Critical-Chain Approach

Critical Chain Project Management (CCPM) is a methodology for planning, executing and managing projects. The focus is on the project schedule and to reduce project changes and cost overruns by taking into account resource allocations and time uncertainties of activities.

The method was developed by an Israeli physicist, Eliyahu M. Goldratt, who introduced it in his Theory of Constraint (TOC) book “Critical Chain” in1997, which later became the foundation of CCPM. It was developed to reengineer the project planning and management practices in order to eliminate common issues and problems that can lead to poor project results, such as increased cost, fewer deliverables than expected and frequently missed deadlines due to longer than expected durations of activities.

CCPM differs from other traditional project planning methods that have its origin in critical path and PERT algorithms in several ways. The emphasis is on resources available, flexible starting times, interim milestones in projects and the use of resource-, feeding- and project- buffers but not order of tasks and strict schedules. The CCPM attempts to level out the resources available where a switch between project tasks are often needed to make sure the project is on schedule.

The focus of this article is to introduce and explain the background and concept of the CCPM approach when planning and scheduling a project together with benefits and limitations of the method. Undesired effects of more traditional planning and scheduling methods will be discussed, followed by how to prevent these effects by using the CCPM approach.

The Author and the history

Figure 1: "Eliyahu M. Goldratt (1947-2011)", https://upload.wikimedia.org/wikipedia/en/b/b8/Eliyahu_M._Goldratt_-_photo.jpg

Author

Eliyahu M. Goldratt (1947 – 29111) was born in Israel and over his life he worked as a lecturer, researcher, scientists, and a business leader. Goldratt completed a Master of Science and a Doctors degree in Philosophy both obtained at Bar-Ilan University in Israel .

He is known for developing the groundbreaking Theory of Constraints (TOC), which he introduced in his book “Critical Chain” in 1997. The book reveals the reasons for why projects are unable to finish on time or within budget. In response to that, the TOC method was introduced . This method reengineers the project planning and management practices in order to eliminate issues and problems that lead to poor project results. In addition he is the innovator behind several TOC tools such as “the thinking process”, “drum-buffer-rope” and the “Critical Chain Project Management” (CCPM) .

History

The importance of projects in today’s global and chaotic environment is becoming significant and will continue to grow in the future. All businesses have projects and they are turning to project management as a way to improve project results in order to stay ahead of the competition. Despite of precise planning and strict schedules through PERT/CPM approaches, lack of efficiency in project management has been a big issue in the last decades. The Theory of Constraints approach (TOC) to project management strives to eliminate this lack of efficiency by using the Critical Chain method when planning, scheduling and monitoring projects .

It all started with Eliyahu Goldratt’s first book, “The Goal”, a non-traditional approach to share knowledge. The book is a business textbook written in a novel form, disguised as a love story and tells a story of a manager in problems due to his poorly run manufacturing plant . According to Goldratt, interdependency of elements influences the ability of businesses to do what should be done and that manufacturing plants can be controlled by three main measures; throughput (TH), operating expenses and inventory. Based on this, he described the Drum-Buffer-Robe (DRB) approach, which is to produce only what is needed. In his second book “It’s not Luck” he extended this method for marketing and distribution and the extended method became known as The Theory of Constraint (TOC). In his third book “The Critical Chain” he applied the TOC method to Project Management and this method is now know as Critical Chain Project Management (CCPM) .

Theory of Constraints

Theory of Constraint (TOC) is a change method that focuses on identifying constraints or bottlenecks in processes and systems, to enable appropriate action to be taken to improve performance to gain more profit . Goldratt applied this theory to marketing and distribution in his second book “It’s not Luck” published in 1994 . According to him organizational performance is dependent on bottlenecks, which prevent the organization to maximize its performance and reach the objective, which is normally to increase profit .

These bottlenecks can include information, equipment, work force, and supplies and can be both internal and external to an organization. The fundamental concept of the theory is that, every business has at least one constraint, that is, any factor that limits the output of the organization and prevents it to improve the performance. In other word the weakest link in the chain. The theory also states that the processes or systems can only have one weakest link at a time, and that other weaknesses are not constraining until they become the weakest link. The theory can be used in various situations and is based on five steps to improve productivity .

The five steps of theory of constraint

Figure 2: "The five steps of Theory of Constraints"

The aim is to keep the constraint or the bottleneck as efficient as possible, because, only the efficiency of the bottleneck is a critical factor to the overall performance. There are five important steps to improve performance of a chain. Each step will be explained with an example in production planning terms .

1. Identify constraints of the process or the system: It is important to identify the bottleneck. If the bottleneck is a machine, the maximum utilization must be achieved, ensuring there is always work to do for this particular machine .
2. Determine how to exploit these constraints: Find ways to ensure the maximum utilization of the bottleneck. This could mean reducing the number of changeovers, offload work that can be done on another machine or reduce setup times to create additional capacity .
3. Subordinate system’s constraints: It is meaningless to run other machines with a higher production rate than the bottleneck. Therefore every other decision must be subordinated to keep the bottleneck running .
4. Elevate constraints to a new level of productivity: Concentrate all resources and efforts on the bottleneck to increase throughput rate or output. One way to do this is to run the bottleneck machine for extra hours every day, this increases the capacity of the machine . The different between step 2 and 4 relates to the amount of investment required .
5. Start again on step on: With increased capacity of the machine, there might be a new bottleneck, which needs to be addressed and the process of improvement must be repeated. Make sure inertia does not cause a system constraint .