Project Management from a Theory of Constraints Perspective

The Problem with Traditional Project Management Methods

Most organisations working on projects find themselves continually struggling to deliver in full, on time and to cost. This is not because the people are poor performers, or the technicalities are overwhelming, or the customers are too demanding, it is because the methods in use are pretty much unchanged since the 1960s.

The fundamental problem is how to handle the difference between the time planned for each task in the project and the actual time taken to complete the tasks. This variability arises from a number of sources such as errors in time estimation, lack of staff availability, lack of key information at the right time, hidden deficiencies in tasks upstream in the project, changes in specification, or knock-on effects from problems in other projects drawing on the same resources.

We can of course take managerial action to reduce the amount of variability from all those sources, but it is impossible to eliminate it entirely. Instead we must find a way to manage the variability that remains after we have taken reasonable steps to reduce it.

Traditionally, the time allocation for each task has two components - the average time we expect the task to take, and some contingency to ensure that we are not late too often. The aggregate of all this time is put together into a project timeline, and sometimes is trimmed by management before being finally approved. The problem with this approach is that, quite often, a task will be later than its own contingency can handle, and this puts the whole project late. When a project goes late, we have to take corrective action, which generally entails having to deliver less, or later, or having to increase the budget.

The Theory of Constraints (TOC) Solution—Critical Chain Project Management

In reality, it does not matter whether any individual task is late, so long as the whole project is not delayed. Critical Chain Project Management has a unique and straightforward response to this fact: it strips the contingency time out of the individual tasks, and pools it at the end of the project as a Completion Buffer. Now, the project is only at late if the cumulative lateness exceeds the time in the Completion Buffer. Because of an effect known as statistical aggregation, this aggregated contingency is very much more effective at protecting the project than contingency within tasks. Furthermore, the more tasks there are in the project, the more effective it becomes.

The Completion Buffer provides a simple and objective way of measuring the health of the project. If we are half-way through a project, and have half or more of the Completion Buffer left, then the project is on track to finish on time. If however, there is less than half of the completion buffer left, then we can say that the project is at risk of running late, and we should be working on corrective action.

Fast time to market is critical in most product development environments, and by far the best software product to achieve this is Concerto from our partner Realization. This product has gained prominence in companies such as Philips and in the world of Maintenance and Repair Organisations (MRO) such as the USA Department of Defense (DoD) has led to dramatic reductions in lead time and substantial improvements to project compliance in terms of specification and budget.

If you would like to learn more about Critical Chain Project Management, why not consider our 2-day Critical Chain Workshop? Click here for more details.

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