GPE engineering project management. Project Management in an Engineering Context
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1 GPE engineering project management Project Management in an Engineering Context
2 Critical Chain Project Management (CCPM)
3 CCPM and TOC Theory of Constraints views systems as chains The weakest link is the constraint (bottleneck). It is the constraint that keeps the chain from doing any better at achieving its goal The Theory of Constraints is essentially about change where is the constraint? work on it where did it change to? In order to be performing well the natural state of the system is changing. If a system doesn t change it will die TOC is a systemic way of thinking poses questions at the system-level helps to establish the necessary conditions to reach the goal
4 CCPM and TOC Cost versus Throughput Cost World Optimizes the cost of development Optimizes each link of the chain <considers local improvements rewarding Throughput World Improving the weakest link improves and strengthens the entire chain Local improvements are only rewarding on the bottleneck System optimums is not the sum of local optima Those who make decisions on efficiency and productivity measurements based primarily on costs/ expenses live in the "cost world" as opposed to those who measure by throughput (i.e. value, profitability and utility). Two paradigms activities/system (machine/holistic, systemic view) Throughput is the rate at which a system generates value. For example, the amount of units per day a factory produces to meet customer orders. Units that go into inventory are not counted as part of throughput
5 CCPM and TOC Leach, Lawrence P., 2005, Cri2cal Chain Project Management, Second Edi2on, ARTECH HOUSE, INC
6 CCPM and TOC GoldraF (1997) defined the old accoun2ng system as the Cost World because it operates on the assump2on that product cost is the primary way to understand value and make business decisions Labor at the 2me was mostly applied to very unskilled jobs and, therefore, plen2ful and easy to replace. Therefore, it was easy to vary the workforce with demand Today, the skilled workforce is much less variable, and the tradi2onal fixed costs are much less fixed Cri2cal Chain, Eliyahu M. GoldraF, 1997, North River Press Leach, Lawrence P., 2005, Cri2cal Chain Project Management, Second Edi2on, ARTECH HOUSE, INC
7 CCPM and TOC In the Cost World if managers do not need workers to produce for customer need, then they produce for inventory, increasing efficiency to make themselves and their local plant look good Unfortunately, the plant does not make money on inventory!!!!!! Leach, Lawrence P., 2005, Cri2cal Chain Project Management, Second Edi2on, ARTECH HOUSE, INC
8 GoldraF s business model is based on two principles The first principle defines three ways to measure whether or not businesses is achieving the goal of making money. These three measurements are interrelated and easy enough to apply to any process. The three measurements are throughput, or the rate at which the system generates money through sales; inventory, or all the money that the system has invested in purchasing things that it intends to sell; and opera.on expense, or all the money the system spends in order to turn inventory into throughput (GoldraF & Cox, 1992)
9 The second principle of GoldraF s model relates dependent events and sta*s*cal fluctua*ons to the manufacturing process. Dependent events are processes that must first take place before other ones can begin (GoldraF & Cox, 1992). Sta*s*cal fluctua*ons occur when one is unable to precisely predict events or quan22es (GoldraF & Cox, 1992). Look at this example illustra2ng this principle. Alex and Jonah sit in a restaurant and Jonah points out that they are able to precisely predict the capacity of the restaurant by coun2ng the available seats. On the other hand, they are unable to predict how long the waiter will need to fulfill their order (GoldraF & Cox, 1992). This uncertainty is referred to as sta.s.cal fluctua.ons.
