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Critical Chain Program Management and Earned Value Management


Critical ... The purpose of critical chain scheduling is to achieve ... Identify resource constraints and critical chain. Assign duration with 50 ... – PowerPoint PPT presentation

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Title: Critical Chain Program Management and Earned Value Management

Critical Chain Program Managementand Earned
Value Management
  • Gregg Tiemann, Boeing
  • Eleanor Haupt, USAF
  • ASC/Industry Cost/Schedule Workshop
  • 5-7 April 2000

  • I only hope it is cast, not as EVM vs. CCPMbut
    as how to improve PM using the best tools for the
    project. Wayne Abba

  • Review of progress to date
  • Answering the Challenges
  • Quick Review of CCPM and EVMS Processes
  • Issues and Recommendations
  • Contractor Implementation
  • Baselining
  • Metrics
  • Government Implementation
  • Philosophy Implementation
  • Earned Value criteria
  • Benefits
  • Open Discussion
  • Review of Action Items

Review of Progress to Date
  • Solicited volunteers for working level team
  • current e-mail roster
  • 28 experts
  • 4 major defense companies
  • CCPM and EVMS experts
  • Co-Leaders
  • Gregg Tiemann, Boeing
  • Eleanor Haupt, USAF, Wright-Patterson AFB
  • Created website to share information
  • http//
  • Conducted working group meeting
  • 9-10 March, WPAFB
  • 4 panels baseline, metrics, government,
    implementation philosophy

Purpose of Team
  • Explore, develop, and recommend methods to
    integrate critical chain scheduling and EVMS in a
    complex project environment
  • Proposed methodology will be presented and
    discussed in workshops
  • ASC/Industry Cost and Schedule Workshop (Apr 5-7)
  • College of Performance Management Conference (May
    15-17, Clearwater Beach FL,
  • Results to be documented in Schedule Reinvention
    Teams schedule resource handbook
  • E. Haupt has lead

Attendeesof 9-10 MarWorking Meeting
Goals for 9-10 Mar Meeting
  • Identify major issues
  • Identify potential solutions to major issues
  • make recommendations
  • Identify any disconnects with current DoD policy
  • EVMS criteria
  • RFP language

Answering the Challenges
Answering the Charges
  • Tell me how you will measure me and I will tell
    you how I will behave if you choose to measure
    me illogically, do not be surprised by illogical
    behavior. Eli Goldratt
  • EVMS forces focus on local optima (task
    completion) instead of the global optima (project
  • EVMS fosters starting tasks early to earn value
    and results in bad multi-tasking.
  • You are absolutly right. Using Earned Value in
    managing and controling a project is devostating
    as I've repeatedly proved in Critical Chain.
  • Agree with statement. The measure of EVMS
    success has always been getting the project done
    on time and at cost. This should be our
    motivating principle.
  • Dont agree that it is black or white.
    Corrective actions should always be focused on
    how the task impacts the global goal of the
    entire project.
  • Nonsense. The EVMS baseline should be laid in to
    a realistic schedule (CCPM or not).
  • You are absolutely wrong. EVMS has been used
    successfully for over 30 years. It is now
    migrating to the private and worldwide sectors.
    EVMS is only as good as the baseline planning.

  • Resolved
  • The purpose of critical chain scheduling is to
    achieve breakthrough success, reduce cycle time
    of projects, and ultimately reduce cost.
  • The purpose of EVMS is the same, and in fact,
    EVMS baselines should be based on well planned,
    achievable schedules.
  • We recognize that...
  • - CC and EVMS are not mutually exclusive
  • - that EVMS application is flexible enough to
    integrate with CC
  • without driving additional reporting

Quick Review of CCPM and EVMS Processes
Critical Chain Scheduling
  • Lay out tasks, assuming 90 probability for
  • Network the tasks, perform backward pass,
    establish late finish dates (critical path
  • Identify resource constraints and critical chain
  • Assign duration with 50 probability to tasks
  • Deconflict the resource constraints
  • Protect the critical chain
  • Establish resource buffers on schedule legs
    before constraining resource
  • Establish feeding buffers on schedule legs that
    feed into the critical chain
  • Establish program buffer (assign half of interval
    between the end of the 50 and the 90 probable

