Project Management

BSB20315-7

Lecture 7
Rethinking time planning:
The critical path approach
 Learning Outcomes

• Limitation of current approaches to project

planning
• Managing by constraints in projects
• Using the critical chain approach

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 Time planning: The critical path
approach – An Introduction
The need to find causes and provide solutions to
project failures has a significant economic
importance.
In this chapter
• Some operational problems associated with
planning and resource allocation are identified
• One group of solutions comes from the ‘theory of
constraints’ – the ‘critical chain’ approach is
explored
• This is then applied in a project management
environment
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 Limitations of current approaches
to project planning

The effects (1)

• Projects fail because project management
methods or their application or both are at fault
• Single cause to regular problems – projects
contain fundamental uncertainties related to the
process (how) or the outcome (what)

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 Limitations of current approaches
to project planning (Continued)
The effects (1) (Continued)
• Responses to uncertainty are a hindrance
– Despite configuration management and change control,
many projects are incapable of managing change
– Under pressure people tend to jettison the system and
fall back on wishful thinking
– Under pressure people focus on short-term objectives,
they complete activities, losing sight of the overall project
– Post project reviews may reveal procedural deficiencies
but adding further procedures will not help the system
– The longer the project duration the greater the chance for
change is required
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 Limitations of current approaches
to project planning (Continued)

The effects (2)

• Methods are not sufficiently robust
– Some traditional methods (e.g. PERT) have not been
evaluated – there has been no alternative
– These methods come out of large organisations with an
interest in promoting their usage
– Success has been selectively measured and further
applications justified on the basis of this ‘success’
– Original baselines are conveniently forgotten – project
progress is measured against current ‘updated’ version

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 Limitations of current approaches
to project planning (Continued)

The causes – CPM and Programme Evaluation and

Review Technique (PERT) do not work due to issues:
1. All goals are based on estimates which contain
uncertainties.
2. Estimates generally contain a large safety margin.
3. If non-critical activities begin at their latest start time (as
cash flow may dictate) they become critical. The more
critical paths the greater chance of failure.
4. A delay in one step is passed onto the next, an advance in
one step is usually wasted, for parallel activities the
biggest delay is passed on.
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 Limitations of current approaches
to project planning (Continued)

The causes ... (Continues)

5. By the time a project manager is notified of a problem, it

is too late to prevent its impact; the percentage measure
of completion is an estimate.
6. Despite being given extra time for an activity, this extra
time is usually wasted at the front end.
7. People often have to multi-task, this increases the lead
time for all projects.

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 Limitations of current approaches
to project planning (Continued)
Problems with multi-tasking
• Dr Eli Goldratt demonstrates
– Three projects A,B,C each take 10 days to complete
– If they are done in sequence the start to finish time is 30 days
– If each of the projects were broken down into smaller units
(say into two), half of each is completed in sequence and
each is then returned to finish, the immediate effect is that
each project is now 20 days
• This assumes that projects can be picked up without any
loss of time (re-familiarising is often needed)
• There may be delays in getting information or results, so
some multi- tasking is essential
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 Limitations of current approaches
to project planning (Continued)

Figure 7.1 Activities completed in strict sequence

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 Limitations of current approaches
to project planning (Continued)

Figure 7.2 The effects of multi-tasking

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 Limitations of current approaches
to project planning (Continued)

Problems with estimates

• Inappropriate use of estimates – rough estimates
become enshrined as target times
• Inappropriate data is used to build estimates –
unrepresentative, unchecked
• Estimates are used out of context – used where
there are significant changes to where and how
work is carried out

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 Limitations of current approaches
to project planning (Continued)

The estimating process

• A piece of work is expected to take, say, 2 days
• Experience shows other tasks impinge (+1 day),
there will be interruptions (+1 day), there maybe
problems (+1/2 day)
• The 2-day activity is now 4.5 rounded up to 5 days
• When the work is done, it will take 5 days and
probably more

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 Limitations of current approaches to
project planning (Continued)
Are people poor estimators?
• An activity will expand to fill the time available –
Parkinson’s Law
• Human nature is to leave the work until the last
possible minute – Student Syndrome (work starts
on day 4)
• The unexpected problems happen but the
recovery/buffer time has already been used (work
activity time is now 5.5 days)
• This is typical
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 Limitations of current approaches
to project planning (Continued)

The chances of early completion are very low

• If the work is finished early it will not be
announced
– Opportunity to polish product
– No desire for more work
– No desire to be seen as overestimating
– The shorter time will become the expected time
so reducing the margin of safety/buffer next
time
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 Limitations of current approaches to
project planning (Continued)

