 First edition cover | |
| Author | Eliyahu Goldratt |
|---|---|
| Country | United States |
| Language | English |
| Subject | Project management |
| Genre | Business Novel |
| Publisher | North River Press |
Publication date | 4 September 1997 |
| Media type | Print (paperback) |
| Pages | 246 pp (first edition, paperback) |
| ISBN | 0-88427-153-6 (first edition, paperback) |
| OCLC | 36781362 |
Critical Chain is a novel by Dr. Eliyahu Goldratt using the critical chain theory of project management as the major theme. It is really a teaching method for the theory.
Like Goldratt's book The Goal , Critical Chain is written as a novel, not like a project manager's how-to guide. This book is a story about a professor trying to attain his tenure at a university's business school. The plot is used to maintain interest in the subject and provide a real life feel to the book. It provides plenty of real-world examples. The plot of the novel is fourfold:
The goal of the book is the last point, but Goldratt makes it clear that educational systems must change to better accommodate the quickly changing world of business.
The book walks the reader through a series of steps to establish the principles for the discussion. It is written for someone with a modicum of project management background.
The book starts by pointing out the problems with how time estimates are normally done on projects. It then provides a primer on the Theory of Constraints and an example of its implementation in a steel mill. With the foundation set, it proceeds to show how the Theory of Constraints can be applied to schedule generation, resources constraints and multiple projects.
Goldratt claims that the current method of generating task time estimates is the primary reason for increased expense of projects and their inability to finish on time. The commonly accepted principle is to add safety (aka: pad or slop) to generate a task time length that will essentially guarantee the step gets completed. He asserts that estimates for a task are based on individuals providing values that they feel will give them an 80-90% chance of completing the step, these estimates are further padded by managers above this person creating a length of time to complete a task that is excessive - as much as 200% of the actual time required. It is this excessive padding that has the opposite effect - guaranteeing the task will run full term or late. As counter intuitive as this seems, he provides examples of why this is the case. This predisposes the people on the project to consume the time estimate by:
The book presents a primer for Theory of Constraints. This is done in the form of a lecture by a professor who has recently returned from a sabbatical at a large conglomerate that uses the Theory of Constraints. The discussion focuses on the current methods of measuring success at a work center (cost and throughput) and shows how they are contradictory to the success of the production line as a whole.
The book enumerates the five principle steps of the Theory of Constraints:
This philosophy keeps the cost and throughput models at odds with one another since the subordination process necessarily decreases efficiency. Hence, evaluation criteria for properly managing a work center must change to properly reward the organization's success.
The book points out this conflict with respect to an axiom in the Theory of Constraints that states that if two concepts are in direct conflict, then there is an assumption as part of those concepts that is incorrect.
To illustrate, the book uses an example of a steel mill with significant production problems, excess inventory and cost issues. It methodically assigns all the issues of the plant to the method in which success of a work center is measured. The errant assumption is efficiency being measured by tons of steel per hour. The flaw in the measurement is that not all material takes the same length of time to produce and not all work centers have the same throughput. It concludes the sources of the problems for the steel mill are:
| Issue | Causes |
| Yard inventory |
|
| Raw material shortage |
|
After subordination, the key is to maintain a small buffer of material in front of the bottleneck to ensure it never stops producing due to lack of material.
After laying this groundwork, the book turns to applying this to Project Management. After declaring the constraint to be the schedule's critical path, the book maps out a set of terms. The result is:
| Production term | Project term |
| Work center | Task |
| Product | Time |
| Pre-work center inventory | Work buffer from the feeding tasks of the critical path |
| Bottleneck work center | Bottleneck resource |
It proposes a method of schedule generation where all tasks are estimated at a reasonable time for completion. This would be a time estimate that would give the resource a 50%-60% chance of completing the task on time. The theory being that one task may take less than its estimated time but another may take more - on the average evening out. Since there is no safety, the conditions above that cause misuse of time on the task do not exist.
Safety is not added to individual tasks. Safety is added to the project as a whole (at the end) or to the end of a sequence of tasks feeding the critical path.