10 In The Theory of Constraints, GoldraF introduces mathema2cal formulas to help organiza2ons further judge their processes. These formulas are: Net Profit = Throughput Opera2onal Expense Inventory Produc2vity = Throughput Opera2onal Expense Turnover = Throughput Inventory
11 CCPM and TOC William DeFmer (1997) proposes the following list of principles in his book 1 System thinking is preferable to analy2cal thinking in managing change and solving problems 2 An op8mal system solu8on deteriorates afer 2me as the system s environment changes. A process of ongoing improvement is required to maintain, update or improve the effec2veness of a solu2on 3 The system op2mum is not the sum of the local op2ma 4 Systems are analogous to chains. Each system has a weakest link (constraint) that ul2mately limits the success of the en2re system DeFmer, William, 1997, Eliyahu M. GoldraF s The Theory of Constraints, A Systems Approach to Con2nuous Improvement, ASQ Quality Press
12 CCPM and TOC. 5 Strengthening any link in the chain other than the weakest one does nothing to improve the strength of the whole chain 6 Knowing what to change requires a thorough understanding of the system s current reality, its goal, and the magnitude and direc2on of the difference between the two 7 Most of the UDEs (undesired effects) within a system are caused by a few core problems 8 Core problems are almost never apparent. They manifest themselves through a number of UDEs linked by a network of effect cause effect 9 Resolving individual UDEs gives a false sense of security while ignoring the underlying core problem. Solu2ons based on local problems are likely to be short- lived DeFmer, Willim, 1997, Eliyahu M. GoldraF s The Theory of Constraints, A Systems Approach to Con2nuous Improvement, ASQ Quality Press
13 CCPM and TOC 10 Core problems are usually perpetuated by a hidden or underlying conflict. Solu2on of core problems requires challenging the assump8ons underlying the conflict 11 System constraints can be either physical, process dependent, or policy- based. Physical constraints are rela2vely easy to iden2fy and simple to eliminate. Policy- based constraints are usually more difficult to iden2fy and eliminate, but they normally result in a larger degree of system improvement than the elimina2on of a physical constraint 12 Iner2a is the worst enemy of a process of ongoing improvement. Resistance to change is normally very strong 13 Ideas are not solu2ons DeFmer, Willim, 1997, Eliyahu M. GoldraF s The Theory of Constraints, A Systems Approach to Con2nuous Improvement, ASQ Quality Press
14 CCPM and TOC Constraint, throughput, measurements All systems have a constraint that limits output (therefore, non- constraints have excess capacity ) Goal = System Throughput System op2mum is not the sum of the local op2ma Adopted measurement systems should induce what is good for the whole (system op2ma = Goal) direct managers to areas needing specific afen2on
15 CCPM and TOC TOC Theory of Constrains and optimal Local optima and global optima don t relate project throughput needs to be protected, but not with a local optima police we need to concentrate resources on the bottleneck (not to the the benefit of every task in the project)
16 CCPM and TOC TOC Theory of Constrains five steps 1. Identify the constraint (IDENTIFY) Tirar partido 2. Decide how to exploit the constraint (EXPLOIT) 3. Subordinate and synchronize (align) everything else to the above decisions (SUBORDINATE) To improve the performance of that same value-chain, continue Aumentar desempenho 4. Elevate the performance of the constraint (ELEVATE) 5. If in any of the above steps the constraint has shifted, go back to Step 1 (PREVENT ENERTIA)
17 CCPM and TOC 1. Identify the constraint - the bottleneck to a project 2. Exploit the constraint - work two shifts, increase speed of machine 3. Subordinate everything else concentrate on throughput 4. Elevate the system's constraint - hire more workers, restructure process, add a machine 5. Go back to step one - prevent inertia
18 CCPM and TOC 1. Identify the System's constraints The system/process is analyzed so that a task or activity that limits the productivity of the entire system can be identified. A system constraint can be identified by a long queue of work or long processing times. It can be a resource (plant, team, ) 2. Decide how to exploit the system's constraints In this step, decisions must be made on how to modify or redesign the task or activity so that work can be performed more effectively and efficiently. Explore installed capacity 3. Subordinate everything else to the above decision Now, management directs all its efforts to improving the performance of the constraining task or activity and any other task or activity that directly affects the constraining task or activity. Focus on the problem 4. Elevate the system's constraint In this step, we need additional capacity to increase (elevate) the overall output of the constraining task or activity. This differs from step 2 in that the added output comes from additional purchased capacity, such as buying a second machine tool or implementing a new information technology. In step 2 existing capacity is exploited 5. Go back to step one. In the previous step a constraint has been broken, and most likely the problem was transferred to another resource (another constrain)
19 WARNING CCPM and TOC DO NOT LET INERTIA BECOME THE SYSTEM S CONSTRAINT
20 CCPM and TOC Constraints usually relate to MARKET CAPACITY RESOURCES (people) PROCESS DESIGN SUPPLIERS FINANCE KNOWLEDGE OR COMPETENCE POLICIES In a project the Critical Chain is THE constraint
21 CCPM and TOC Goldratt argues that most of the time system constraints trace back to a flawed policy rather than to a physical constraint Leach, Lawrence P., 2005, Cri2cal Chain Project Management, Second Edi2on, ARTECH HOUSE, INC
22 CCPM syndromes Activity schedule estimate
23 CCPM syndromes Activity schedule estimate
24 Student syndrome CCPM syndromes
25 CCPM syndromes Student syndrome
26 CCPM syndromes Parkinson s Law WORK EXPANDS TO FILL THE TIME AVAILABLE
27 CCPM syndromes Murphy A reference to Murphy s Law if anything bad can happen, it WILL happen." In project management, many unexpected problems tend to occur that delay comple2on Don t ask me if it will occur, ask me when! GoldraF says that Murphy exists! - Always!!!
