Basic of Theory Of Constraints and Critical Chain Project Management(CCPM)

1. Theory of Constraints
An encounter against restraint
forces in the way expectations..
Name: Sourabh Joshi
Executive MBA 1st Year
Roll No: 01518
Dept Of Management Science
(PUMBA)

2. Objective of this presentation…
TO UNDERSTAND THIS “THING
CALLED THEORY OF
CONSTRAINTS”
“Look on a complex
reality and find the
simplicity”
Dr. Eliyahu Goldratt

3. TOC is mainly about focus – focusing your efforts in the right place to
achieve optimum benefit.
Any improvement action that is taken by the organization must be
focused on the constraint area and/or one that has a positive affect
on the constraint.
TOC gives a systematic and focused process which organizations use
to achieve a process of on-going improvement.
"If I can find a leverage point, I can move the
earth"
(Archimedes)
What is TOC?

4. 1. We must make a distinction between core and noise
(choopchick) issues.
2. Every local action must contribute to the global
performance.
3. We treat people with respect.
The Basic Assumptions of TOC

5. In order to understand the system, under TOC we
focus on:
• The “goal” of the system or process
• The measurement of the achievement of the “goal”
• The flow of the system
• The constraints to the flow
• The conflicts related to the constraint
• Managing the flow through the constraints
Let us look first at a system called
“a commercial business”
TOC - Systems and System Thinking

6. • Customer Satisfaction
• Employee Satisfaction
• Owners satisfaction
• In reality there is no conflict between the three
different expectations .
• Choose any of the three Goals, the other two become
the necessary conditions for achieving the chosen Goal!
• For the purpose of this presentation we will assume that
the Goal is making money now and in future.
Goal…

7. Measures for the Goal…
Generally accepted measures are
• Net profit
• Return on investment
• Cash flow
TOC does not question the validity of these
measures. However it does question the
usefulness of these measures as operational
measures

8. Operational Measurements…
TOC Operational Measures
• Throughput (“T”)
• Investment (“I”)
• Operating Expense (“OE”)

9. Throughput (“T”): The rate at which Contribution Rupees are coming
into organization.
Operating Expense (“OE”): All the money that system spends on
converting inventory into throughput.
Investment (“I”): All the money currently tied up inside the system.

10. Process of On-Going Improvement
Any process of on-going improvement must answer the
three questions:
What to Change?
What to Change to?
How to
cause the
Change?
What is the constraint?
What is the solution?
POOGI

11. Five Steps – Weakest link…
1. Strength of chain - 35kg. (Constraint)
2. Use chain judiciously. (Exploit)
3. Increasing strength of other links does not
increase strength of chain. (Subordinate)
4. Harden link to increase to 40kg. (Elevate)
5. Work on next weak link. (No inertia)
45 kg 40 kg 42 kg 45 kg 43 kg 43 kg 40 kg 35 kg 45 kg

13. A process of on going
improvement (POOGI)
1. Identify the constraint.
2. Exploit the constraint
3. Subordinate all policies,
decisions and procedures to
exploiting the constraint.
4. Elevate the constraint.
If we need still more
output from the
constraint, elevate it.
5. Avoid inertia. If in a
previous step constraint
shifts, start the cycle once
again.

14. Management Constraints….

15. Why Projects Failed????
• Lack of flexibility and resistance to
change.
• It fails to address the practical
uncertainties such as requirement
change.
• Functions does not completes on time.
• Delay in approval process.

16. Critical Chain Project Management
(CCPM)…different than traditional
• CCPM focuses on task due dates and interim milestones in a project.
• Emphasizes the completion of the most important tasks in the project plan as
quickly as possible.
The following two conceptual situations in project management using CCPM -
a) Resource Constrained Situations and
b) Optimum Usage of Buffer,
leads to the creation of three types of buffers between task:
1. Project Buffer (PB) – This is the amount of buffer that’s added to the end of the
project. Set, typically, between 20% and 50% of the duration of activities in critical
chain.
2. Feeding Buffer (FB) – This is the amount of buffer time at the end of a sequence of
activities.
3. Resource Buffer (RB) – This is an alert that’s used to indicate that a resource is
needed to perform an activity. This alert can be set a few days before the
actual activity begins.

17. Critical Chain Project Management
(CCPM)…different than traditional
Typical Steps applied in CCPM:
1. Remove ‘Safety Time’ and reduce the activity duration by
50%.
2. Create schedules on late finish dates.
3. Remove resource constraints
4. Identify critical chain
5. Add project buffer of 50% of the critical chain tasks
duration to the end of the project.
6. Add feeding buffer to the end of the chain of non-critical
tasks.

18. Where are differences lies……
Traditional Approach CCPM Approach
Focus on interim milestones Focus on tasks: The work takes as long as it
takes without multi-tasking
Multi-tasking – working on several key tasks at
the same time
Focus in a single task, complete it and hand it
on
Task duration estimates are typically “padded”
to account for multi-tasking.
Task durations area estimated as a range
(optimistic, mean and pessimistic estimates).
Multiple priorities make it impossible to fully
focus on one task
Tasks and projects have clear priorities –
highest-priority task first
“Parkinson’s Law” – work expands to fill the
available time
Define “done” for each task. Focus on it,
complete it, and hand it over.
Work is started just in time to finish it before
it’s due
Start tasks as soon as predecessor tasks are
completed, hand them on as fast as possible
Finishing something early means the next
person has more time
Finishing something early means the next task
starts early

19. Constraints in Operations…