Critical Chain Project Management

Critical chain project management adds resource constraints to the traditional Critical Path analysis. As well as looking at logical constraints (dependencies between activities) Critical chain also looks at resource constraints: If you only have 1 painter it really does not matter that all 100 houses are logically available for painting at the same time.

The presumption is that the critical path is a theoretical minimum time that has little to do with reality. Critical chain management presumes that almost any critical path can be squeezed with sufficient money and ingenuity and these things, not the logical minimum are the key constrains.

In the painter example it is self evident how the critical path analysis can be improved by considering the resource constraints. In more complex and subtle examples, however, the impact is not so obvious and still less easy to manage without formal tools specifically focussing on this constraint. Critical chain provides such a formal methodology.

Method

Critical Chain Analysis

A traditional critical path is used to work backward from a desired end date. For each task two estimates are generated:

a 'best guess' estimate (50% chance we will do it within this time); and

a 'safe' estimate (90% or 95% chance we will do it within this time.

Resources are assigned to each task and the project is resource levelled using then 50% estimates. The longest 'chain' of resource-levelled tasks is the critical chain.

The differences between the 50% estimates and the 95% estimates are then gathered together according to the resource type and divided by the amount of resources available for tasks of that type. (20 hours of estimated overrun divided by 2 painters is 10 hours of levelled overrun for painters) The longest of these levelled buffers is then added to the end of the project effectively pushing back the start time by a safety margin.

A baseline is created from this plan. Monitoring will be critical so the baseline is very important.

Execution and Monitoring of the Critical Chain

The schedule is managed to keep the critical chain full. In this way the practical constraints of resources are managed as well as the logical constraints of the critical path.

The key metric is the rate at which the various resource safety buffers are eaten away by overruns. Action is needed when the rate at which any single resource buffer is used up makes it clear that you are going to run out of that resource before the deadline.

Issues.

The main issue with critical chain management is the moral hazard in the inclusion of extra time in the plan. Individuals on the project tend to see the extra time as part of the allocated time and treat this as the baseline for their efforts rather than the 50% estimate which should be. They only see themselves as 'late' when they breach the 'safe' estimate which may then become the true 50% estimate.

To counter this risk, project managers must review staff performance against the 50% estimates and make it clear that whilst the safe figure represents acceptable performance on any one task. Average acceptable performance is measured against the 50% figure which should be bettered as often as it is broken.