find a way to drastically cut
development time”
Solving the Problem
Answer #1 – Cost World
Perspective
• Cost World Perspective = Driving local
efficiencies
• What this fails to account for is the linkage
between dependent steps
• Using the analogy of a chain -
It Depends! Which One is the Weakest Link?
Answer #2 – Throughput World
Perspective
• Throughput World Perspective = Driving
production [output]
• Managing by both the Cost World and
Throughput World causes irreconcilable
conflict
Bottleneck
Theory of Constraints Analysis
Four Step Process
1. Identify the System’s Constraint
• Find the weakest link!
– Could be physical or it could be something like an
erroneous policy
2. Strengthen the Weakest Link
• Adding more capacity
– Hire more people or buy more machines
• Squeeze the maximum from the capacity we already
have
Theory of Constraints Analysis
(cont.)
Four Step Process (cont.)
3. Subordinate Everything to the System’s Constraint
• If the bottleneck can only do 3 units/hour, don’t demand 5 units/hour!
• If 3 units/hour is unacceptable then revisit Step 2
4. Elevate the System’s Constraint
• Strengthening the weakest link to the point where it is no longer the
weakest link
• Repeat the four steps based on the new weakest link
New Bottleneck
Project Management Application
– Step 1 – Identify the Constraint
• The constraint for a particular project is its critical
path – Delays to the critical path delay the project as
a whole
– Step 2 – Strengthen the Constraint
• The question – We want to strengthen the constraint
– the critical path – How do we do this?
The Concept of ‘Safety’
• Safety = The difference between the median of the
probability distribution and the actual estimate
• Typical for people to provide estimates that give
them over an 80% chance of success
• However, probabilities of 80% or more yield
safeties of 200% or better
• Three (3) common ways safety is added to a
project
Three Common Ways to Add ‘Safety’
• Time estimates are based on pessimistic
experience
• Larger number of management levels
involved = higher total estimation, because
each level adds its own safety factor
• Estimators also protect their estimates from
a global cut
Three Common Ways to Waste ‘Safety’
• Students’ Syndrome – first fight for safety
time, then wait until the last minute anyway
• Multitasking
A
10
10
10
A
B
C
B
C
A
B
20
20
20
C
Three Common Ways to Waste
‘Safety’ (cont.)
• Reluctance to report an Early Finish
Project Management Application (Cont.)
• Step 2 – Strengthen the Constraint
• Example Project, Four Steps of Varying
Length (all on the critical path)
Step #1
Step #1
Step #2
Step #2
Step #3
Step #3
Step #4
Step #4
Project Buffer
Project Management Application
(Cont.)
• Step 3 – Subordinate Everything to the
Constraint
– Develop feeding buffers for tasks that feed into
the critical path
– Provide resource buffers – eliminate negative
impact of multitasking
Pulling Together the Pieces
Project Management Application
(Cont.)
• Step 4 – Elevate the System’s Constraint
– During the natural progression of a project, the critical
path may change one or more times
• A critical path change means that your constraint has changed
• Determine the new constraint and re-perform four-step analysis
– Also, organizations may be performing many projects
• The same resource may be needed to perform critical path
tasks on different projects
• The dependencies between the critical path tasks of the various
projects is called the Critical Chain
Conclusion
'Cost world' perspective
'Throughput world' perspective
Three mechanisms to add 'safety' to projects
Three mechanisms that waste project 'safety'
Critical chain analysis to ensure project success
Credits and Contact Info
www.eligoldratt.com
Jonathan Powell, CGFM, PMP
jwpowell@us.ibm.com
240-715-3926