Week10 slides

Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler. All rights reserved.For academic use only. 1
Session 10
Effort Perspective: Critical Chain
Simulation
Dr. Thomas Lechler Babbio Center 636
Phone: (201) 216-8174 FAX: (201) 216-5385
email: tlechler@stevens.edu

Session 10: Course Pointer
Shareholder
Value
Output
Value
Stakeholder
Value
Effort
Value
Critical
Chain

Session 10: Evidence
1. How to solve resource conflicts in a multi project
environment?
2. What is the leverage to raise the efficiency in a multi project
environment?

Topics and Objectives
• Understanding the basic problems in multi-
project environment.
• Understanding the impact of CC
implementation
• Implementing the principles of TOC
• Improving effort value

Session 10: Agenda
1. Introduction
2. Multi-Project Problems
3. CC Impact
4. Applying Critical Chain

1. Multi-Project Problems: Success Impact
Samples: USA: 172 Projects (112 succ., 50 fail.)
GER: 448 Projects (257 succ., 191 fail.)
Correlation Coefficients Resource Conflicts
Success Criteria GER USA
Efficiency -.20 -.26
Effectiveness -.15 -.19
Customer Satisfaction -.21 -.21
Business Results -.20 -.19
MEANS 4.4 4.1
• Many projects suffer under resource conflicts
• Resource conflicts have negative impact

1. Multi-Project Problems: Known Problems
It’s the system, stupid!
“Pit a good person against a bad system and the
system will win all the time.”
Rummler and Brache, 2002
Deming’s 85/15
– 85% of faults are process related, and it is
management’s responsibility to solve them
– 15% of faults are the responsibility of
– individual employee’s
– Most time management is focusing on the “15” rather
than the “85”, trying to find the guilty person rather than
to improve the process
Deming, W.E., “Out of the Crisis”, MIT, CIA, Massachussetts, 1986

On-time performance N CPM N CC
Greater Than 90% 9 7% 8 53%
80% To 90% 12 10% 3 20%
70% To 80% 18 15% 1 7%
60% To 70% 20 17% 0 0
50% To 60% 18 15% 1 7%
40% To 50% 15 12% 0 0
Less Than 40% 27 22% 0 0
No Response 2 2% 2 14%
Results from: http://www.pdinstitute.com/surveys/surveyresults.htm
Question: On-time performance for the
projects of my organization is:
CC promises higher due date performance!
2. CC Impact: Reported Improvements

2. CC Impact: Simulation Results
Goldratt, Viewer Notes, 1999, pp.70
Simulated Project Results
10% chance
to complete
50% chance
to complete
90% chance
to complete
Days until
project
completion
Multi
Taski
ng
CC Multi
Taski
ng
CC Multi
Taski
ng
CC
Project 1 315 81 370 111 425 190
Project 2 315 160 375 200 430 235
Project 3 315 185 375 210 430 240

CC-Project Before After
Warfighter Systems
Testing (US Air
Force Operational
Test & Evaluation
Center)
18 projects in six
months.
On time delivery
unknown.
26 projects in six months.
75% projects on time;
30% reduction in cycle time.
Aircraft Repair and
Overhaul (US Naval
Aviation Depot,
Cherry Point)
Average turnaround
time (TAT) for H-46
aircraft was 225 days.
Throughput was 23 per
year.
Reduced TAT to 167 days, a 25%
reduction while work scope was
increasing.
Delivered 23 aircraft in six months
(throughput of 46 per year).
70% reduction in backlog
Submarine
Maintenance and
Repair (US Naval
Shipyard, Pearl
Harbor)
Job Completion Rate =
94%.
On-time delivery less
than 60%.
Cost per job was
$5,043.
Job Completion Rate now 98%
On-time delivery 95+%.
Cost per job reduced 33%
Overtime reduced by 49%
$9M saving in first year.
2. CC Impact: Cross Case Analysis

2. CC Impact: Cross Case Analysis Summary
The Impact of CC across many cases:
– Increased systems throughput ~ 20%
– Reduced project schedule ~ 15% - 40%
– Increased on-time delivery ~ 93%
– Reduced backlog ~ 30% - 70%
– Reduced overtime ~ 20% - 50%
CC shows dramatic performance
improvements but…

3. Applying Critical Chain
Applying the Five steps of TOC to CC-Multi-Project
Management:
1. IDENTIFY the system’s constraint.
2. EXPLOIT the system’s constraint.
3. SUBORDINATE everything else to the above decision.
4. ELEVATE the constraint
5. DON’T let inertia become the constraint
(If the constraint is broken, go to 1)
In-Class Simulation
Goldratt, Viewer Notebook, 1999, pp.75

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