What is Critical Chain Project Management

Critical Chain Project Management

In 1984 an Israeli business management expert Eliyahu M. Goldratt came up with the book called 'The Goal' and introduced the theory of constraints in that book. Then he came up with another book called critical chain in 1997 which again focuses on the concepts of managing projects. This book critical chain project management is considered as an alternative to PMBOK by project management professionals. In this methodology, constraints are assumed related to each task, and the details of how will be discussed in this article.

The project management methodologies are of many types and PMP is one of the popular methodologies that are used in many countries and across the globe. As such the project management is a broad topic and is a complex one that has many theories, principles, and concepts involved in it.

Critical chain method (CCM) is the longest path of the project that prevents the project from being getting completed in the shortest time.

The critical path method (CPM) is the longest path through the schedule with having a zero float or a negative float.

CCM is the modified form of the CPM that considers the availability of resources when making the project schedule.

Constraints

The theory of constraints is the concept that says that there are fewer numbers of constraints that are there in the project which will prevent the project in achieving the goals, objectives, and requirements. We need to identify the constraints and restructure the processes to make it successful. It enables one to find the weakest link in the project that has the risk of preventing the project from the derailment. It can be anything from team members, processes and organizations, etc.

In 1984 an Israeli business management expert came up with the book called 'The Goal' and introduced the theory of constraints in that book. Then he came up with another book called critical chain in 1997 which again focuses on the concepts of managing projects.

The key assumption in the theory of constraints is that three parameters are there by which the organization can be managed. They are as follows,

Throughput - The thing by which the organization generates the goal units such as sales or the money
Operational Expenses - The money spent when generating the above goal units.
Investment - The money that is spent on machinery, equipment, and resources, etc.

Now we need to understand what to do with the theory of constraints in such a way that the processes make the projects successful. It is called the focusing process; it is illustrated as follows,

Identify the theory of constraints,
Decide to convert it into an opportunity
Then make all the processes based on the above decision.
Eliminate or lessen the constraint
Repeat the cycle of the focusing process as needed.

The theory of constraints has a methodology called the thinking process that is made up of many interdependent complex processes. The thinking process is a cause and effect tool that removes many root causes of the undesirable effects without creating a new one. To do this there are three questions one needs to ask they are as follows,

What are the things that need changing?
How should we change it?
What action must we perform to change it?

Now for measuring the throughput accounting there are 4 measurements those are listed below,

Net Profit - Which is the throughput minus the operating expenses?
Productivity - Which is the throughput divided by the operating expenses
Return on Investments - Which is net profit divided by the investment
Investment Turns - Which is throughput divided by investment

The improvements can be achieved by increasing the throughput, reduce the operating expenses, and to reduce investments. The theory of constraints focuses most importantly in increasing the throughput than in reducing the costs.

Also Read: Components Of Cost Of Project

Critical Chain Approach

As shown in the network diagram below is the longest path considering the resource constraints and the activity interdependence? It considers the resources availability and is thus the modified form of the critical path method. In this method, the buffers are used to eliminate the slack or float as identified in the critical path method. From the below diagram of the critical chain method example the path Start  C  D  E  F  End is the critical chain.

Critical Chain Approach

Source

Buffers explained in CCPM Project Management

CCM is also known as the Critical chain Project Management (CCPM) or the Critical chain Management which extends the theory of constraints and tries to identify the constraints and also helps to eliminate the constraints in the project. It also ensures that there are no delays in the project and that it does not extend the project schedule. So what is a it?

It is the longest path in the network diagram considering resource constraints and interdependence.

In the traditional methods such as the waterfall method, the tasks are added with the extra time and started the interdependent tasks as soon as possible and doing the parallel activities to manage the uncertainties. Whereas, in a CCM, the uncertainty is managed by estimating the average time duration for each task and then scheduling those tasks and leaving out all the unnecessary tasks. Here in the CCM aggregate buffers are placed in the project to control the project. The key tasks on which the project depends are called a critical chain.

There are three types of buffer placed in the CCM so that it does not extend the project schedule.

a) Project Buffer - The project buffer is placed in the last task before the completion of the project. The project completion date is fixed and when the project is in the execution phase the project buffer is fixed and cannot be changed. The duration of the project buffer is 50% of the contingency which was removed from every task estimate.

b) Feeding Buffer - Any other path that merges with the critical chain is called the feeding chain. The feeding buffer is added to protect the chain from any violations of the feeding chain. It is placed between the last activity of the feeding chain and the activity of the critical chain. The estimate of this buffer is the same as the project buffer.

c) Resource Buffer - These buffers are kept alongside the critical chain so that the key resources are available when there is a need. Here the resource can be a person or equipment.

Critical Chain Project Management Example

It was initially adopted for the manufacturing industry and the semiconductor industry has been successfully adopted in the software and IT industry as well. There are many examples where the software industry has cut down the project cost and project time by using the CCM. It was also used in embedded systems, semiconductors, and hi-tech industries successfully to cut down the cost and the delivery timelines. More of the live and real-time examples will be covered when you register for PMP training online with StarAgile and that is the chief advantage of this course.

Finally – Did you understand what is a critical chain project management

It is indeed complex to effectively control and manage the projects. It involves achieving the goals, objectives, benefits, and requirements of the products or services. To make the project management success it is critical that the project manager is certified in one of the project management methodologies such as the PMP and know other methodologies too.

The project manager with the PMP certification online is in high demand and is the desired qualification for the project manager in all the industries and across the world. The pressure lies on the project manager to perform as per the expectations of the management and the customer.

Is the critical chain method difficult to grasp? Do not worry as StarAgile’s PMP certification training course will clear all the doubts and you will be able to work on your own with the real-world example.

You can learn more Project Management tools along with the principles of the PMBOK with the PMP training course online. To read more, click on the links provided in the different sections. To explore more and register for the PMP training course online visit StarAgile’s website and master the entire project life cycle.

If you are in doubt talk to StarAgile’s PMP Training Online coordinator now and enquire about the PMP certification cost.

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