Program Buffer
Normal Schedule, at around 90 probability for
task durations
Reduce durations to 50 probability
Divide difference by 2, assign as program buffer
resulting program buffer is about 33 of program
Resource Alerts Assure CC Resource Availability
Protects due date from CC variation
Task A
Task B
Task C
Task F
Task G
Program Buffer
Task J
Task D
Task E
Due Date
Task H
Task I
Aggressive Target Duration Estimates
Protects CC from non-critical task variation
EVMS Baselining
  • Lay out tasks
  • Network the tasks
  • perform forward pass to establish early finish
  • perform backward pass, establish late finish
    dates to meet milestones
  • critical path established
  • Program manager establishes assumptions for
    baseline dates
  • early or late finishes or somewhere in between
  • dependent on risk and overall schedule
  • Networked schedule (with milestone dates) used as
    basis for resource allocation
  • Budgeted Cost of Work Scheduled (BCWS)

Issues and Recommendations
  • Contractor Implementation

Baseline PanelPotential Issues
  • sizing of buffers
  • assign to buffers?
  • is 50 the right probability?
  • use of milestones
  • change process/control
  • initial program duration

  • Issue Sizing of buffers
  • Discussion
  • may be constrained by contractually mandated
  • Recommendations

  • Issue should resources ( or hours) be assigned
    to buffers?
  • Discussion
  • con
  • buffers may cover several WBS or OBS elements
  • any task on this leg may cause usage of the
    buffer, therefore the scope of the increased work
    may not be known until it happens
  • if the time buffer is not used, then it goes
    away, causing a paperwork drill to pull back
  • student syndrome if I have funding reserve,
    Ill spend it
  • pro
  • accumulation of added costs as buffer is consumed
    without being able to claim earned value drives
    poor CPIs
  • leaving about 1/3 of program value in management
    reserve invites raiding
  • some buffer is usually consumed, therefore
    requiring budget resources
  • Recommendations
  • alternative one
  • may allocate management reserve to some lower
    level to protect buffers
  • would not have work scope, WBS identity, or

  • Issue is 50 probability for durations the best
  • Discussion
  • CCPM advocates using 50 probability for
    establishing task durations
  • irregardless of nature of work (development,
    production, etc.)
  • May insert too much risk into complex development
  • Team noted that typical DoD programs may actually
    start at less than 50 probability
  • Recommendations
  • may wish to use different probabilities based on
    program phase
  • 70 for highly complex development efforts
  • 60 for normal development efforts
  • 50 for production efforts
  • on complex DoD programs, perform Monte Carlo
    simulation to determine probability of success
    BEFORE cutting duration times

  • Issue protecting contract milestone dates
  • Discussion
  • CCPM ignores all milestones except the end of the
  • typical contracts include milestone dates, and
    can be used for payment purposes
  • government programs report milestone dates to OSD
    and report progress against this baseline
  • Recommendations
  • government should be flexible in agreeing to
    milestone activities without set dates
  • e.g. Preliminary Design Review has a duration
    of 3 days, actual date will float
  • should work with contractor for insight into
    predicting milestone dates
  • government may need to find alternate way to
    assess progress and make payments
  • government should establish OSD goals on more
    conservative schedule (e.g., 90)
  • or, possible to insert buffers before milestone
  • or, phase program buffers before major milestones
    and treat as mini projects
  • e.g., activity from award to CDR is a mini
    project, with project buffer

  • Issue Baseline change process and control
  • Discussion
  • contractor may need more flexibility in
    processing baseline changes
  • Recommendations
  • contractors should establish rules for use of
    schedule buffers
  • contractors may wish to establish more
    flexibility in approving management reserve
  • e.g., allocate MR to IPT leads, with authority to
    approve at IPT level

  • Issue Initial program duration
  • Discussion
  • government contracts may be based on unrealistic
    milestones, high concurrency between development
    and production
  • probability may be less than 50 to begin with
  • Recommendations
  • outside the purview of this group
  • continue acquisition reform efforts to minimize
    schedule risk during initial program planning
    (before release of RFP)
  • on complex DoD programs, perform Monte Carlo
    simulation to determine probability of success
    BEFORE cutting duration times

Metrics PanelPotential Issues
  • Ignore SPI?
  • What are the appropriate metrics?
  • Create a new index?
  • Change variance reporting?
  • Impacts to EAC predictions
  • need demonstration projects
  • drill down into detail problem areas

