the critical chain

8/7/2019 THE CRITICAL CHAIN

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CRITICAL CHAIN

Submitted To: Submitted By:

Prof. Devendra Jaiswal Priyanka Singh

Pratibha Sharma


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It starts with the informal meeting to discuss thebusiness schools proposed budget for the next year.

She told a story of an agricultural school that grew at10% after some time the school did not need so manyof graduates but the expenses were remained same.

The financial burden was high enough to mandate adrastic cut throughout all the other schools.

She said that there is an another field that forcespeople to go through higher education, the newstudents enrollments at their law school are less thenhalf compared to three years ago


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Daniel Pullman the chairman and the CEO of Gene modem

Levy the executive vice president of engineering insisted on hiring aconsulting firm to do an in depth analysis of Gene modems product

development starting from examining the way they decide on features ofa new modem, through the development process.

Levy insisted on bringing experts from the outside and everyonesupported him

Levy looks at the three young managers who are inexperienced for thetask.

Mark an engineer from Kowalski was the group leader his task was tofind the solution to the biggest threat endangering the future of thecompany.

Levy explained the product life cycle of a product and said before wefinish the introducing a new modem into the market, we obsolete it bylaunching an newer one.

He also explained that Market price of a share is mainly based on theshare holders expectations based on our impressive track records

He said that their products life span is about six months & thedevelopment time is roughly 2 years so we have to launch a new productof our development.


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In this Rick have been assigned to teach a course in theexecutive MBA program he was at the position of semi-

respectable position of associate professors.

Now He was happy & the next step is to get professorship but

he can not get it if he keep neglecting the need to publish

articles.

He want something tangible , more connected to the real world ,real problems.

He was wondering that teaching managers is not easy because

they are not going to accept everything that he will say

Jim was trying to cheer up Rick. Jim suggested subject project management to teach which he

use to teach to get help in his research


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This is about B.J. vonbraun an excellent manipulator and

university president.

She ,Bernard Goldsmith and Alistair Franklin they each have large

business schools at their universities.

Alistair said that the last years were very good for us.

Organizations demand for new MBAs grew, but we didnt have

enough capacity to supply the demand.

B.J. asked that we dont have enough applicants because thecapacity of business schools has grown beyond the no. of people

who want to become managers.

That means we need to encourage people to choose

management as a career path. Bernard was not agree to this & said it may be because of

oversupply of demand and slow growth of our business schools.

They were comparing their schools with others in term of

students, course and the teachers as well.


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This is the class scene he was preparing himself For the class, heasked Mark about his course and other things & why he has

chosen this project management course and he started hiscommon interaction with the class.

He explained to the class about the course and its usage .

He asked others about their project.

He explained that a project is some block diagram of the various

steps that must be accomplish in order to achieve the objective. He further gave an example of project that didnt finish on time

or on budget.

He conclude that the problems common to all projects are

1 budget overruns

2 time overruns 3 compromising the content.


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Here, both B.J and Chris were discussing on

triming the business schools budget.


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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 onutilisation

Detailed risk analyses

Detailed specifications


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General Problems

Budget overruns

Time overruns

Compromising the content

Financially, overruns are much less important than the

overdue


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Deadline Effect (Students Syndrome)

Multi Tasking

Synchronizing

High Set-Up Times

Delays Accumulate, Advances Dont

End of the month syndrome


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Task start

Projects seem to be longer than necessary

Parkinsons 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


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A critical path for a project is longest chain of dependent

steps.

The critical path determines the time it will take to finish theproject.

Delay in critical path Delay in project completion


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Make building

functional

30

Install machines

in building

30

Contract vendors15

Build machines90

Build Building

90

Critical path

150 days to prepare the building


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Late start- Postpone the investment until necessary No time slack Any delay on that path delay in the project Focusing not possible

Early start-Too many things at a time tend to lose focus

Focusing is lost

Think about it:Weigh the savings from postponing an investment againstchance of damage resulting from finishing the project a littlelate


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Milestones

What is been done?

Reward for starting each path at the earliest possible

time Encourages project leader to start unfocussed

Result?

Progress on one path compensates for the delay on

another

Difficulties accumulate Project overruns


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Uncertainties exist in projects.

A buffer is additional time to complete a task.

Murphys Law states that if something can go wrong, it will.

In traditional estimates, people often add a buffer to each task and use the

additional time whether its needed or not.

Time estimates are self fulfilling prophesy.(48)

Critical chain scheduling removes buffers from individual tasks and instead

creates:

Project buffer Feeding buffers Resource Buffer


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Project Buffer

Between the last task of the aggressive project schedule critical chain and the

committed end date

Feeding Buffers

Protect the critical chain from being impacted by non-critical chain

Resource Buffer

The resource buffer is an information signal to resources planned to work

on the project critical chain that the project task is coming up for work


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Every task has some safety

The greater the uncertainty and risk of the task, the

greater the safety included in your safe estimate


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Cost world Throughput world(90)

Focus to reduce cost Focus to increase

throughput

Any local improvement

automatically translates intoan improvement of the org.

If one link drops, the

throughput of the companydrops

Any improvement is

appreciated.

Improvement of the weakest

link appreciated.

At the beginning of the month these companies are managed

according to the cost world, at the end of the month according

to the throughput world.


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Throughput World The strength of any chain, process or system is dependent

upon its weakest link

Cost World The only way to achieve good cost performance is through good

local performance everywhere

If produced more, it will lead to accumulation of unnecessary inventory


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Net Profit ROI Cash Flow

Fundamental operating measurements bridge

ThroughputOperating

Expenses

Local

Actions

Decrease

IncreaseIncrease

Increase Decrease

Increase

Inventory


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Milestones Removed

Student Syndrome

Trimmed the SafetyPad

Multi Tasking

Resource Buffer in Place

Reduced Feeding Buffer

Reduced Project Buffer


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You manage the constraint

Or the constraint manages you


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Learning

This novel gives us the view on production &

marketing management. It has transformed

the thinking and actions of management

throughout the world. This book called A

Guru To Industry, which can change anyones

thinking about business.


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Thank You

the critical chain

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