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Critical Chain


Title: Critical Chain Author: Raymond Last modified by: aa2035 Created Date: 8/16/2006 12:00:00 AM Document presentation format: On-screen Show (4:3) – PowerPoint PPT presentation

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Title: Critical Chain

Critical Chain
  • Team 7
  • David D. Cho
  • Minyoung Kim
  • Bin (Raymond) Xiao
  • Hua Zhang

Chapter 1
  • The Company Genemodem
  • Impressive Track Record Profits growth in 6
    consecutive years
  • CEO Daniel Pullman (fully supported product
    development project)
  • VP of Engineering Issac Levy (insisted on hiring
    a consulting firm to do an in-depth analysis of
    Genemodems product development)

Chapter 1 contd (The Problem)
  • The Challenges
  • 1. Short product life-span
  • (like a triangle, only six
  • months, continue to
  • shrink)
  • 2. Long product development time (roughly twenty
    four months)
  • Resolution Drastically cut development time

Chapter 1 contd (The Project)
  • Target Drastically cut development time
  • Think tank Mark Kowalski, Ruth Emerson and Fred
  • Test ground A226
  • Time span Before A226 is ready (roughly 16
  • Resources No budget restrictions
  • Incentives 10,000 shares each (current price
    62.48, 62.4810,000624,800)

Chapter 1 contd (The Think Tank)
Chapter 2
  • Place University (Business school)
  • Characters Rick Silver (Associate Professor),
  • Jim Wilson (Full Professor)
  • Main Event
  • - Mr. Rick Silver is newly assigned to
    teach a
  • course in the Executive MBA.
  • - He is recommended by Jim Wilson, due to
  • unique style of teaching through open
  • - Jim Wilson suggests Rick Silver to teach
  • Management course and also he needs
    Rick Silver
  • in finishing some interesting research.

Chapter 3
  • Place A dinner event for Universities
  • Characters Ms. BJ von Braun and 4 other
  • presidents
  • Main Event
  • - Ms. BJ initiated conversation with other
  • about recent decrease in the number of
    MBA applicants.
  • - Presidents are sharing about their ideas of
  • reasons for the decrease could be both
    over capacity of
  • business schools and less demand of
    MBA degree.
  • - They also talks about that Ivy leagues
    are not
  • experiencing any decrease due to their
  • and strong financial ability to attract
    academic calibers.

Critical Chain
  • Chapters 4-6

What is a project?
  • Textbook definition
  • A set of activities aimed to achieve a specific
    objective and have a clear start, middle and
  • Professor Silvers definition
  • A complex initiative that needs pictures,
    diagrams, time charts, or showing sequential or
    parallel steps in order to manage it.

General Project Problems
  • Regardless of industry or project type, there are
    three common problems to all projects
  • Budget overruns
  • Time overruns
  • Compromising content

Conflicts - The Meeting
  • B.J Von Braun -
  • President of University
  • Saturating demand for new MBAs
  • Overextending capacity
  • Large fixed overhead for business program that
    might potentially decline
  • Christopher Page
  • Dean of Business School
  • Demand will not taper off
  • Need investments to maintain talent in the
    business schools
  • Talent will bring increase reputation and
    increase demand

Meeting Adjourns
  • Agreements
  • Ability of graduates to get jobs as indicators of
  • Use of survey tool as measurement
  • BJ VonBraun already has the results she gets
    Page to agree to the decision-making conditions,
    then shares results with him.

Class Example New Production Facility Built in
  • Sacred cow project for CEO
  • Project is grossly over budget and significantly
  • Payback period pushed from 3 to 5 years, which
    still seems unrealistic
  • All use uncertainty as reasons for delay - Upper
    management blames external environment and lower
    ranks blames internal sources

  • Most problems in projects are direct or indirect
    results of uncertainty
  • Most individuals add a safety margin to any
    deadline, usually around 80

Critical Chain Chapter 7-9
  • IOM580 Project Management Team 6
  • Leon Tseng, Jasmine Yeh, Troy Yu, Hiroshi Harima

Chapter 7
  • Scene 1 Conversation between B.J. and Chris Page

We shouldnt change with such small fluctuation
Trim the budget according to the forecast!!
Chapter 7
  • Scene 2 Conversation between B.J. and Bernard

