This Focused Performance Weblog is a "business management blog" containing links and commentary related primarily to organizational effectiveness with a "Theory of Constraints" perspective. TOC is noted for its applications in Project Management and Multi-Project Management (Critical Chain) and Operations Management (Drum-Buffer-Rope), as well as in Marketing, Strategic Planning and Change Management (TOC Thinking Processes). If you are on an archive page, current postings are found here.
Friday, January 30, 2004
Estimates and Buffers in Critical Chain (Part 4 - Buffer Management Basics) -- In the firstthreeparts of this series on estimates and buffers in the Critical Chain project management methodology (CCPM), the focus was on their development and sizing. In this installment, the subject shifts to using buffers to manage project execution. While, on the surface, buffers appear to be primarily a means to protect a project's schedule promise from inevitable uncertainty, they are also at the center of day-to-day decision-making in a CCPM environment.
Planning and scheduling is about making promises. Managing project execution is about keeping those promises in the face of uncertainty, variation, and risks both identified and unidentified. Once a schedule is developed and commitments are made, we enter the real world of project execution. A plan and schedule are merely models of expectations associated with the project. Reality will create deviations from those expectations as early as day one of the project. These deviations are the both the result and precursors of changing risks and opportunities associated with the project.
As reality deviates from the model of expectations, tasks will take longer or shorter than accounted for in the schedule. As tasks are worked, better understanding of the reality of the project is developed (including potentially significant changes in the details of the project's product). As the project progresses, more becomes known about later tasks as a result of findings in earlier tasks. These variations in performance, new knowledge, and resulting refinements in expectations need to find their way into the understanding of the project and its promises. In a Critical Chain-based project, buffers are consumed or replenished accordingly, acting as shock absorbers designed to protect promises from the unavoidable variation in task performance.
But sometimes those deviations are greater than anticipated. Sometimes, the shock absorbers threaten to "bottom out." Sometimes corrective actions are needed to mitigate the accumulation of anticipated and unanticipated variation. How does one assess the current risk and whether and how to act?
Critical Chain-based risk management and project "control" does not end with building the schedule and making the promises. The full name of the Theory of Constraints solution for single-project management is Critical Chain Scheduling and Buffer Management. Buffer Management is the key CCPM process for monitoring and controlling projects. It provides the basis for ongoing awareness of changing risk and guidance for when that risk suggests a need for action.
The use of Buffer Management is not unlike the use of statistical process control (SPC) in production environments, helping differentiate the impact of common cause variation (related to anticipated, accepted risk in the project world) from special cause variation (unanticipated or unplanned risks). It is based on straightforward methods of assessing both the consumption of buffers relative to project completion or the trending of that consumption, and requires minimal data gathering to facilitate its calculation. As a result, buffer reporting becomes a tool that is usable not only by the project management elite, but also by top management as well as project performers and their managers to assess and appropriately act on risks as they raise their head.
Like Project Risk Management, Buffer Management is a future-facing process. At its core is an approach to updating tasks that eschews emphasis on what has been done or “percent complete” in favor of what matters in terms of the promise – what remains to be done. Just as risks are potential events yet to be encountered, task updating based on estimates of the duration to the completion of active tasks reflect any remaining risks for that task. Similarly other traditional methods of soliciting concerns of risks for future tasks can also be translated to changes in expected durations of those tasks or to insertions of new tasks into the original chains in the project network.
Combining the cumulative previous buffer consumption with the current task’s remaining duration (or new understanding of future work) provides a new, current view of the state of the buffer. Comparing how much buffer remains to the amount of buffer required to protect the project’s promises from the variation expected in the remaining work allows an assessment of the health of those promises. (Technical details of various means of doing this comparison will be covered in Part 5 of this series.)
Risk assessment during project execution can be assisted by determining if buffer remaining is less than buffer needed, or if buffer consumption exhibits a troubling trend. Risk response planning can be based on thresholds of buffer consumption or comparisons of the rate of buffer consumption to the rate of related task chain completion. These thresholds (sometimes taking on the ubiquitous "green-yellow-red" nomenclature) are used to determine whether it is appropriate to act to mitigate the impact of these risks or accept the remaining risk as within the ability of remaining buffer to deal with it. Sometimes it can be even more important to avoid developing and implementing unnecessary corrective actions, especially when those actions require significant time and attention to develop. In that case, awareness of a healthy buffer allows for a comfortable and confident decision to do nothing.
In the development of risk responses, Buffer Management also provides input to how much response is necessary. The implicit understanding of risk inherent in the use of buffers carries through the project by allowing project teams to assess how much buffer is required to protect the due date promise from the remaining work. This allows them to determine how much buffer, if any, has to be recovered when faced with a previously unanticipated risk event, so that the effects on the project promise can be determined, reported, and appropriately addressed.
Before ending this installment of the series, another aspect of Buffer Management "basics" must introduced. Not only is it applicable to the protection of individual project promises; it is also a key to effective Multi-Project Management. In a shared-resource, multi-project environment, there are often situations in which certain resources are called upon by more than one project. The result is what I believe is the question that what project management is all about, "What should I be working on to assure maximum benefit to the organization?" With consistent, portfolio-wide buffer management, the relative state of the individual projects' buffers can be easily compared and "what-if'ed" to provide guidance for determining the right answer to that question.
Look for the next installment in this series, which will dig a bit deeper into the mechanics of Buffer Management, and discuss some implications of the methods of buffer sizing in that context.
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