  • Issue Can or should we ignore SPI?
  • Discussion
  • SPI compares earned value to planned value
  • if durations (and budgeted resources) are
    established at 50 probability, then it is likely
    that earned value will lag more more than normal
  • SPI will be low, driving a lot of variance
  • SPI can still be a valid indicator, pointing to
    problem areas
  • Recommendations
  • use SPI to drill down to problem areas
  • select alternate metrics to establish variance
    reporting (see other charts)

  • Issue What are the appropriate metrics?
  • Discussion
  • Need appropriate metrics to serve as early
    warning system
  • Should be appropriate to new TOC culture
  • manage the buffers
  • Recommendations
  • Focus on analyzing schedule variances through
    buffer consumption
  • Program manager should establish simple tiered
    warning system, e.g.,
  • 0 - 33 buffer consumed green (okay)
  • 34 - 66 buffer consumed yellow (watch plan)
  • 67 - 100 buffer consumed red (act)
  • Tailor tiered system to different buffers or risk
    areas in program
  • tighter control needed for resource buffers?
  • Tailor color coding to percent complete

Early Warning - Notional
project buffer consumed
0 25 50
75 100
critical chain percent complete
  • Issue Create a new index?
  • Discussion
  • SPI metric not appropriate for culture of buffer
  • Recommendations
  • Buffer Performance Index (BPI)

  • buffer consumed
  • BPI of 1 or greater is good
  • Others?

  • Issue How should variance reporting change?
  • Discussion
  • typical variance reporting thresholds would
    result in many more variances to report
  • need to tailor CPR or C/SSR DID
  • Recommendations
  • contractor defined significant variances
  • eliminate reporting on traditional schedule
  • report on buffer consumption
  • need to evaluate potential for additional cost
    variances to occur

  • Issue Impacts to EAC predictions
  • Discussion
  • some EAC formulas rely on a combination of CPI
    and SPI as a performance factor
  • SPI factors that are significantly worse could
    overstate EAC
  • Recommendations
  • use new index (BPI?) in place of SPI in EAC
    formulas, e.g.,
  • (CPIBPI)

  • Issue need demonstration projects
  • Discussion
  • theory and proposed recommendations need to be
    tried out in a demo project
  • concern can CCPM work for a very large and
    complex DoD project?
  • Recommendations
  • conduct smaller scale demo projects
  • track alternate metrics
  • analyze final results vs. metrics
  • analyze organizational behavior in relation to
    metrics - what drove behavior?
  • recommend best metrics for future projects
  • dont implement policy until we have a few demo
    projects completed

  • Issue need to be able to drill down into detail
    problem areas
  • Discussion
  • balance need for insight into problem areas vs.
    desire to control amount of reporting
  • Recommendations
  • provide drill down to the detail necessary to
    understand cost and performance

Issues and Recommendations
  • Government Implementation

Government PanelPotential Issues
  • Status reporting
  • impacts to FPRA business base
  • Paying subcontractors
  • Funding profiles
  • Incorporation into IBR process
  • Leveraging larger MR for out-of scope changes

  • Issue potential impact to government program
    status reporting
  • Discussion
  • quarterly OSD reports (Defense Acquisition
    Executive Summary) reports CV and SV and program
    office explanations
  • other reports go to Program Executive Officers
    and service staffs
  • SV could be misleading
  • use of SPI to forecast EAC could result in
    Nunn-McCurdy breaches
  • Recommendations
  • seek OSD approval to report alternate metrics
  • avoid use of SPI in EAC calculations

  • Issue Potential impacts to FPRA business base
  • Discussion
  • Are there significant changes from the baselined
    business base assumptions and the realized
    business base? In other words, we forecast
    indirect rates on the 50 probable schedule, but
    real performance causes a significant shift in
    the business base for the actual or applied rate.
  • Recommendations
  • Continue process of baselining rates at beginning
    of program and updating yearly to new forecast.
  • May wish to allocate MR to protect potential
    difference in rates
  • Educate DCMC at next quarterly DCMC earned value

  • Issue Timing of payment to subcontractors if
    they are on time, but prime is not
  • Discussion
  • What happens when a subcontractor delivers on
    time to the 50 probable schedule, but the
    primes performance has slipped, resulting in
    material sitting on dock prior to actual need
  • Will government allow payment to subcontractor in
    advance of revised need date?
  • Recommendations
  • Get DCMC/DCAA buy-in to allow payment for on-time
  • Educate administrative contracting officers

