Critical Chain and Risk Management
-- Protecting Project Value from Uncertainty (Part 2)
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2. PROJECT PLANNING
-- DEPENDENCIES AND DURATIONS
No matter how good a project schedule is or how well resources perform in the execution of tasks in that schedule, if critical dependencies associated with the project are not included in the description of the effort, they represent considerable risk to delivering project value.
The Dependency Network
The primary aspect of planning in a Critical Chain environment is a process known as Network Building. It is a multi-pass approach designed to assure that no key dependencies for the project are missed. Like all effective project management planning processes, it starts, as Stephen Covey might say, with the end in mind. It requires careful consideration of what the project is about, emphasizing identification of the true value-generating aspects of the project. The TOC origins of Critical Chain provide a basis for this clarification, in terms of providing a focal point in the relationship of the project to the project owners constraint and the contribution of the project to an enhanced ability to achieve (more of) the organizations goal. From this analysis comes necessary clarity of objectives, deliverables, and success criteria, assuring that everyone is on the same page regarding success of the project.
Once the end is understood, Network Building quickly shifts to a focus on task dependencies required to get there. The clear definition of deliverables serves as a high level WBS, but rather than continue developing the individual hierarchical branches of a WBS, Network Building shifts to dependency identification. To the extent that projects are highly interdependent efforts, this emphasis on what is needed to develop a handoff is a more straightforward way of building a holistic set of dependencies than trying to search across the lower levels of branches of a traditional WBS. This also assures an emphasis on deliverables and handoffs through their identification as necessary inputs, with clarity further enhanced by a strong preference for verbose task descriptions (Jacob, 1998).
Once the first pass of major dependencies, from end to beginning have been developed, it is addressed for identification of the minimum resource capability needed for task completions. Very often, this emphasis on minimum capability helps identify additional supporting task dependencies, as assumptions about the use of masters versus journeymen and apprentices are uncovered. Once resource identification is complete, if they havent already been involved, the next pass in Network Building is a review of the task structure by representatives of those resources, highly useful for further catching missed dependencies and for assuring clarity of expected task outcomes.
Network Building and Risk Identification
The emphasis of Network Building in a Critical Chain environment is on clarity of task inputs necessary to support that tasks deliverables. The resulting discussion of input requirements are directly related to risks associated with the ability of that task to do what needs to be done for its required output. The backward building of the network assures that outputs are understood before defining inputs. This focus on dependencies is, in effect a focus on risk, since missed dependencies in plans and schedules are a serious source of risk. The repeated questioning of what do you need? followed by is there anything else that is needed? serves to trigger thought of things that could go wrong, i.e., identification of potential risks in delivering task outputs.
The iterative process (initial identification of task outputs and inputs, through resource identification and review, to estimation of durations and iterations) provides a series of safety nets enhancing the chances of catching more missed dependencies and risks.
Network Building and Risk Avoidance/Mitigation
Any effective planning process is about the identification and inclusion of necessary handoffs. These handoffs are the linkages of the chain of tasks -- they serve as inputs to some tasks and are developed as outputs of others. The plan -- the dependency network -- is simply the sum of handoffs that need to occur to overcome obstacles on the way to the projects objective and to minimize the effect of potential pitfalls along the way. To the extent that careful consideration is given to the completeness of necessary inputs, identified risks can be avoided or mitigated by adding additional tasks to the network.
In Network Building, the emphasis on input identification rather than on a flow of tasks or on isolated legs of a WBS helps to assure that risks of missed dependencies are avoided. It is far easier, once ones required outputs are identified, to come up with the full complement of necessary inputs, rather than try to guess what ones successor needs, especially when that successor is in some separate leg of a WBS.
Too often, plans include assumptions regarding the existence of necessary inputs. The incessant (some might say obsessive) focus on whether all identifiable inputs are sufficiently provided for in the network goes a long way to avoiding and mitigating risks that might have otherwise been buried in those assumptions.
Durations and Iterations
The final step in Network Building is the development of range estimates for both task durations and iterations. Critical Chain Scheduling utilizes a 2-point estimate, for both durations and iterations. Avoiding the idea of the oxymoronic accurate estimate, the Critical Chain approach explicitly accepts and takes into consideration the reality of variation and uncertainty associated with every project endeavor. With knowledgeable representatives of the appropriate resources involved, it is critical to understand what might happen in the event that Murphys Law strikes, and what could happen if the task in question gets lucky. This is applicable to both durations of particular tasks, as well as to the number of iterations associated with dealing with things that are unknown up front.
To this end, resources are first queried for a safe estimate -- one in which they have a high level of confidence, and are willing to consider a commitment. This defines the upper end of the possible requirements of the project components in terms of time. Once this upper limit is initially established, a second aggressive but achievable estimate is solicited -- one that reflects a near best case situation that is in the realm of possibility if things go well in the performance of the task in question.
Two-Point Estimates and Risk Assessment/Avoidance/Mitigation
Schedule and cost risk assessment are inherent in Critical Chains 2-point duration and iteration estimates. Once basic dependencies are identified in the Network Building process, the uncertainty and potential variation associated with individual tasks and groups of tasks are the next link related to the risk of keeping project promises and delivering desired value. Even if identified, mitigated, or avoided through additional tasks in the network, task delivery is still subject to technical or performance risk.
In addition to serving as the basis for turning the dependency network into a Critical Chain schedule, the 2-point estimation process is an excellent vehicle for further understanding risks and ways of addressing them. The first, commitment-level estimate should reflect the inherent task or iteration risk associated with the piece of the project in question. The difference between the larger and smaller estimates is directly related to the assessment of necessary safety associated with task estimates. The amount of safety necessary, relative to the aggressive but achievable estimate will highlight the level of risk associated with the task. The reasons for that safety, which should be a piece of the estimation discussion, will provide opportunities for identifying additional inputs and tasks that can serve to rationally reduce either or both of the estimates, or to help assure that they wont be exceeded in execution.
This article is an expanded version of one originally presented at the national Project Management Institute Symposium (Nashville, November, 2001). 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.
-- 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 PARKINSONS 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
|Nothing is particularly hard if you divide it into small jobs. - Henry Ford
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.
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