Using numerous analogies and examples, the concept of a resource buffer is introduced. This concept claims that one must ensure the resource bottleneck on the critical path is always busy and stays focused. They should be:
The book introduces increasingly complex situations to remove the non-practical classroom approach until it reaches two common project situations:
The book emphasizes that the project manager has to understand that he or she is not working with absolutes. Resolution of these issues are not absolute. The time estimates are just that - estimates - they cannot be treated as absolute times. This is essential for the following two points.
A project example is given with a single bottlenecked resource on multiple paths. Since this resource is over utilized on multiple paths its tasks need to be considered when determining the project duration. This results in the introduction of the term critical chain - the aggregate of the critical path and the constrained resource leveled tasks.
Projects are going to use common resources. Organizations need to accommodate parallel projects while adhering to the Theory of Constraints concepts. This requires developing a prioritization scheme for the resource to determine the correct order to do work (i.e. proportion of the project buffer remaining). As before, once the scheme has been developed, the resource needs to be focused (not multitasking) on completing the task as soon as possible.
The book closes by introducing a concept for a method for determining which projects should be selected for execution. It is based on looking at the investment in each project in terms of money-days. Money-days is the product of the investment in the project and its duration.
The book was reviewed by a number of academic and business journals including Harvard Business Review [1] and IIE Transactions. [2] In addition, a number of academics have studied Critical Chain Project Management and shown that while the packaging of the content is novel, the ideas are not necessarily original and in some cases, not advisable. [3] [4] [5] [6] [7] [8]
A real-time operating system (RTOS) is an operating system (OS) for real-time computing applications that processes data and events that have critically defined time constraints. An RTOS is distinct from a time-sharing operating system, such as Unix, which manages the sharing of system resources with a scheduler, data buffers, or fixed task prioritization in a multitasking or multiprogramming environment. Processing time requirements need to be fully understood and bound rather than just kept as a minimum. All processing must occur within the defined constraints. Real-time operating systems are event-driven and preemptive, meaning the OS can monitor the relevant priority of competing tasks, and make changes to the task priority. Event-driven systems switch between tasks based on their priorities, while time-sharing systems switch the task based on clock interrupts.
Project planning is part of project management, which relates to the use of schedules such as Gantt charts to plan and subsequently report progress within the project environment. Project planning can be done manually or by the use of project management software.
Critical chain project management (CCPM) is a method of planning and managing projects that emphasizes the resources required to execute project tasks. It was developed by Eliyahu M. Goldratt. It differs from more traditional methods that derive from critical path and PERT algorithms, which emphasize task order and rigid scheduling. A critical chain project network strives to keep resources levelled, and requires that they be flexible in start times.
Eliyahu Moshe Goldratt was an Israeli business management guru. He was the originator of the Optimized Production Technique, the Theory of Constraints (TOC), the Thinking Processes, Drum-Buffer-Rope, Critical Chain Project Management (CCPM) and other TOC derived tools.
The Project Management Body of Knowledge (PMBOK) is a set of standard terminology and guidelines for project management. The body of knowledge evolves over time and is presented in A Guide to the Project Management Body of Knowledge, a book whose seventh edition was released in 2021. This document results from work overseen by the Project Management Institute (PMI), which offers the CAPM and PMP certifications.
The critical path method (CPM), or critical path analysis (CPA), is an algorithm for scheduling a set of project activities. It is commonly used in conjunction with the program evaluation and review technique (PERT). A critical path is determined by identifying the longest stretch of dependent activities and measuring the time required to complete them from start to finish.
The theory of constraints (TOC) is a management paradigm that views any manageable system as being limited in achieving more of its goals by a very small number of constraints. There is always at least one constraint, and TOC uses a focusing process to identify the constraint and restructure the rest of the organization around it. TOC adopts the common idiom "a chain is no stronger than its weakest link". That means that organizations and processes are vulnerable because the weakest person or part can always damage or break them, or at least adversely affect the outcome.
The thinking processes in Eliyahu M. Goldratt's theory of constraints are the five methods to enable the focused improvement of any cognitive system.