Figure 7.4 Activity completion profile

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 Limitations of current approaches to
project planning (Continued)
Delays will accumulate
• Early finish benefits are not usually passed on
• Delays on critical path effect completion date
• The only certainty is that the project will be late despite CPM
• If, say, four activities, each having a 30 percent chance of
being late, the effect is a 24 percent chance of project being
on time
• Long critical paths with lots of activities are particularly
susceptible to being late
Using percent complete measures for estimating progress
• Unlikely to provide control information to make decisions on
interventions needed to keep project on schedule
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 Managing by constraints in
projects
The theory of constraints (TOC)
• Origins – structured logic approach in manufacturing
– Scheduling production lines
– Flow of goods
• Fundamental to focus on constraint or the bottleneck
– Usually identified by inventory waiting to be processed
• The constraint determines the ability of the system to do
work and therefore earn revenue
Stages
1. Identify the constraint (critical path, critical resources)
2. Exploit the system constraint
3. Subordinate everything else to the constraint
4. Elevate the constraint
5. Go back and find new constraints
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 Managing by constraints in
projects (Continued)
Application of TOC to project management
Step 1: Identify the constraint
• What is stopping the project being carried out faster?
– The critical path?
– The availability of resources?
– Dates that are fixed and cannot be moved?
– Behaviours, policies, ‘custom and practice’?
• The constraint may be different things at different times
• The critical path determines duration but this is only the
starting point
• Further constraints appear when adding resources to the
mix
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 Managing by constraints in
projects (Continued)

Figure 7.5 Resource contention

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 Managing by constraints in
projects (Continued)

Figure 7.6 Plan with resolved resource contention

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 Managing by constraints in
projects (Continued)
Step 1: Identify the constraint (Continues)

• Removing the resource contention causes a delay

– (3 weeks in the example)
• The more projects and interdependencies, the more
complex
• Fixed dates in the schedule
– Board meetings every 2 months will impact stage-
gate/sign off and moving to next phase
– Large equipment may only be delivered on pre-arranged
days
• Projects may run entirely on scheduled dates for every
activity
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 Managing by constraints in
projects (Continued)

Step 1: Identify the constraint (Continues)

• Compounds problem of delays accumulating

• Constraints imposed by organisations and individuals
– ‘We always start activities on a Monday’
– What are the chances of the previous activity being
finished on the previous Friday?
• Policy may dictate that one activity must be finished
entirely before another starts

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 Managing by constraints in
projects (Continued)

Step 2: Exploit the constraint

• ‘The most important thing is to keep the most
important thing the most important’
• The most important thing is the constraints
• Everything that prevents a part of the system from
performing to its maximum potential must be removed
• Implicates how the project is run

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 Managing by constraints in
projects (Continued)
Step 3: Subordinate everything to the constraint
• If the measurement system focuses on the less
important things (activities that are non-critical), the
project will be late/overspent
• The schedule should be based around the constraint
• Ignore local efficiencies that do not consider the
system as a whole
• Project completion should be the measure, not activity
completion
• If the constraint is the resource, keep it the most
important, communicate it, make it visible
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 Managing by constraints in
projects (Continued)
Step 4: Elevate the constraint
• Increase the flow through that part of the system
• Increase the capacity by working faster, longer, or
adding extra help
• Have a back-up or a stand-by

Step 5: Go back to step 1

• Moving a bottle neck means another will appear
elsewhere
• Check progress
• Recognise constraints will change
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 Using the critical chain approach
Estimating
• Base estimate on activity times only with no safety
added
– Need buy-in from all estimators
– Stigma removed as 50 percent activities will finish
early, 50 percent late
• Safety buffer should be included at the end of the
critical path
– For feeder activities (parallel activities not on the
critical path) the safety buffer should be where the
feeder joins the CP
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 Using the critical chain approach
(Continued)

Estimating (Continued)
• Time plans establish precedence relationships,
they should be treated as overviews only
– Changes need to be accommodated and
communicated
• Progress should be monitored by the critical path,
not the percent complete
– A time to finish is required from all sub-project
managers
– Represent by state of safety buffer

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 Using the critical chain approach
(Continued)

Figure 7.7 Buffering the feeder paths

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 Using the critical chain approach
(Continued)

Estimating (Continued)
• The true consequences of a late finish should be
evaluated in financial terms
– Beware penalty clauses
– Or savings on running costs of completed project
• Always buffer a constraint when it has been
identified
• Adding buffers and removing due date constraints
leads to stability and robustness
• When a non-critical activity becomes critical, it
should be protected with a buffer
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 Using the critical chain approach
(Continued)

Control
• The project manager has ultimate responsibility
for control
– Determines the issues that are important and their
measures
– Determines the systems to monitor and apply
corrective action
• Remove due dates, start the activity directly after
the completion of the previous activity
– The relay race: runners are lined up (and beginning
to move) before their leg of the race
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 Using the critical chain approach
(Continued)

Control (Continue)
• With due dates there is no requirement or
incentive to finish early
• Without due dates early finishes can be added to
the buffer
• The project manager’s role becomes one of
– managing handovers
– encouraging early finishes
– ensuring that subsequent activities are ready to
start
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 Summary

• The critical chain approach to planning and controlling

projects uses the same logic that has been
successfully applied in manufacturing
– Organisations such as Boeing, Intel, Halcrow and Phillips
use this method
– The number of applications is increasing
– Software support is improving
• ‘The findings show that Critical Chain, properly
implemented, offers a significant time-saving
advantage over the Critical Path Method’ [Budd and
Cooper]
• Properly implemented includes dealing with significant
behavioural issues
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