Business schools fail to deliver the markets!!
Management is art. It cannot be taught as a
Chapter 8
  • Rick and Jim talk about the research subject
    Overdue and Overruns

Agree, but.
The budget overruns are not the main reasons for
the extended payback period
It is caused by the delays in completing projects
Chapter 9
  • Rick explains PERT and Gantt techniques to

Critical path is
Make an early start and keep the slack!!
Should postpone the investments until really
Its an optimization problem!!
Chapter 9
  • Class discussion gets heated

The issue must be addressed from managements
point of view, too!!
if starting too many things managers would be
bound to lose focus
Using late starts, we lose slacks and everything
becomes important
The control mechanism measures the progress of
the project. The problem is that by the time the
progress report indicates something is wrong,
its usually too late.
Chapters 10-12 OverviewTeam 8Jake Detels, Tom
Martin, Christopher Maynard, John Portwood
Chapter 10
  • Early vs. Late Start of Critical Path
  • A waste of time
  • Concentration on minor considerations and neglect
    the major ones
  • The main thing is for the project manager to
  • Both early and late start jeopardize the ability
    to focus, even though to different degrees
  • Measuring Progress of Projects
  • Measurement should induce the parts to do what is
    good for the system as a whole
  • Measurement should direct managers to the point
    that needs their attention

Chapter 11
  • Manage for Cost or Manage for Throughput
  • Theory of Constraints (TOC)
  • Only one or two true constraints in system
  • TOC says that conflict implies a faulty
    assumption and that must be corrected
  • Example The only way to achieve good cost
    performance is through good local performance
    everywhere (Sub-Optimization)
  • Incorrect assumption and root of
    problems in many organizations
  • Strengthening the Chain

Chapter 12
  • Prime Measurement
  • Again, there is only one (or two) constraints in
    a system
  • Identification of the system constraint should
    drive identification of the Prime Measurement
  • The main reason for an operational measurement is
    to induce the departments to do what is good for
    the company as a whole
  • Tell me how you measure me and Ill tell you how
    Ill behave.
  • Book examples changes at a steel mill

Critical Chain Chapters 16 thru 18
Group 3 Katelyn Fang Sherry Liu Kevin
Nagatori Adam Terry IOM 580 Dr. Ardavan
Asef-Vazir Spring 2009
Chapter 16
  • Pitfalls of Managing a Program
  • Pad each steps completion dates.
  • Pad each step with a lot of safety time
  • Waste safety time
  • Student Syndrome
  • Multi-Tasking
  • Delays accumulate and advances do not

Chapter 16 (cont)
  • Bottleneck a resource with capacity that is not
    sufficient to produce the quantities that the
    market demands.
  • Critical Path the constraint of the project.
  • Feeding Buffer a buffer used by the non-critical
    path so that it does not affect the critical path.

Chapter 16 (cont)
Before / Most Common
Project Plan with buffer at each step
After / Best Way
Project Plan with buffer at Critical Path and
Feeder Buffers for Non-Critical Path
Chapter 17
  • Monitoring Progress
  • Before gt Monitor critical path by complete
  • After gt Adding feeding buffer monitoring
  • Days consumed on feeding buffer
  • Days consumed compared with original buffer days
  • Days left on feeding buffer
  • Conclusion gt Focus on continuous monitoring

Chapter 18
  • 2 Types of Projects
  • Projects done solely by the company
  • Reduce lead time estimates
  • Eliminate milestones
  • Frequent reporting
  • Projects done by vendors and subcontractors
  • Talk their language
  • Pay for vendor responsiveness
  • Penalty for not finishing a project on time
  • Cash Flow
  • Sales
  • Market Share
  • Stock Value

The Critical Chain
  • Group 2 Chapters 19-21

Lose-Lose to Win-Win
  • Student (Ted) looks at the relationship between
    contractors and owners
  • Lose-Lose
  • Contractor bids low to obtain contract
  • Contractor makes more money off of changes and
  • Owner pays high price for changes
  • No incentives for contractor to complete the
    project on time

Lose-Lose to Win-Win
  • The Win-Win relationship
  • Owner benefits from a project which is completed
  • Owner shares this benefit with contractor in
    incentive bonus for finishing early
  • Owner punishes contractor for finishing late with
    heavy penalties
  • Contractors no longer bid on price but ability to
    complete project faster