28 CCPM on the way Key point remove excess time Everyone estimates... Student Syndrome, Parkinson s Law, Functional managers protect their resources Senior management (& client) wants everything early (yesterday)! Solution Reduce all activity estimate durations by 50% and place aggregated time buffers to protect project schedule and resource constraints
29 CCPM on the way Key point manage to the constraint Resources can be scarce because of other concurrent projects Scarce resources comprise the Critical Chain (abrange, estão incluídas) Critical Chain: The longest set of dependent activities, with explicit consideration of resource availability, to achieve a project goal The Critical Chain does not equal the Critical Path. Critical Chain is the longest pass of dependent activities, being the dependence an effect of either sequence or use of the same resources. If there is no resource restriction Critical Chain is the Critical Path
30 CCPM on the way Key point multi-tasking is inefficient Spreads resources over several tasks at once Loses focus Restarts (set up times) = loses efficiency Solution = Roadrunner Performance Focus 100% of resource s time on one task until it is complete
31 CCPM on the way Key point multi-tasking is inefficient Whenever I put down one task and pick up another, I lose productive time How much time is loose switching depends on how deep the task in hand is Putting a stop to multi-tasking effectively creates extra capacity
32 CCPM on the way Student syndrome dissolved
33 CCPM on the way Buffers Jan, Shu-Hui & Ho, 2006, ISARC, CONSTRUCTION PROJECT BUFFER MANAGEMENT IN SCHEDULING PLANNING AND CONTROL
34 CCPM on the way Resources must focus on one task at a 2me and pass on the results as soon as the task is complete immediately con8nuing with the next
35 Buffers CCPM on the way
36 Buffers CCPM on the way Using CCPM we normally agree that the bottleneck is the critical chain. To protect it and increase its effectiveness (reduce waist of time) we use a Project Buffer (PB) at the end of CC (we use an overall safety to the project and not to the single activities) (remember we reduced the safety at the activity level using the 50% rule and remember what we said about local and system optima. PB should have a duration of 50% of about the duration of the CC) We use the Feeding Buffer (FB) at the end of each non-critical path, when joining with the critical chain, to prevent repercussion of delays in this non critical branch. Even when delays are exceeded and are superior to the buffer (feeding) capacity, project buffer can still absorb delays. FB should have a duration of about 50% of the non-critical chain duration before it. PF and FB are time buffers With CCPM due date is a limit (we don t think in terms of finishing dates as we are in throughput world). Like that we eliminate the students syndrome Besides it is necessary to guaranty the redness of resources to activities in the critical chain. The Resource Buffer is a warning flag to prepare the resource
37 CCPM on the way Aggressive time estimates and Buffers Broken Critical Chain, Oak Logic Consulting, Communications in Business
38 Multitasking CCPM on the way Broken Critical Chain, Oak Logic Consulting, Communications in Business
39 Multitasking CCPM on the way
40 1. Iden8fy the cri8cal chain CCPM on the way The tasks must es2mate the mean 2me- dura2on conversion ( me) and primary resource requirements. (For tasks with mul.ple resources, iden.fy the primary resource you believe will be a constraint. If there are several constraint resources, break the task up for each primary resource) If you do not have resource conten2on in your project, go to the last step Iden2fy the conten2on you will resolve first. This should be the conten2on nearest to project comple2on or the one that shows the most conflict. If several show about the same amount of poten2al conflict, choose the first one you come to working backwards from the end of the schedule Remove resource conten2on by sequencing tasks earlier in 2me. (Do not worry about crea.ng new conflicts with this step; you will resolve those in sequence) Return to the end of the schedule and follow step 1.4 for the next resource. As you resolve conflicts for the next resource, you must maintain the lack of the conflict for the resources you resolved earlier. Repeat un2l all iden2fied resource types are resolved Iden2fy the cri2cal chain as the longest chain of dependent events Leach, Lawrence P., 2005, Cri2cal Chain Project Management, Second Edi2on, ARTECH HOUSE, INC
