Critical Chain - book review

Eliyahu M. Goldratt has found a nice little niche in the business education market, churning relatively simple management concepts into a genre he calls "business novels." Now that I've read The Goal and Critical Chain, I have to say as novels, they are utter failures. The business content is useful, but the artistic conceit is a definite obstacle to their instructive value. If you haven't read the book, but want to know what it's about, read this page, and the first reference (at least) under "Further Reading" below. If you're still desperate for some amusement, go ahead and read the silly thing.

Maximizing Production Flow

The starting point was presented in another of Goldratt's "novels," The Goal, dealing with manufacturing: In production flow, one bottleneck determines throughput, and a sequence of processes and their interaction with the bottleneck determine lead time. Here's the recipe for improvement:
y y y y y

Identify the constraint. Exploit it by scheduling the sequence of work to make sure the constraint (or bottleneck process) is running full time. Subordinate all other processes to it, providing buffer as needed to keep the constraint running at maximum capacity. Elevate the constraint, by increase its capacity. Add resources in ways that shorten the critical chain; improve processes along it. Repeat, since if you're successful, a new constraint will appear. This is the opportunity for continuous improvement.

Critical Path Management

The same idea can be applied to project management, except now the constraint is the critical path (CP). "Processes" are tasks or activities. An additional dimension is created by considering the people (Goldratt calls them "resources") who perform the tasks. The abstraction of a PERT chart can conceal the fact that the same person might be required for multiple activities. The true constraint of the project can be a critical chain, involving the constrained person. (This amounts to putting more dependency information into the PERT network, and simply allows better determination of the actual CP. But he wouldn't have sold any books titled Critical Path. Further, PERT analysis depends on resource levelling to be truly useful; and the data required for levelling is the same information required to determine the critical chain.)

If I put it in bold face, would you have read that last paragraph? Reread it now, and save yourself and your project a whole bunch of time and effort.

Sources of delay in projects

Goldratt emphasizes three important ones: 1. The deadline effect (he calls it "student syndrome") describes how we tend to delay starting a task until we "have to." We give ourselves buffer, and then use it all on the front end of a task. (Note that this is typically true for tasks we don't want to do, but not for ones that interest, animate and involve us.) 2. Multi-tasking extends all leadtimes. If you're working on something "half-time," it takes twice as long. Or more, due to the overhead of switching from one to the other "setup time" for "resources." 3. Delays tend to accumulate, advances tend to be wasted. If something in the CP is delayed, the project is delayed. If something in the CP is finished early... the next activity tends to start "on time" anyway.

A simple heuristic for Critical Path Management

Improve performance by eliminating the padding (or "safety") in individual task estimates, and creating a combined CP buffer which is put at the end of the CP. This intended to directly address delay items 1 and 3 above.

If a task is finished "early" (which could mean "at the median estimate" if estimates weren't padded), the project completion slides earlier. If it finishes late, subtract the overage from the CP buffer as "used." Actually, you could also account for the "unneeded buffer," when a task is completed, and gradually reduce the CP buffer; the size of the needed buffer is directly related to the number of tasks (and the complexity of their interrelationships). Paths that are subsidiary to the CP should have buffers inserted after their sequence of tasks, and before connection to the CP; just like a queue of materials at the bottleneck process ensuring it can keep working.

The critical chain idea acknowledges that tasks requiring constrained resources (maybe the combination of individual + skill makes it less dehumanizing to use that term) also require buffer ahead of them to ensure that nothing delays the CP. Multitasking is inevitable, but as long as the increased leadtime isn't in the CP, there is no penalty.

What prevents us?

Busyness
If everyone would just work harder, we'd get done sooner, right? Well, no, not unless they're involved in the critical path (or helping others on it, or making sure nothing delays it, etc.) The simple production mentality of "stay busy, or else," can work against us, if we stay busy with the wrong things. At best it will just be wasted effort (from a project point of view anyway). Rather than being done early, people may expand tasks to fit the time allotted. Put another way - don't confuse activity with progress.

Milestones
To the extent that milestones are fixed dates by which tasks need to be completed, they can exacerbate the deadline effect. They tend to conceal opportunities available from getting tasks done early. Goldratt recommends doing away with the altogether. Another approach is to keep them tied to key connection points on the critical path, and let them slide as needed if buffer is required.

Protection
If "completing by the deadline" is given paramount importance, people will do their best to set deadlines they know they can meet. This is where all that task by task padding comes from, and why Goldratt recommends doing away with milestones and managing the project buffers instead.

