How to Plan and Monitor Projects Successfully With Critical Chain

How to Plan and Monitor Projects Successfully With Critical Chain - Project Management

Projects often have to be carried out in the shortest possible time and absolutely on schedule. Speed and reliability are crucial. Critical Chain Project Management (CCPM) can help you here. CCPM has been around for several years. However, it has not yet become established. However, many elements of it can be applied very well in any “normal” project planning. In this article you will learn what the special characteristics of Critical Chain Project Management are and how you can benefit from it.

Time Can be Critical in Projects

Time plays a decisive role in projects, especially in infrastructure and maintenance projects, but also when it comes to getting to market with a new product earlier than the competition. Here, projects must be completed in the shortest possible time and absolutely on schedule. Speed and reliability are crucial. An unnecessarily long project duration or delays often cost contractual penalties or reduce the company’s profit. One method that can significantly support on-time project execution and promises up to 30% shorter project duration is Critical Chain Project Management.

How Critical Chain Project Management Emerged

Critical Chain Project Management (CCPM) is based on methods and algorithms derived from Theory of Constraints. It was developed by Eliyahu M. Goldratt and introduced in 1997 in Eliyahu M. Goldratt’s book, Critical Chain. It is a method of planning and monitoring projects that focuses on the resources (people, equipment, physical space) required to execute project tasks. CCPM differs from traditional methods, which are derived from the critical path method or the PERT algorithms, where the emphasis is on the sequence of tasks and rigid planning.

Although the Critical Chain Project Management (CCPM) method is relatively easy to understand, it is not so easy to implement in practice, which is subject to many uncertainties. Therefore, in this article I describe as simply as possible the essential principles that can also be usefully implemented in any good project planning.

The Basic Principles of Critical Chain

Critical Chain Project Management (CCPM) aims to implement projects with the shortest possible duration – in contrast to traditional planning methods. This is achieved by carrying out as few projects as possible in the company at the same time and by optimally allocating resources to the project activities. The aim is to have as little Work in Progress (WIP) as possible.
It is also the goal that project employees work for only one project or activity and are therefore not repeatedly interrupted during their work. Thus, harmful multitasking can be avoided. All buffers are also removed from tasks and placed at the end of the project as a collective buffer.

An essential part of Critical Chain Project Management is the constraint resource. This can be a person (or a skill ), a specialized department or a machine, from whose capacity is needed more than is available and thus determines the throughput time of the project.

Merge Hidden Buffer Times to a Project Buffer

According to Goldratt’s theory, when a project team member needs to estimate the duration of a task, they add time buffers – and the project manager may also add a safety buffer. Ultimately, this results in an oversized safety buffer that unnecessarily extends the duration of the project. Goldratt suggests taking the time buffers out of the individual tasks and placing a reasonably sized, shareable project buffer at the end of the project. The duration of tasks should then be estimated, so that this is met with a 50% probability.
The rationale for using the 50% estimates is that if half of the tasks are completed early and the other half late, the sum of the variances over the course of the project should be zero.

Buffer (Reserves) from work packages placed at the end of the project

Goldratt is also referring to Parkinson’s Law: “Work expands so as to fill the time available for its completion”.
Critical Chain Project Management tries to reduce its impact by significantly reducing the time available for tasks and by regularly estimating the time remaining until the task is completed.

Goldratt not only suspects that there are many hidden buffers but also suggests that employees are postponing their tasks, which means the student syndrome. He suspects that employees start work as late as possible in order to get some free space at the beginning of the activity. However, this assumption is controversial. The fact that activities are indeed repeatedly postponed is probably due more to harmful multitasking, because employees receive assignments from different departments and everything should be done.

If you now place all the buffer times of the individual activities as a total at the end of the project, then this buffer makes up perhaps 20-30% of the total project duration. However, the project is usually not shortened with this buffer. Of course you have in mind that the buffer might not be completely needed.
Often the focus is not necessarily on shortening the project, but on meeting the planned project duration, and so such a calculation is accepted by most project team members.

Working Without Deadlines and Milestones?

Goldratt’s theory knows only one goal: the project end date – intermediate dates or milestones are not interesting, and tasks are not scheduled because they could lead to unwanted stops. He sketches an ideal world in which the employee who is already available only waits for the completion of the previous activity.
In traditional project management, on the other hand, key dates and milestones motivate and represent an important interim success for all project participants on the long road to project completion. But they are also important points in time for decisions, deliveries or other important events that depend on deadlines.