The program evaluation and review technique (PERT) is a statistical tool used in project management, which was designed to analyze and represent the tasks involved in completing a given project.
The Goal is a management-oriented novel by Eliyahu M. Goldratt, a business consultant known for his theory of constraints, and Jeff Cox, the author of many management-oriented novels. The Goal was originally published in 1984 and has since been revised and republished. This book can be used for case studies in operations management, with a focus geared towards the theory of constraints, bottlenecks and how to alleviate them, and applications of these concepts in real life. It is used in management colleges to teach students about the importance of strategic capacity planning and constraint management. Time Magazine listed the book as one of "The 25 Most Influential Business Management Books.
This is a list of topics related to the theory of constraints.
Throughput accounting (TA) is a principle-based and simplified management accounting approach that provides managers with decision support information for enterprise profitability improvement. TA is relatively new in management accounting. It is an approach that identifies factors that limit an organization from reaching its goal, and then focuses on simple measures that drive behavior in key areas towards reaching organizational goals. TA was proposed by Eliyahu M. Goldratt as an alternative to traditional cost accounting. As such, Throughput Accounting is neither cost accounting nor costing because it is cash focused and does not allocate all costs to products and services sold or provided by an enterprise. Considering the laws of variation, only costs that vary totally with units of output e.g. raw materials, are allocated to products and services which are deducted from sales to determine Throughput. Throughput Accounting is a management accounting technique used as the performance measure in the Theory of Constraints (TOC). It is the business intelligence used for maximizing profits, however, unlike cost accounting that primarily focuses on 'cutting costs' and reducing expenses to make a profit, Throughput Accounting primarily focuses on generating more throughput. Conceptually, Throughput Accounting seeks to increase the speed or rate at which throughput is generated by products and services with respect to an organization's constraint, whether the constraint is internal or external to the organization. Throughput Accounting is the only management accounting methodology that considers constraints as factors limiting the performance of organizations.
In project management, resource leveling is defined by A Guide to the Project Management Body of Knowledge as "A technique in which start and finish dates are adjusted based on resource limitation with the goal of balancing demand for resources with the available supply." Resource leveling problem could be formulated as an optimization problem. The problem could be solved by different optimization algorithms such as exact algorithms or meta-heuristic methods.
The Shifting Bottleneck Heuristic is a procedure intended to minimize the time it takes to do work, or specifically, the makespan in a job shop. The makespan is defined as the amount of time, from start to finish, to complete a set of multi-machine jobs where machine order is pre-set for each job. Assuming that the jobs are actually competing for the same resources (machines) then there will always be one or more resources that act as a 'bottleneck' in the processing. This heuristic, or 'rule of thumb' procedure minimises the effect of the bottleneck. The Shifting Bottleneck Heuristic is intended for job shops with a finite number of jobs and a finite number of machines.
The project management triangle is a model of the constraints of project management. While its origins are unclear, it has been used since at least the 1950s. It contends that:
Total project control (TPC) is a project management method that emphasizes continuous tracking and optimization of return on investment (ROI). It was developed by Stephen Devaux. It builds upon earlier techniques such as earned value management, critical path method, and program evaluation and review technique, but uses these to track and index projected project profitability as well as the more traditional cost and schedule. In this way it aims to manage projects as profit and investment centers, rather than cost centers.
The following outline is provided as an overview of and topical guide to project management:
Schedule Network Analysis is a strategy that is commonly used in project management. The strategy consists of visualising the different project tasks and making connections between them in the project management plan.
Theory of constraints (TOC) is an engineering management technique used to evaluate a manageable procedure, identifying the largest constraint (bottleneck) and strategizing to reduce task time and maximise profit. It assists in determining what to change, when to change it, and how to cause the change. The theory was established by Dr. Eliyahu Goldratt through his 1984 bestselling novel The Goal. Since this time, TOC has continued to develop and evolve and is a primary management tool in the engineering industry. When Applying TOC, powerful tools are used to determine the constraint and reduce its effect on the procedure, including: