Aggregate Risk Critical Path
Planning:
A Discussion of Leveraging Critical Chain Concepts for
Critical Path
Robert Richards, Ph.D.
Stottler Henke Associates, Inc.
www.StottlerHenke.com
Hilbert Robinson
President, Afinitus Group, LLC
Orientation
•
•
•
•
•
•
•
Introduction
Uncertainty & Risk
Needs for Aggregated Risk
Aggregated Risk: The Critical Chain Solution
Aggregate Risk Critical Path Planning
Conclusions
Q/A & Authors
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Critical Chain & Resources
• Critical Chain Project Management (CCPM):
Resources explicitly defined and tracked
• Imply that resources must be modeled to use
Critical Chain concepts?
• Only a subset of concepts deal with resources
I.e. many of CCPM’s benefits are independent of
resources
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Critical Chain & Resources (2)
• Many of CCPM’s benefits are independent of
resources
• If resources available in large enough quantities,
then Critical Chain = Critical Path
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Critical Chain & Critical Path
• Why Not Leverage Critical Chain Concepts for
Critical Path
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Aggregation of Risk
• Major Principle of Critical Chain
– Does not explicitly require resource modeling
• Fights
– Student Syndrome
– Parkinson’s Law
• Let’s Look at in More Detail
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Uncertainty & Risk
• All Projects deal with uncertainty and risk
• Provisions are always made to accommodate a
reasonable amount of uncertainty
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Non-Aggregate Risk
• Traditional Critical Path implementation uses
what will be referred to as a non-aggregated risk
• Basic building block of the project model is the
task or activity.
• Assumption: in order to have a high confidence
that the project will finish on time … each activity
(or at least most) need to finish on time
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Activity Contingency
• Amount required by each activity to make it
reliable is not trivial
– More uncertain the environment and the more
significant the consequence of missing the
commitment, the greater the amount of safety
incorporated into the planning of each activity must
be, in order to maintain a high degree of reliability.
• This is the non-aggregated risk technique; each
activity is lengthened to provide protection
against all its associated risk.
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Task Estimation Variation
50% confidence
Safety
10%
confidence
2
5
90% confidence
10
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Estimating Task Durations
• The situation: You are asked to estimate how
long it will take you to complete a critical task.
You want to make sure that you can live up to the
estimate you provide.
“I know the
task will be
late before it
comes to
me” safety
“I know this
is not the
only task I
will work on”
safety
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“I know my
manager will
cut estimates
anyway”
safety
11
Needs for Aggregated Risk
• Paradox? Even with apparent safety – projects
still have a tendancy to be late
– Student Syndrome
– Parkinson’s Law
• Critical Chain – considers these in its mitigation
strategy  Aggregated Risk
– Independent of Resources
– Thus may be applicable to Critical Path
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Student Syndrome (Procrastination)
•
•
•
•
Initial Activity
Inactivity
Deadline Trigger
Burst of Activity
Level of
Effort
Start
Deadline Trigger
Scheduled Completion
Time
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Parkinson’s Law
• “Work expands so as to fill the time available for
its completion”
–
–
–
–
I can make it better.
I don’t want to be wrong on my estimate.
Avoid the accusations of “Sandbagging”.
The reward for finishing early is more work.
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Aggregated Risk:
The Critical Chain Solution
• Project Networks rebuilt:
1) Removing hidden contingency from activity
durations
2) Replace with explicit contingency provisions
– Strategically located at key points in the network
• Results in:
Project with shorter overall duration & higher
degree of schedule protection.
Project Level vs. Task Level Protection
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Aggregation Principle
• Insurance is designed to work by spreading
costs across a large number of people. Premiums
are based on the average costs for the people in
an insured group. This risk-spreading function
helps make insurance reasonably affordable for
most people.