Planning Projects with Critical Chain

With CCPM, a project schedule with dependencies is created as usual. Then the effort required for each activity is estimated and the (generic) resources needed for it are determined. Then the duration of the activity is estimated. The first estimation is the duration with which the activity is completed with a probability of 50% and a second “safe” duration, which has a probability of e.g. 90%.

Now effective resources are allocated to each activity, and the schedule is resource leveled using the aggressive time duration (50% estimation), i.e. adjusted to the availability and workloads of the constrained resource so that no conflicts arise. This is a time-consuming optimization exercise – which might be ruined after the next project schedule change.
The longest sequence of resource leveled tasks, leading from the beginning to the end of the project, is then identified as the critical chain.

Now buffers are scheduled to compensate for time overruns on tasks. The “additional duration” of each task in the critical chain – the difference between the “safe” 90% duration and the 50% duration – is collected in a project buffer at the end of the project. In the same way, the feeder buffers are collected at the end of each sequence of tasks that enter the critical chain. The date at the end of the project buffer is given as the delivery date to the external participants. Finally, a baseline is established to allow financial monitoring of the project.

The Critical Chain with project buffer, feeding buffer and integration points

Delays are also passed on at integration points, while buffers from early finished task cannot. If several tasks are a prerequisite for starting the next task, the task that finishes latest determines the flow, even if another task finishes earlier than planned.

Monitor Projects with Critical Chain

In Critical Chain, project progress is measured by the progress of the activities on the critical chain. This is shown in the following figure.

Measurement of project progress using Critical Chain

Each activity lasts ten days. The planned effort for the project is 100 days. According to the classical approach, the project manager would report the project as 70% completed according to the figure. But if you now look at the critical chain, out of 40 days of effort, only 10 days are completed, or 25%. This is the more realistic statement with regard to the expected execution time.

Now let us look at the following example of buffer consumption over time. If a task in the critical chain takes longer than planned, the project buffer at the end of the critical chain is used up. If “design” does not need 25 days but 40 days, then 15 days of the project buffer are already used up. The same is true for the feed buffer for the critical chain of 20 days. This is also used up as soon as tasks A and C together take longer than 60 days. Each additional day needed now consumes a part of the project buffer at the end of the critical chain, because Task F cannot start on time in this case.

The buffer consumption on the Critical Chain
The buffer consumption on the Critical Chain

As long as the ratio between consumed project buffer and work progress is balanced, nobody needs to warn. The buffer consumption can be displayed visually as a controlling figure in relation to the project progress and can be tracked over the project duration. The following graphic shows the % buffer consumption in relation to the % of completion of the critical chain. If the slope of the buffer consumption curve is greater than 45 degrees, this means that the buffer consumption is progressing faster than the progress of the critical chain. In this case, you must act as project manager. If your curve is in the green area, you can (still) sleep well.

The project status with the Critical Chain method visualized
The project status with the Critical Chain method visualized

What You Can Learn From Critical Chain

Goldratt’s theory and buffer management does not take one important aspect into account: the core variables in project management, i.e. the interdependencies in the project between deadlines, cost targets, work performance, quality and functional objectives. In the critical chain approach, only the time aspect of the project is evaluated. The extent to which cost, functional, performance and quality objectives are achieved is not considered here. The simplistic assumption that all other objectives are also achieved when the time targets are met does not necessarily apply.

But Critical Chain also shows us a few good planning aspects. Tightly estimated task durations create pressure and encourage efficient working with as little multitasking as possible. Always keeping a critical eye on the constrained resource is essential. Project buffers and feeder buffers are not taken into account enough in many projects but are an important planning element.
This was a simple description of Critical Chain Project Management. The whole methodology is much more complex and from my (critical) point of view only successful in an “ideal world”.

You can read more about buffers and reserves in this article:

How to Plan Contingency and Management Reserves for Projects Correctly

Here You Can Find Even More Knowledge

This was an overview of how to successfully plan and monitor projects using elements of Critical Chain. What is your experience with Critical Chain Project Management? Do you agree with my statements or do you have a different opinion? Share your experience with the readers with a commentary so that we all get to know another view. Thank you!

Would you like to learn more about how to make your projects more successful using Earned Value Management? My book “Earned Value Management – Fast Start Guide” takes you an important step further!

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Posted in Project Control, Project Planning.

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