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2015 TOCICO International Conference

Transforming Businesses Track

Joe Cooper
Senior Consultant
Allegient, LLC

Transforming Project Turmoil into Project Harmony: A Critical Chain (CCPM) Basics Workshop
September 8, 2015

Does it seem that projects in your organization require frequent firefighting where due dates are challenged and heroics are necessary to get things done? Do projects often go from green to red overnight? Is team morale suffering? Do you believe that your organization could flourish to new heights if this cycle were broken?

Lack of focus and inability to manage uncertainty are two significant causes of project delays, diminished quality, excessive project durations, and low team spirit. By addressing these root causes, critical chain project management (CCPM) techniques improve project speed, quality, on-time performance, and team morale.

Reducing nonproductive multitasking enables high-speed execution, high-quality deliverables, a greater sense of accomplishment, and an increased capacity to think and to innovate for team members and management. It is significantly more effective to prioritize and execute tasks sequentially rather than juggling many tasks on multiple projects simultaneously. The end result is that even the lower priority tasks finish earlier.

Several leading global organizations, such as Eli Lilly and IBM, have adopted CCPM solutions to significantly improve their project management results. Another such organization, Mazda Motors, credits CCPM with a recent, major company turnaround.

Problems associated with poor project performance
In order to implement effective solutions that improve project performance, it is important to identify the problems and isolate the root causes. When the numbers of problems are many, it is vital to address the critical few that are most impactful to achieving the organizational goal(s). One such problem on projects is that of low team morale. When teams are not operating with passion, energy, enthusiasm, and full engagement, superior project execution is not sustainable and delivery excellence is difficult to achieve.

Another significant problem worth addressing is on-time performance. When stakeholders expect predictable delivery of project results, missing a delivery date can be costly in terms of perceived reliability, customer satisfaction, and bottom-line results. Improving the frequency of on-time delivery can drastically increase the confidence stakeholders have in an organization’s ability to deliver and the potential for a steady stream of additional opportunities.

Excessive project durations are another significant problem which impacts projects and oftentimes leads to decreased return on investment (ROI) and opportunities lost to competitors. This workshop explores each of these project problems in greater detail to identify root causes and to uncover effective solutions.

Causes to the problems associated with poor project performance
Addressing these problems themselves would be like merely treating the symptoms of an illness. Until the root causes are understood and treated, the core of the problem can never be effectively eliminated. Investigations into the problems associated with poor project performance begin to uncover root causes such as:

  • low-trust environments;
  • nonproductive multitasking which decreases productivity, negatively impacts team morale, and causes missed due dates;
  • uncertainty in task estimates that are inadequately addressed;
  • student syndrome: waiting for the last possible moment to start a task – means that contingency is wasted and risk is increased;
  • Parkinson’s Law: allowing work to expand to fill the time allotted – also wastes contingency and increases risk;
  • having high amounts of work in progress can cause multitasking and firefighting which leads to low team morale and extended project durations (lead-times).

Critical Chain uncovers a set of new paradigms
Critical chain project management (CCPM) is the project management application of the theory of constraints (TOC). First introduced by Dr. Eli Goldratt in 1997, critical chain has gained significant momentum in the project community as a solution to the problems associated with poor project performance. CCPM takes resource constraints into account for more realistic planning and focused execution. The critical chain is the resource-leveled critical path. CCPM also utilizes pooled contingency to more effectively address the various components of project uncertainty.

The first solution addressed in this discussion, creating environments of high-trust, is not formally a critical chain solution. However, having significant trust within teams and across organizations is important when implementing change. The end result of improved morale and quality of work life for team members is more deliberately emphasized in the CCPM literature. Of course, many operational managers, VPs, and CxOs appreciate the positive effects of high trust in their organizations regardless of the strategies and tactics utilized.

Additional CCPM solutions are as follows. Pipelining addresses the problems associated with having too much work in progress. Full kitting addresses the problems associated with starting project tasks without the necessary predecessor activities completed. To address wasted contingency, 50/50 task estimates are utilized. Executing with focus, rather than multitasking, addresses elongated task durations, productivity losses due to context switching, and the stress team members feel as they try to keep many plates spinning simultaneously. Lastly, project buffers shorten project durations and protect critical project dates from uncertainty; significantly improving the predictability of project completion and delivery.

In an October 2009 speech, Eli Lilly and Company (pharmaceuticals) CEO Dr. John C. Lechleiter, announced the most sweeping changes in company history, indicating three new competencies that are changing drug development at Lilly. One of those competencies is exploiting the benefits of critical chain project management. Dr. Lechleiter stated,

"The COE is implementing a project management methodology called ‘Critical Chain’, developed by physicist Eli Goldratt. Critical Chain was actually first applied at Lilly in a completely different context by our IT group. They, in turn, helped our research labs launch a pilot program that has proved the power of Critical Chain in drug development. Historically, across our pipeline, we have a 60% success rate in hitting milestones on time. In other words, we miss almost half of our deadlines. In the Critical Chain pilot program, the success rate so far is 100%. That’s why we’re now applying Critical Chain in force.”

In a June 2013 keynote address to the Theory of Constraints International Certification Organization (TOCICO) international conference in Bad Nauheim, Germany, Mr. Mitsuo Hitomi, Executive Officer from the Mazda Motor Company spoke of a major company turn-around, and he credited critical chain and TOC. Mr. Hitomi presented remarkable results with an emphasis on employee harmony, improved quality of work life, and positive financial results in 2013 after four fiscal years of operating in the red. Additionally, Mr. Hitomi indicated that critical chain momentum grew and resulted in development project durations being cut in half with all projects delivered with full scope and on time. Echoing the sentiments of Dr. Goldratt himself, Mr. Hitomi stated after the presentation, "Even the sky is not the limit”.

Organizations observe numerous project problems within their environments daily. Some of the most impactful are team morale, missed project commitments, and excessive project durations. It is important to identify root causes and not just treat the symptoms of these problems. Root causes include having too much work in progress, environments of low-trust, multitasking rather than focusing, and wasted contingency at the task level due to student syndrome and Parkinson’s Law. Critical chain targets these causes by streamlining the number of projects in the pipeline for maximized throughput and flow, creating an environment of high-trust which allows team members to get aggressive with task estimates and to call out issues without fear of blame, and by creating an effective contingency mechanism, a project buffer used by the teams, that is an objective and transparent leading indicator of project health.

The results demonstrated by organizations who have systemically embraced CCPM are impressive. Teams enjoy a sense of accomplishment as they operate with high focus and with harmony. On-time delivery becomes increasingly more predictable and on-time performance can improve from 30%-60% to 90%+. Project durations can be cut by 25% or more without sacrificing scope, quality, or team members’ lives outside the workplace.

JOE COOPER is a project, program, and portfolio management consultant at Allegient, LLC in Indianapolis, IN USA. His passion is helping organizations to optimize the speed and reliability of their project delivery and turning this improvement into a strategic competitive advantage.

Joe has been a speaker at PMI Global Congress and at PMI Central Indiana Professional Development Day. He currently serves the PMI Central Indiana Chapter as the Speaker Engagement Director.

Joe earned his PMP in 2003 and is also certified by the Theory of Constraints International Certification Organization (TOCICO) in critical chain project management.

Joe attended graduate school at Oklahoma State University studying Laser Physics and conducting experimental research in medical applications of lasers (tissue coagulation). Joe earned BS degrees in Physics, Mathematics, and Professional Pilot Technology at Indiana State University.

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