what would you do if government suddenly became a really demanding client? oded cohen

1Copyright © 2012 by Oded Cohen

Public Sector Efficiency Public Sector Efficiency ConferenceConference

Contractors parallel session: Contractors parallel session:

"What would you do if the government "What would you do if the government suddenly became a really demanding suddenly became a really demanding

client?"client?"

Vilnius, September 2012Vilnius, September 2012

Oded Cohen – TOC For Contractors


Oded Cohen Oded has nearly 35 years of experience in developing, teaching and implementing TOC methodology, solutions and implementation processes working directly with Dr. Goldratt all over the world. Among the countries to which Oded brings his expertise are the USA, Canada, Japan, India, China, the UK, Poland, Russia, Ukraine, Colombia, Chile, Peru, Turkey and many others.

Oded has authored multiple TOC articles and contributed to several TOC books.

Oded in the is the author of Ever Improve – A Guide to Managing Production the TOC Way, published in June 2010. Oded co-authored the book Deming & Goldratt: The Theory of Constraints and the System of Profound Knowledge – The Decalogue.

Together with Jelena Fedurko Oded has co-authored the book TOC Fundamentals, recently published in Russian.

[email protected]


• This session is for contractors that provide the State or the Government deliverables that have the nature of projects.

• Typical projects are in construction, infrastructure, IT, new product development, etc.

• As such contractors are expected to meet three conditions – the projects that they are committed to fulfill should be: On Time Within Budget According to the agreed specifications (promises)

• The Reality of projects is dominated by uncertainty. As such it is extremely difficult and seems unrealistic to expect to meet the three conditions of Time, Budget and Specifications.

• Nevertheless, it is likely that more and more State bodies may demand from the contractors to meet these conditions.

Contractors may find such situations challenging.

Let’s see what TOC offers.

Supplying to the State/Government



TOC Offer – CCPMCritical Chain Project Management

CCPM Implementations in the Public CCPM Implementations in the Public Sector Working with ContractorsSector Working with Contractors

• Defense -

MRO - Maintenance, Repair and Overhaul

New Product Development

• Infrastructure – Roads, Bridges, Railway, Buildings

• Utilities -

Air Control

Water, Electricity etc.



Results Summary of many different project companies

• Delivery Performance >95%• Lead Time reduced by 30%• Costs reduced by 15-20%• Capacity increased by 30-50%

All without any significant investment – just changing the rules, policies and measures

Results achieved within 6-9 months


TOC provides a managerial approach to better manage uncertainty that dominates projects.

TOC recognizes that key constraint of projects is the Critical Chain – the shortest chain of dependent activities while the dependency is not only logical but also through the resource availability.

Critical Chain is used for better planning and better controlling the execution of projects plans.

• In Project Planning – CCPM promotes good and realistic project plans with built-in protection – Project Buffers and Feeding Buffers.

• In Project Execution – CCPM promotes Buffer Management, Priority setting, Early Warning and Recovery Actions.

• TOC Provides focus by setting the measurement for project management – to be a reliable provider.

• Outstanding performance – reliability and competitive lead times can bring the provider more sales.

What is unique about CCPM – Critical Chain Project Management?



• There are too many uncertainties stemming from the nature of the project (first time, new technology etc.), the lack of control (customers’ instructions, bureaucracy, other contractors

etc.) and Murphy – what can go wrong – will!

• Typical situations that can block the progress of State Projects: There are too many cost overruns against budget – materials, resources etc. Existing projects are disrupted by ‘extra work’ Many tasks (activities) take longer than planned Progress payments are not received when expected Revisions for late changes to scope hold us up Too much rework Too much overtime (especially before milestones and towards the end of the

project) Too many resources are not available when needed (they have many

simultaneous tasks) Priorities constantly shift Top management under pressure to add more resources Often scope or specifications are cut from a project

Why is it so difficult to deliver on time

TOC claims that a Core Problem is responsible for the existence of the majority of these problems.

Any solution must address the Core Problem.Oded Cohen – TOC For Contractors


Understanding the ProblemCurrent Reality Core ProblemCore Problem

A conflict diagram - A conflict diagram - Core CloudCore Cloud

Core ProblemCore Problem

A conflict diagram - A conflict diagram - Core CloudCore Cloud

DDDD

D’D’D’D’CCCC

BBBBAA AA

DTake

corrective actions that compromise project budget commitments

A

Run projects successfully

BEnsure the project

is on-time and in full

(according to specs)

C

Protect budget commitments

D’Do not take

corrective actions that compromise

project budget commitments



What to change? What to change to?

Low Performance Measurements

Low Performance Measurements

GAPS

andGap Analysis

GAPS

andGap Analysis

Cu

rren

t R

eality

Core Core ProblemProblem

Core Core ProblemProblem

High Performance Measurements

High Performance Measurements

TOC direction of solutionTOC direction of solution

Fu

ture

Reality

PIVOT

• Elements of the solution

• Closing the Gaps• Logic of the solution

• Benefits

• Elements of the solution

• Closing the Gaps• Logic of the solution

• Benefits

Analysis and solution application



The TOC Pivot – Managing Constraints

PIVOTTOC

TODAYTODAYTHE PASTTHE PAST THE FUTURETHE FUTURE

The GAP

Block

Lift

What is the constraint of the project management?

When does the system create value for the goal of making more money?

The shorter is the time to complete the project – the better!

At the completion of the project – Throughput is generated and money invested is starting to be returned!

Conclusion: Projects have the TIME constraint.



Fu

ture

Reality

TOC Direction of Solution

CCPM – Critical Chain Project Management: The TIME constraint of the project is

presented through the Critical Chain – the longest chain of dependent activities. Managing the project through the CC is geared to finish the project in a safe and quick way.

CCPM – Critical Chain Project Management: The TIME constraint of the project is

presented through the Critical Chain – the longest chain of dependent activities. Managing the project through the CC is geared to finish the project in a safe and quick way.

TOC direction of solution

TOC direction of solution



Overview of the TOC Solution Overview of the TOC Solution for Project Managementfor Project Management

CCPMCCPM



Tactics:The Project organization implements Critical Chain project management

Planning Injections 2-4

Execution Control Injections 5-9

TOC Solution for Single Project Management

Injection 1 The Prime

Measurement

Strategy:The Project is On Time, In Full & Within Budget

Mindset:Projects to Customers

are the Prime Driver – the Drum



CCPM – Injection 1 Achievement of the delivery

commitments is established as a Prime Measurement for managing project

environment



CCPM – Injection 1 Achievement of the delivery commitments is

established as a Prime Measurement for managing project environment

UDEDE

NBR

Inj

Measuring On Time Delivery

1. Reliability - The number of projects that were delivered on-time (or early) versus the total number of projects within time “buckets” (e.g. month, quarter, year). [Percentage]

2. For internal use: The amount of money that has been delivered on time or early versus the total value of the projects within time buckets [Percentage].

3. Also for internal use : The financial impact of the late delivery – T$D – Throughput Dollar Days. [the amount of money delayed multiplied by the number of days late]



Project Planning the TOC WayProject Planning the TOC Way

CCPM - Injections 2-4CCPM - Injections 2-4




Planning Injections 2-4

Execution Control

Injections 5-9


Injection 4

Buffers

Injection 2

Project Planning Diagrams

Injection 3 Critical Chain

Plan



Injection 1

Criteria for a Good Project Plan:• Provide Financial Benefits

• Realistic • Immunized against Disruptions



CCPM – Injection 2 Project Planning Diagrams are in place

with tasks resourced and estimated for duration – while estimates of durations are challenging but

achievable



CCPM – Injection 2Project Planning Diagrams are in place

with tasks resourced and estimated for duration – while estimates of durations are challenging but achievable

Build a diagram of task dependencies and check its quality in accordance with the following criteria: Completeness – No more than 400 tasks All dependencies are identified The deliverables ("output") of each task clearly known

All tasks are connected "Finish-Start” Feasibility Required resource(s) – main resources, no fractional and no specific names Duration of tasks – no forced dates

CCPM-Injection 2 establishes a mechanism and procedures to develop a quality diagram of the project plan, with duration of the tasks to be set “Challenging, but achievable“.

