the toc centre of australia

© 2000 The TOC Center of Australia Pty Ltd 1Critical Chain Overview – AIPM 2003 MktgCCSEAV01grh 0208010 2001 The TOC Centre of Australia Pty Ltd

The TOC Centre of Australia

Resource Optimisation Using Critical Chain Buffer Management in the Multi

Project Environment

Presented by: David V Hodes

Tel: 02 9293 2844

Mobile: 0409 789 034

Fax: 02 9315 5891

E-Mail: david@tocca.com.au

www.tocca.com.au

© 2000 The TOC Center of Australia Pty Ltd 2Critical Chain Overview – AIPM 2003 MktgCCSEAV01grh 0208010 2001 The TOC Centre of Australia Pty Ltd

The TOC Centre of Australia Product Suite

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Critical Chain Projects

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Some Critical Chain Results

• The first time out, we took 26 days out of a 71-day hypermarket re-fit, a 37% increase in capacity

Matador Refrigeration

• The industry standard to get the plant up and running to 90% capacity is about 46 months. The plant was recently completed and is up to 90% production in 13 months

Harris Semiconductor

• We succeeded in dropping our average turnaround time per aircraft visit from three months to two weeks…

Israel Aircraft Industries

• We originally scheduled to take 13 months to deliver – and the team did it in six months

Honeywell DAS

© 2000 The TOC Center of Australia Pty Ltd 5Critical Chain Overview – AIPM 2003 MktgCCSEAV01grh 0208010 2001 The TOC Centre of Australia Pty Ltd

The Idea Factory

The reward

The Project

The Market

The Idea Operations

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The Cash Flow Of An Idea

On time

$

TimeLate

Extra cost

Market follower pricing

disadvantage

Trapped resources

Early

Monopoly advantage

Market leader pricing

advantage

Cost reduction

The next new idea

Freed resources

© 2000 The TOC Center of Australia Pty Ltd 7Critical Chain Overview – AIPM 2003 MktgCCSEAV01grh 0208010 2001 The TOC Centre of Australia Pty Ltd

When Ideas Become Projects

• They are late

• They are over budget

• They frequently change in scope

• Standish Group (www.standishgroup.com )

• 30% of projects canceled before finished

• 75% of completed projects are late

• Average cost overruns are 189%

• Average time overruns are 222%

© 2000 The TOC Center of Australia Pty Ltd 8Critical Chain Overview – AIPM 2003 MktgCCSEAV01grh 0208010 2001 The TOC Centre of Australia Pty Ltd

What About The Measures?

• “Show me how you measure me, and I’ll show you how I perform. Measure me in an illogical way, and don’t be surprised if I behave illogically”

Dr Eli Goldratt

• Is the goal task conformance or project performance?

© 2000 The TOC Center of Australia Pty Ltd 9Critical Chain Overview – AIPM 2003 MktgCCSEAV01grh 0208010 2001 The TOC Centre of Australia Pty Ltd

Global Versus Local Optima

• 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 on

utilisation• Micromanage task flow• Detailed risk analyses• Detailed specifications

© 2000 The TOC Center of Australia Pty Ltd 10Critical Chain Overview – AIPM 2003 MktgCCSEAV01grh 0208010 2001 The TOC Centre of Australia Pty Ltd

Uncertainty Is At The Heart Of The Problem

• Vendor performance is unreliable

• Required tasks are not fully known

• Time to complete any given task varies

• Delivery of needed tools, equipment, and

material is uncertain

• Resource availability cannot be guaranteed

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The Issue of Duration Risk

10% probability

50% probability

95% probability

BC is not necessarily 2xAB

Task Duration

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How Risk Relates To How We Are Measured

When we put safety into each task…

• Projects seem to be longer than necessary • Parkinson’s 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

Task start Task end

Activity

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The Effect Of Multi-tasking

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Unlevelled Schedule

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Load to Capacity of C

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The definition of the Critical Chain is the longest set of dependent steps, taking task precedence and resource contention into

account.

Critical Chain

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Identify Critical Chain

Load levelled (finite capacity)

Critical Chain identified

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Managing The Critical Chain

Shrink the times to 50% probability of completion – aggregate protection in the feeding and project buffers

Σ = Buffer

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Types Of Buffers

Project buffer: • Placed before the customer, to protect our

commitment to the customer (the external constraint)

Feeding buffer: • Placed at each point where non-critical tasks join

the critical chain, to protect against precedence conflicts on non-critical tasks

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CC, Fb and Pb

Project buffer task 13

Feeding buffers tasks 3 and 8

© 2000 The TOC Center of Australia Pty Ltd 21Critical Chain Overview – AIPM 2003 MktgCCSEAV01grh 0208010 2001 The TOC Centre of Australia Pty Ltd

Critical Ratio

• Critical Ratio =work to completion

time to completion

(work+buffer)

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Scenario 1

Status date represented by red line (8am Sunday 4th November)

Purple bars represent projected start and finish times

Project buffer (Pb) penetrated

Feeding buffer (Fb) task 8 penetrated

Resource buffer (Rb) tasks 5 and10 scheduled against expected start

Task 4 most critical to work on, as a delay here causes immediate Pb penetration

© 2000 The TOC Center of Australia Pty Ltd 23Critical Chain Overview – AIPM 2003 MktgCCSEAV01grh 0208010 2001 The TOC Centre of Australia Pty Ltd

But How Do We Manage The Complex, Multi-Project Environment?

Project Portfolio

Portfolio Selection

The pacing resource

Individual Critical Chain

Projects

Buffer management policies

Project PipelineProject PipelineProject PipelineProject Pipeline

•Analyse•Resource•Decide

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The Classic Multi-Project

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Classic Multi-Project Statistics

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TOC: Critical Chain, Drum and Buffer Management

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TOC Statistics

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Test Results

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So What’s the Choice?

• You manage the constraint…

•Or the constraint manages you