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Introduction to Critical Chain
• Developed by Eliyahu M. Goldratt
– Introduced in 1997
• Derived from the Theory of Constraints
• Differs from CPM in focus on resource
requirements
• Focuses on protecting the project’s critical chain
• Gathers contingency time into pooled buffers
protecting the critical chain
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Critical Chain Planning Process
From Task to Project Protection
1. Traditional Plan
2. Safety Excluded
3. Resource Leveled
4. Critical Chain Marked
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Buffer Placement
• Project Buffer
– Between the last task of the aggressive project
schedule critical chain and the committed end date
• Feeding Buffers
– Protect the critical chain from being impacted by noncritical chain
– Place at the end of non-critical chains before they
connect to the critical chain
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Buffered Project
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Buffered Project (2)
Compared to 60
days traditional
PB = Project Buffer
FB = Feeding Buffer
• Aggregation Principle [where did some of the
safety go?]:
– Pooled protection provides more coverage
– Location is just as important as amount
– Sizing Rule of Thumb  Buffer is half of preceding
chain
 Buffers does NOT = Management Reserve
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Critical Chain: 2nd Look
• The shortest causal path through a schedule
• Takes resource requirements, contention into
account
• Slippage in the critical chain causes slippage in
the delivery date
PERT with critical path
1
Partial Order PERT with cp/cc
1
2
8
6
7
5
2
8
6
7
3
4
5
3
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Critical Chain: Example
PERT
1
Schedule
8
1
R
2
4
3
2
8
6
7
R
5
7
R
5
6
3
4
Partial Order Schedule
1
Schedule with Critical Chain
2
1
6
7
5
2
8
8
4
3
5
7
6
3
4
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Buffering the Critical Chain
Combined contingency time
Contingency time
1
1
2
5
4
3
3
7
8
5
7
6
Buffer placement schedule
1
CCPM schedule
1
2
3
6
4
8
6
8
2
4
7
2
3
5
8
4
5
7
6
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Execution Mode: Buffer Management
Schedule Before Execution Starts
“AS OF DATE
1. T8 experienced a 5 day increase in scope or delay
2. Results in a 2.5 day impact to the project buffer
3. The rest was absorbed by the CC gap
35-32.5=2.5 7% Complete and 14% Buffer Consumed
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Project Buffer Consumption after Feeder
Buffer Consumption
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Fever Chart
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CCPM Schedule Control
• Frequently status with estimates of Remaining
Duration for working tasks:
– Simple.
– Forward looking.
• Calculate impact on project buffer tracing
task chains forward: buffer penetration.
• Compare to pre-set thresholds for action:
– Green
– Yellow
– Red
no action
plan buffer recovery.
implement buffer recovery.
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Aggregate Risk Critical Path Planning
• The process to determine the Critical and
Feeding Chains is identical regardless of
whether resources are in scarce supply or not.
• Resource scarcity has the impact of altering
which tasks comprise the Critical versus Feeding
changes but has no other material impact.
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Aggregate Risk Critical Path Planning
•
•
•
•
Update each activity duration to remove the
entire hidden contingency, i.e., the activity
duration is that duration where the probability
of finishing on time is 50/50.
Insert Feeder Buffers (FB) where non-criticalpath activities merge into the critical path.
Insert a Project Buffer (PB) after the final critical
path activity.
During execution prioritize activities using
buffer penetration.
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ARCPP: Implementation
1. Model as currently done
2. Set all the activities to require one unit of an
arbitrary resource
3. Define the available number of arbitrary
resource units to the number of activities.
4. Export to a Critical Chain software package
5. Use the Critical Chain software as advertised
6. Result = Aggregate Risk Critical Path Planning.
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Conclusions
• By removing major inhibitor to the application of the
Critical Chain method (the effort required to explicitly
model resources) – more projects may benefit from a key
concept of CCPM – Aggregated Risk
• Aggregate Risk Critical Path Planning minimize the
negatives:
– Procrastination, and
– Parkinson’s Law.
• By making Critical Chain benefits accessible a la carte,
1) more likely to be experimented with and
2) incorporated into practice
• Practitioners may find that a subset of concepts serves
them better
PMI College of Scheduling
“PMI” is a registered trade and service mark of the Project Management Institute, Inc.
32
Q/A & Authors
Robert Richards, Ph.D.
Stottler Henke Associates, Inc.
951 Mariner’s Island Blvd, Suite 360
San Mateo, CA 94404
(650) 931-2700
[email protected]
Hilbert Robinson
Afinitus Group, LLC
425-231-4637
[email protected]
PMI College of Scheduling
“PMI” is a registered trade and service mark of the Project Management Institute, Inc.
33