UDEDE

NBR

Inj

Project Planning Diagram



Pro

bab

ilit

y o

f co

mp

leti

on

50% 80% Time

•Students syndrome

• Parkinson’s Law

• Bad multitasking

Tasks contain a lot of safety!

Why? Because of the behaviour of managers – in planning phase managers ask for estimationsin execution – they treat estimations as justified commitments

Task duration - Behavioral reasons for 80% probability distribution

Estimation times – Current reality in projects

UDEDE

NBR

Inj





Task duration – Behavior

Pro

bab

ility

of

com

ple

tio

n

50%80% TimeP

rob

abili

ty o

f co

mp

leti

on

50% 80% Time

Estimation times – must go through a challenging process

UDEDE

NBR

Inj



TOC approach – estimates of duration should be challenging but achievable!

In majority of the cases the duration with 50% probability equals HALF the duration with 80% probability.



CCPM – Injection 3 Critical Chain determined through resolving

resource contention



Making the project plan realistic means that we identify and address resource contention situation. This is happening when the plan calls for the same resource to perform more than one task at the same time.

Two mechanisms are used to handle the situations:1. By re-assigning resources that are likely to be available

when needed by the plan2. By sequencing the tasks by creating dependence

between tasks due to availability of resources – this is the Critical Chain


resource contentionUDEDE

NBR

Inj



Sorting out Resource Contention:The Critical Chain is the chain of dependent events - one that takes into consideration all dependencies (including resource dependency).

W16

B10 M16C20

G10

M16Finish

68 days

Critical Chain

W16

B10 M16

C20

G10

M16Finish

Letter andColour = Resource

Critical Path Promise = 56 days

M16 - Resource contention!



NBR

Inj



The role of Critical Chain in managing projects

The Critical Chain is the chain of task and resource dependencies that prevents the project from being planned in a shorter interval, given finite resources.

The Critical Chain provides the major focus and back bone for the planning. It plays even more important role in controlling the execution of the plan.

Hence – the name of the solution - CCPM



NBR

Inj



CCPM – Injection 4 Buffers are inserted in strategic points



Reality in projects – Reality in projects – Working to task due datesWorking to task due dates

RESULT - The delay of 5 days is passed on - the project is RESULT - The delay of 5 days is passed on - the project is said to have “moved to the rightsaid to have “moved to the right””

What happens if it takes less than 10 days - What happens if it takes less than 10 days -

PlanPlan 1010 1010 1616

ActualActual <10 (6)<10 (6) 1010 1616

What happens if it takes more than 10 days -What happens if it takes more than 10 days -

1010PlanPlan 1010 1616

> 10 (15)> 10 (15)ActualActual 1010 1616

Because of working to task due datesBecause of working to task due datesthe positive variation is not passed on (usually)the positive variation is not passed on (usually)

CCPM – Injection 4 Buffers are inserted in strategic pointsUDE

DE NBR

Inj



Buffer – is a protection mechanismThe Critical Chain of each project is being protected by the

placing of sufficient time buffers at strategic points within the flow of tasks:

Project Completion Buffer (PB)Feeding Buffers (FB)

Feeding Buffer -

FBProject Completion Buffer - PB

W16

B10 M16C20

G10

M16

CCPM – Injection 4 Buffers are inserted in strategic points

UDEDE

NBR

Inj



Execution Controlthe TOC Way

CCPM - Injections 5-9




Planning

Injections 2-4

Execution Control

Injections 5-9


Injection 8 POOGI

Injection 5 Reporting

Buffer ManagementPriority

Injection 6 Resource

availability

Injection 7 Recovery Actions

Injection 9Critical

Resources



Injection 1

Criteria for Good Execution Control : Priority, Recovery, POOGI

The Reality of the Project Execution – DELAYS!

