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Critical Chain and Risk Management
-- Protecting Project Value from Uncertainty (Part 3)

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

Some of the major beneficial effects of the Critical Chain approach come from the linking of scope and time management to risk management. The intimate interactions of these processes in the Critical Chain approach make them difficult to pigeonhole in the taxonomy of the traditional project management body of knowledge (Duncan, ed., 1996), and therefore, they can easily be overlooked. The conduits for much of this connection are found in the development and use of schedule buffers and in the process of Buffer Management.

The Critical Chain Schedule

A Critical Chain schedule takes advantage of the 2-point estimate process to translate the dependency network into a reliable project promise. Reliability comes first from feasibility assured by explicitly including resource dependencies as well as handoff dependencies in the determination of the critical chain/path of the project.

Secondarily, the two estimates developed in the planning process are used to aggregate and concentrate safety where it will do the most good to protect the project’s promises and its intended value. The body of the schedule -- the network of tasks and resources used to identify the critical chain -- makes use of the smaller of the two estimates. The difference between the “safe” estimate and that “aggressive but achievable” estimate for critical chain tasks is used to develop the primary characteristic of the critical chain schedule -- the buffers. A project buffer, which protects the final project due date from the variability in performance on those tasks is built from the estimates associated with the critical chain tasks. Feeding buffers, which are related to chains of tasks that feed into or merge with the critical chain, are similarly sized and placed to isolate the critical chain from the integration effects of those chains, essentially helping to keep the critical critical (Patrick, 1999a).

Critical Chain Schedules and Risk Assessment/Acceptance

Once developed, assessment of the full schedule, including the contribution of the buffers to project lead-time, provides a clear view into the identified potential of schedule risk for the project. In non-Critical Chain environments, when contingency is included, it is often hidden, either in management reserve, or in internal and external commitments. The common practice of keeping these components off the table hides their true impact and implications. The open and explicit communication of buffers (important as we will see in the discussion of project control) allows a clear assessment of what could happen “in the best of all possible worlds,” versus what might happen if individual concerns accumulate to affect project performance.

The ultimate risk of a project is not delivering the promised value in the required time frame. If the schedule results in a lead-time that does not support business needs of the project, the critical chain schedule provides two primary sources for reduction -- the critical chain and the project buffer. Assumptions that have been made on key critical activities can be revisited to assess whether additional actions or activities can be added to the project to reduce variability and the size of the project buffer, or whether task handoffs can be restructured to allow more parallel activity and reduce the length of the critical chain. At some point, limits on corrective action are reached, resulting in a buffered schedule that reflects the accepted risk of the project’s lead-time and schedule promise.

Critical Chain Schedules and Integration Risk Avoidance/Mitigation

While a lot of emphasis is placed on the project buffer and its protection from critical chain variability, feeding buffers are just as important. They serve to protect project promises from a universal source of risk found in every project that involves parallel activity. Integration risk, i.e., the statistical nature of merging parallel paths, is the primary source of changing critical paths in traditionally managed projects. If a set of parallel paths of activity each have a relatively safe 85% probability of completion by certain point in time, it takes only 4 such paths to turn the chance of an on-time start for the task they integrate into to 52% -- not much more than that of a flip of a coin. When one considers that projects are typically made up of integrations of integrations or integrations, there is little wonder that critical paths change during the life of a projects, and that there is difficulty bringing projects in on time without relying on heroics or hoop-jumping.

A common tool for assessing this characteristic of risk in traditional critical path project schedules is Monte Carlo simulation, which provides a view of the impact of these integrations on the probability of promised project completion. The critical chain schedule takes these integrations into account up front by explicitly building feeding buffers to deal with the variability in feeding chains (rather than relying on random amounts of slack or float). While Monte Carlo simulations advise on the probability of keeping promises, buffered critical chain schedules are designed to avoid integration risk and keep that probability high.


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.

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


There is never enough time, unless you're serving it. - Malcolm Forbes

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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