41 CCPM on the way 2 Exploit the cri8cal chain - Review your plan to determine if sequencing can shorten the overall project dura2on. If so, do it. Do not trial- and- error various solu2ons - Add the project buffer to the end of the cri2cal chain 3 Subordinate the other tasks, paths, and resources to the cri2cal chain - Protect the cri2cal chain by adding feeding buffers to all chains that feed the cri2cal chain. Size these buffers using the longest preceding path. (Note: All noncri2cal chains feed the cri2cal chain to complete the project. If chains go directly to the project buffer, they also need feeding buffers) - Resolve any resource conten2ons created by adding feeding buffers through sequencing tasks earlier in 2me - Move to an earlier 2me any dependent tasks preceding those moved 4 Elevate (shorten) the lead- 2me of the project by using added producing ar2facts for certain windows of 2me to break conten2on 5 Go back to step one. Do not allow iner2a to become the constraint Leach, Lawrence P., 2005, Cri2cal Chain Project Management, Second Edi2on, ARTECH HOUSE, INC
42 CCPM on the way 1-7
43 CCPM on the way 1-7
44 CCPM on the way 1-7
45 CCPM on the way 1-7
46 CCPM on the way 1-7
47 CCPM on the way 1-7
48 CCPM on the way 1-7
49 CCPM on the way Buffers A resource buffer isn t a time buffer at all; it s a flag to warn that a particular resource will be needed soon So it s an alarm clock! A resource buffer is established some time interval before the resource is needed (1 week, a month, etc.)
50 If in a project, during execution, you achieved 60% of project buffer, what does this mean (it is ok, or not)?
51 Buffer Management CCPM on the way % of critical chain to execute / % of project buffer to consume
52 BUFFER Buffers to Monitor Project Status Buffers Provide Focus and Early Warning OK WATCH & PLAN ACT Remaining Project Buffer: %CBR/%CCR >= Remaining Feeding Buffer: %CBR/%CCR 1>2/3 CCR - Critical Chain Remaining CBR Completion Buffer Remaining %CBR/%CCR 2/3>
53 Corrective Action We compare the percentage of the Completion Buffer Remaining (%CBR) with the percentage of the Critical Chain Remaining (%CCR) We set trigger points for corrective action, for example: When the ratio %CBR / %CCR is 1 or more, Project status is GREEN - Watch When %CBR / %CCR is between 1 and 2/3, Project status is AMBER - Prepare a recovery plan When %CBR / %CCR is less than 2/3, Project status is RED - Implement recovery plan
54 Measures in 2-D 0 % Completion Buffer Remaining 100 % 100 % Critical Chain Remaining 0 %
55 CCPM differences CRITICAL PATH / CRITICAL CHAIN Places high value on the completion of tasks on time Employs techniques to minimise slack or float Uses the amount of slack or float to set priorities Places low value on tasks being completed on time Inserts buffers even on paths that are not critical Manages buffers to minimise unplanned expediting, overtime and other costly deviations from schedule.
56 CCPM differences CRITICAL PATH / CRITICAL CHAIN Resources are given due dates No buffer, later tasks are forced to make up any slide Local optimization is not systemic Management attention on all tasks Resources not de-conflicted Judge resources on whether they completed by due date and quality of work Cultural change in how to manage projects and evaluate team members Avoid multi-tasking Protect against uncertainty by aggregating all safety time at the end of the project Concentrate on the constraint of the project: the longest chain of dependent tasks or resources
57 CCPM differences Good enough is an important idea in developing cri2cal- chain project plans. For mathema2cal reasons, it is impossible to build a precise op2mizing algorithm for resource leveling. The procedure to develop the cri2cal- chain plan ensures that the plan you build will be good enough. This means that the overall length of the schedule will be, within a small part of the length of the project buffer, nearly the shortest or op2mum schedule path. Since reality will change many assump2ons, and we cannot explicitly predict the results of sta2s2cal fluctua2ons, this is good enough STOP HERE Leach, Lawrence P., 2005, Cri2cal Chain Project Management, Second Edi2on, ARTECH HOUSE, INC
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