  • Issue Government funding profiles can be a
  • Discussion
  • Funding profile for development contracts are
  • Profiles are usually laid in before RFP is
  • Potential problem could result from mismatch
    between longer funding profile and more
    aggressive CCPM schedule
  • Recommendations
  • Program office should attempt to build funding
    profile to CCPM schedule
  • Seek approval to treat development money as 2
    year money (which it is) for flexibility
  • Establish contingent liabilities as needed

  • Issue How do we incorporate this into the
    Integrated Baseline Review process?
  • Discussion
  • How do we revise the IBR process?
  • How do we perform a more global look at
    constraining resources?
  • How do we evaluate a 50 probable schedule?
  • Recommendations
  • Alternatives
  • Joint IPT participation in baseline development,
    (not a single point review)
  • Phased IBR (work scope, then schedule, then
  • Phased IBR (global and top level assessments,
    then look at control accounts)

  • Issue Temptation to use Management Reserve (if
    much larger) for subsequent contract changes
  • Discussion
  • If not educated on CCPM, program office could
    lean on contractors to use large pot of MR for
    future changes
  • Recommendations
  • Education is key
  • May wish to allocate and identify MR based on 90

Issues and Recommendations
  • Implementation Philosophy

Implementation Philosophy PanelPotential Issues
  • Customer, Govt, DCMC Education
  • Tools
  • Impact to IPTs?
  • Bargaining agreements?
  • Apply to Subcontractors?

Implementation Philosophy
  • Issue Customer education
  • Discussion Commercial customer may not like
    size of buffers
  • Recommendations

Implementation Philosophy
  • Issue Government and DCMC education
  • Discussion
  • Recommendations

Implementation Philosophy
  • Issue Availability of tool sets
  • Discussion
  • ProChain and Concerto are currently availability
    schedule tools for CCPM
  • Flexible enough to handle the toughest DoD
  • Impact to current EVMS analysis tools
  • Recommendations

Implementation Philosophy
  • Issue Impact to IPT Concept?
  • Discussion
  • discussed
  • no impact seen
  • Recommendations

Implementation Philosophy
  • Issue Impact to bargaining agreements?
  • Discussion
  • Discussed
  • no impact seen
  • Recommendations

Implementation Philosophy
  • Issue How does the prime apply CCPM to
  • Discussion
  • Recommendations
  • Apply CCPM according to degree of risk

Benefits of CCPM and EVMS Integration
  • Better baselines and program execution
  • Schedule and cost
  • Better focus on enterprise resources during IBR
  • Better tailoring of metrics (e.g. focus on buffer
    consumption vs. strict thresholds)
  • Time saving
  • CC forcing re-examination of tools that have been
    around but ignored or not adequately utilized
  • Results in better project management

Earned Value Criteria
Youre under suspicion for violation of EVMIG
2.3 sub para 2a, questions 139 and 152
Review of Earned Value Criteria
  • EVMIG criteria reviewed by entire team
  • EV Criteria
  • 2.2 May need to apply CCPM to subcontractors
    based on risk and complexity (prime contractor
  • Alternatively place feeding buffer where sub
    schedules feed into critical chain or have
    supplier place buffer on their schedule
  • 2.5 Any buffer should have a unique WBS
    organization ID (e.g. program buffer may be
    assigned to the Program Mgr)
  • 2.6 Should only have ONE schedule
  • 2.7 Recommend insertion of buffers before key
    milestones (e.g. design reviews) IF there is a
    contractually required date
  • 2.8 Recognized DoD awards contracts with
    aggressive schedules (RFP requirement or
    competitive environment)
  • 2.12 LOE effort for time period of program
    buffer may be placed in management reserve at
    lower levels (e.g. at level of CAM for LOE
  • Note number refers to criteria contained in
    Earned Value Management Implementation
    Guide, Chapter 2,

Review of Earned Value Criteria
  • EV Criteria
  • 2.13 Current process of baselining rates at
    beginning of program and updating yearly to new
    forecast should not significantly change if using
    CCPM as baseline schedule. There may be more
    variability between the baseline and new rates.
    May wish to allocate MR for this potential
  • Recommendation Have DCMC/DCAA look at this
  • 2.23 conclusion variance analysis supports
    schedule variance on buffer consumption
  • 2.24 no change (rate variance)
  • 2.25 tailor reporting in DID

Review of Earned Value Criteria
  • No current problems seen implementing CCPM on a
    program that requires compliance with EV criteria

The final chart...
  • Open Discussion
  • Review of Action Items