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Critical Chain and Risk Management
-- Protecting Project Value from Uncertainty (Part 1)


This article is an expanded version of one originally presented at the national Project Management Institute Symposium (Nashville, November, 2001) as Buffering Against Risk -- Risk Management and Critical Chain. It is presented here in linked sections for ease of reading on the web. This version has been accepted for the 2002 World Project Management Week conference (Hong Kong, March, 2002). For off-line reading and sharing, the full article can be downloaded in Adobe Acrobat (pdf) format at ccrisk.pdf or in Microsoft Word format at ccrisk.doc.

1. INTRODUCTION
-- MANAGING UNCERTAIN EVENTS FOR CERTAIN PROMISES

Protecting the value of a project involves dealing with the uncertainty that will be associated with its delivery. The role of Project Management is to assist in turning uncertain events and efforts into certain outcomes and promises. If this is the case, then the primary process associated with project management should be that of risk management. How other processes, such as scope, schedule, and spending management support risk management is therefore critical for successful project management and for maximizing the value of our project-based efforts. One of the more recently introduced project management methodologies has at its core a focus on the management of uncertainty and risk.

Critical Chain-based project management has received considerable attention in the Project Management community since it was broadly introduced in Eliyahu M. Goldratt’s book, Critical Chain (Goldratt, 1997). Most of this attention has been focused on the areas of schedule development and management. But the details of the scheduling methodology -- the critical chain versus the critical path, just-in-time starts replacing as-soon-as-possible starts, the eschewing of task due dates and use of buffers of time to protect the project's promise and monitor its progress -- are only means to an end. Or rather, ends -- speed and reliability of project performance unencumbered by conflicting pressures and behaviors. And reliability of project promises is as much a result of a methodology’s ability to support effective risk management, as it is a result of effective planning and scheduling.

Recognition of uncertainty and its associated risk are at the core of the initial stages of developing Critical Chain schedules. The emphasis on dependencies in the usual approach to developing a project network for a Critical Chain schedule helps to avoid risks of missing interactions of different parts of the project. The use of 2-point estimates to assess and address the early view of schedule risk associated with task uncertainty sets the tone up front for the appreciation of risk in the real world. In addition to task uncertainty, iteration uncertainty (a topic not written of much to date in the Critical Chain literature) can also be taken into account in the sizing of Feeding and Project Buffers. These resulting buffers themselves become a highly visible and direct assessment of the schedule risk associated with the project as a whole.

Critical Chain-based project management is more than just Critical Chain Scheduling and Buffer Management. The genesis of Critical Chain in the Theory of Constraints (TOC) has yielded a holistic view of project management that provides effective risk-focused approaches not only to scheduling and control, but also to initial scoping and planning, effective resource behaviors, and minimizing cross-project impacts. These key aspects of the methodology have a range of implications for the support of basic risk management processes and outcomes, including identification and assessment of risks, response development -- bit it avoidance, mitigation, or acceptance, and guidance for response control (Pritchard, 1997).


1. INTRODUCTION
-- MANAGING UNCERTAIN EVENTS FOR CERTAIN PROMISES

2. PROJECT PLANNING
-- DEPENDENCIES AND DURATIONS

3. PROJECT SCHEDULING
-- INTEGRATIONS, VARIATION, AND RATIONAL PROMISES

4. RESOURCE BEHAVIORS
-- MINIMIZING THE EFFECT OF PARKINSON’S LAW

5. SYNCHRONIZATION OF THE PIPELINE
-- MINIMIZING RISK OF CROSS-PROJECT IMPACTS

6. PROJECT AND RISK RESPONSE CONTROL
-- CLARITY OF PRIORITIES AND CORRECTIVE ACTION

7. THE THEORY OF CONSTRAINTS
-- MORE THAN CRITICAL CHAIN PROJECT MANAGEMENT

8. SUMMARY -- A FORWARD-LOOKING APPROACH TO FUTURE RISKS

9. REFERENCES


You know, it's at times like this when I'm trapped in a Vogon airlock with a man from Betelgeuse and about to die of asphyxiation in deep space that I really wish I'd listened to what my mother told me when I was young! -- Why, what did she tell you? -- I don't know, I didn't listen! - Douglas Adams, From The Hitchhiker's Guide to the Universe.

Discuss Critical Chain - An email-based discussion group

Frequently Asked Questions about Critical Chain-based project Management

Top 10 Sources of Project Failure -- A list you probably won't see on Letterman.


Related links:

Check Out the Following Links for More About the TOC Approach to Project Management:

Getting Out From Between Parkinson's Rock and Murphy's Hard Place -- This first link will bring up a paper based on a poster presentation originally given at the 1998 New Jersey PMI Chapter's annual symposium, honored with a "best of the show" award by attendees, and later turned into an article published in PMI's PM Network magazine.

Program Management -- Turning Many Projects into Few Priorities with TOC -- This link will lead to a paper on the key attributes of a TOC Multi-Project Management environment. (Most projects are performed by resources shared with other projects. It can be deadly to ignore the resulting interactions, no matter how well you manage single projects.) This paper was originally presented at PMI's Global Symposium in Philadelphia in October of 1999 and is included in the proceedings of that conference. Audio tapes of the presentation are also available from PMI.

Project Portfolio Management - The First Cut is the Kindest Cut - One of the common problems faced by project-oriented organizations is having too many projects relative to their capacity. Therefore, one of the first things that needs to be done is to determine what can be done is to determine what should be done . . . and what should not be done . . .

Consumption of Effort and Conservation of Energy for Project Success -- This link will lead to an essay on the necessity for managing protective capacity in multi-project environments to get the most organizational throughput from the efforts of project resources.


Critical Chain Basics

A Critical Chain Schedule

The Sooner You Start, The Later You Finish

Multitasking Multiplies Lead Time

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