Vendor management
The abstractions of project management are instantiated by having portions of the project supplied by other firms. That is, the simple metrics of "minimize cost," and "deliver by this date" may be implicit for internal teams, but they have to be explicit for vendors, and there is less opportunity for fine tuning, and more motivation for protection, as described above. The importance of schedule, and ways to improve it, can be explored by negotiating tradeoffs between it and cost. What cost incentives for early delivery will they respond to? What cost penalties for late delivery will they accept? More importantly, what penalties should we be seeking to impose to capture our own opportunity costs and the expenses of a schedule slip? If they depend on inputs from us, find that out, and then find out how their delivery can be improved by better information of when we will provide the crucial inputs. Since small delays can create big impacts on profitability, improvements in delivery schedule will often be worth a premium. Don't step over a dollar to pick up a dime, eh? But focus this effort where it matters - in the critical path, and the critical chain dependencies within it.

Book report
on

Critical Chain
by

Eliyahu M. Goldratt
Written by

Erik Baggerud
in the course

Project management in R&D Autumn 2002

Introduction
The subtitle of this book is A business novel, and that is what it really is. When I was choosing the book for this book report and I picked up this book, I was a little sceptical about the form of the book. It appeared to be a lot of conversations written down and very few figures or pictures. At the same time the subtitle with novel appealed to me as a fresh way of presenting a theoretical subject. Well, I picked the book and was not disappointed. I will give a short introduction to the story and the concept of the book and then give my review of the book and how the presented topic fit into my every day work.

The story
The main story in the book is about an associate professor named Rick Silver who is struggling to make it in the academic world. He is a very good teacher, but he wants tenure and is in need of publications. His area is project management and he wants the articles to make a difference in this field. The fact is that the theories applied to project management are not effective and projects are running late at high expenses. The work is moving very slow, but he gets the inspiration when he is assigned to teach a course in an Executive MBA course. During the course professor Silver and his students develop the concept of the Critical Chain. The teaching style of professor Silver is conversation with the students about different topics. The students get homework to do and in this course the homework tasks becomes case studies for the theories that they develop in the classes. He is also helped by the fact that three of his students are involved in a project at their company to develop a way to cut product development time. Through out the book the theory is developed, and different concepts of project management are covered. The inspiration for the critical chain comes from the Theory of Constraints (TOC), which is taught by another professor in production management. TOC identifies the bottleneck or constraint, exploits it and then subordinates all other activities to that bottleneck. The same concept is shown throughout the book to apply to project management as well on several levels. As mentioned above the teaching and development of the Critical Chain theory is the main story. At the same time small stories about Rick Silvers personal life, problems with economy at the university and some cases from the companies where the students apply the theory, run in parallel. The economy problem almost makes the promotion of Rick impossible, but the new discoveries he makes in the course and the support it gets from the industry, supports his survival.

Review
I will divide the review into three categories review of the form of the book, review of the content and review of the impact on my work. As I mentioned in the introduction the book is written as a novel with a lot of discussion. This form makes it very pleasant to read. The topics of the book are presented to the reader through the conversations and the discussion professor Silver has with his students, colleagues and people from business Also the discussions concern a lot of examples and analogies which makes it easy for the reader to see the application of the theories. The parallel stories make the story more enjoyable and they do not disturb the real story. I also mentioned in the introduction that it was few figures. The figures that are there are vital, but on some occasions I think there should have been some more figures. Concerning the content of the book it is I think, good to have some knowledge about project management and critical chain theory before reading it. By that I mean that the background

from the Project management course was enough to understand the problems and enjoy the book. Through the classes of professor Silver and the problems of the students the reader is introduced to the TOC, critical path and critical chain. Different topics are explained through the answers to questions that the students address. Other concepts such as the Triple Constraint of project management are covered. In the lectures the class identifies the problems their projects are having, and from that the theory is developed. The classes usually ends with some consensus about the problems often stated as professor Silvers summary of the lecture. These statements I think are conceptual errors that occur in project management and may work as warnings or helpful tips within ones own project if one bears them in mind. An example is: There is no way to achieve good throughput performance through good local performance By that one means that one must optimise the system as a whole, which implies identifying the bottleneck. The book will not function as a reference book, because of the form of the book, but it serves its purpose as an inspiration and introduction to the problems and solutions (at least according to this theory). How will this affect my work? Well what I can say that it was very inspiring to read after dealing with the topic in our classes and I look forward to learning more in our coming lectures. The method appears effective and with the additional tools we have learned about on how to discover when the project is eating into the buffer, it appears even more suitable. As my PhD-project is moving towards its end I will use the method to try and keep myself on track to reach the degree at end of next year. At least I will be able to structure my work in such a way that I identify the necessary tasks to reach it. Hopefully I will also be able to use this when I start my career in the future. What I also found very interesting was the teaching method of professor Silver in the book. This discussion forum appealed to me, in the way he was able to include his students into the lecture. Now I do not give many classes, but it should be able to use as a tool in presentations.

Conclusions
As a summary of my impression I will say that it was fun to read, it covered and explained the topics in an elegant manner and it was inspiring for future work and also future reading of the books by Goldratt.