The TOC Way means: Manage through the Buffers!



The planned size of the buffer project completion

The buffer status is used for Self-expediting, Priority of assigning of resources and for Prompting management actions and decisions

Introduction to Execution Control

100%

Buffer Status

The penetration to the buffer states the amount of days consumed from the buffer.

Buffer is split into three parts and the consumption zone is colored by a relevant color – green, yellow, and red.

Buffer consumption



CCPM - Injection 5

Tasks are performed according to the status of their corresponding buffers through using Buffer Management. Resources inform daily how much time it will take them to complete

the task.



Buffers Status

CCPM-Injection 5 Tasks are performed according to the status of their corresponding

buffers through using Buffer Management. Resources inform daily how much time it will take them to complete the task.



CCPM-Injection 6 Resource Availability is monitored in

anticipation of a new planned task



In order to ensure resources for the tasks in CC – look ahead!

The length of the project is determined by the CC.

Any delay on CC can bring the whole project to be late.

When a resource is not available for a task on CC and the task has to wait for the resource – it causes delays on CC.

In order to prevent such situations – project manager must ensure that all resources assigned for CC were available when they are needed. This can be achieved through early check and early warning.

This is like a “wake-up call” for a resource on CC.

UDEDE

NBR

Inj

CCPM-Injection 6 Resource Availability is monitored in

anticipation of a new planned task



CCPM-Injection 7 BM for recovery actions is in place



The reality of the project is DELAYS!

The penetration to the buffer presents a risk to the expected completion of the project.

When the trend of Buffer Consumption is too high or when the remaining level of buffer is below Low(=RED!), managers are expected to come with ideas of how to restore the buffer to higher level.

These ideas are discussed and actions agreed.

CCPM-Injection 7 BM for corrective actions

(expediting) is in place Restoring the level of the Buffers

UDE

DE

NBR

Inj



CCPM-Injection 8 Buffer penetration reasons are reviewed

periodically for POOGI



CCPM-Injection 8 Buffer penetration reasons are reviewed periodically for POOGI

Buffer Management Statistics The commitment to POOGI is performed through collecting

statistics of major reasons for delays while the buffers are depleted. The reasons are collected and used for statistical analysis.

A periodically meeting to review the statistics of the reasons for buffer penetration is held.

The meeting is used to decide on the necessary actions to eliminate causes for buffer penetration. Improvement initiatives are agreed and the progress of implementing these initiatives is monitored by the Buffer Management Committee assigned.

UDE

DE

NBR

Inj



CCPM-Injection 9 Resources are monitored as potential CR –

Critical Resources



CCPM-Injection 9 Resources are monitored as potential CR

– Critical Resources

Please note that in reality there is a pressure to dedicate resources to projects. This stems from the demand for resources to be available when needed (as per the evolution of the original plan). Nevertheless – resources can be used in more than one leg of the project and hence can become critical.

Even though the Critical Chain mechanism ensures that there is no resource conflicts and contentions in the plan – the unfolding reality can cause resource contention and highly utilized resources can cause delays and penetration to the buffer.

UDEDE

NBR

Inj



Tactical technical

deliverable:

CCPM for planning and

execution control is in

place

Strategic deliverable:

Projects are delivered on time within budget and

according to original promises

Phase 1 Phase 2 Phase 3

Mindset:Customer

orders are the Prime Driver for managing

projects – The Drum

PlanningSystemic

approach to project plan diagrams

CCPM Implementation Map

Execution Control

& Global

improvements

Deliverable: Top management accepts

the business opportunity associated with on-time delivery

Deliverable: There is a good enough plan that

serves as a base for the proactive execution

control

Deliverables for starting the next phase


what would you do if government suddenly became a really demanding client? oded cohen

Business

oded cohen oded cohen

oded cohenoded cohen

project toc claims

toc books

toc way

jelena fedurko oded

book toc fundamentals

multiple toc articles