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Critical Chain. Team 7 David D. Cho Minyoung Kim Bin (Raymond) Xiao Hua Zhang. Chapter 1. The Company: Genemodem Impressive Track Record: Profits growth in 6 consecutive years CEO: Daniel Pullman (fully supported product development project)

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Critical chain

Critical Chain

Team 7

David D. Cho

Minyoung Kim

Bin (Raymond) Xiao

Hua Zhang

Chapter 1

Chapter 1

  • The Company:Genemodem

  • Impressive Track Record: Profits growth in 6 consecutive years

  • CEO: Daniel Pullman (fully supported product development project)

  • VP of Engineering: Issac Levy (insisted on hiring a consulting firm to do an in-depth analysis of Genemodem’s product development)

Chapter 1 cont d the problem

Chapter 1 cont’d (The Problem)

  • The Challenges:

    1. Short product life-span

    (like a triangle, only six

    months, continue to


    2. Long product development time (roughly twenty four months)

  • Resolution: Drastically cut development time

Chapter 1 cont d the project

Chapter 1 cont’d (The Project)

  • Target: Drastically cut development time

  • Think tank: Mark Kowalski, Ruth Emerson and Fred Romero

  • Test ground: A226

  • Time span: Before A226 is ready (roughly 16 months)

  • Resources: No budget restrictions

  • Incentives: 10,000 shares each (current price $62.48, 62.48*10,000=$624,800)

Chapter 1 cont d the think tank

Chapter 1 cont’d (The Think Tank)

Chapter 2

Chapter 2

  • Place : University (Business school)

  • Characters : Rick Silver (Associate Professor),

    Jim Wilson (Full Professor)

  • Main Event:

    - Mr. Rick Silver is newly assigned to teach a

    course in the Executive MBA.

    - He is recommended by Jim Wilson, due to his

    unique style of ‘teaching through open discussion’.

    - Jim Wilson suggests Rick Silver to teach ‘Project

    Management’ course and also he needs Rick Silver

    in finishing some interesting research.

Chapter 3

Chapter 3

  • Place : A dinner event for Universities Presidents

  • Characters : Ms. BJ von Braun and 4 other


  • Main Event:

    - Ms. BJ initiated conversation with other presidents

    about recent decrease in the number of MBA applicants.

    - Presidents are sharing about their ideas of that

    reasons for the decrease could be both ‘over capacity of

    business schools’ and ‘less demand of MBA degree’.

    - They also talks about that Ivy leagues are not

    experiencing any decrease due to their reputation

    and strong financial ability to attract academic calibers.

Critical chain1

Critical Chain

Chapters 4-6

What is a project

What is a project?

Textbook definition:

“ A set of activities aimed to achieve a specific objective and have a clear start, middle and end”.

Professor Silver’s definition:

A complex initiative that needs pictures, diagrams, time charts, or showing sequential or parallel steps in order to manage it.

General project problems

General Project Problems

Regardless of industry or project type, there are three common problems to all projects:

  • Budget overruns

  • Time overruns

  • Compromising content

Conflicts the meeting

B.J Von Braun -

President of University

Saturating demand for new MBAs

Overextending capacity

Large fixed overhead for business program that might potentially decline

Christopher Page –

Dean of Business School

Demand will not taper off

Need investments to maintain talent in the business schools

Talent will bring increase reputation and increase demand

Conflicts - The Meeting

Meeting adjourns

Meeting Adjourns


  • Ability of graduates to get jobs as indicators of demand

  • Use of survey tool as measurement

    BJ VonBraun already has the results – she gets Page to agree to the decision-making conditions, then shares results with him.

Class example new production facility built in malaysia

Class Example – New Production Facility Built in Malaysia

  • Sacred cow project for CEO

  • Project is grossly over budget and significantly late

  • Payback period pushed from 3 to 5 years, which still seems unrealistic

  • All use uncertainty as reasons for delay - Upper management blames external environment and lower ranks blames internal sources



  • Most problems in projects are direct or indirect results of uncertainty

  • Most individuals add a safety margin to any deadline, usually around 80%

Critical chain chapter 7 9

Critical Chain Chapter 7-9

IOM580 Project Management Team 6

Leon Tseng, Jasmine Yeh, Troy Yu, Hiroshi Harima

Chapter 7

Chapter 7

  • Scene 1: Conversation between B.J. and Chris Page

We shouldn’t change with such small fluctuation

Trim the budget according to the forecast!!

Chapter 71

Chapter 7

  • Scene 2: Conversation between B.J. and Bernard


Business schools fail to deliver the markets!!

Management is art. It cannot be taught as a science

Chapter 8

Chapter 8

  • Rick and Jim talk about the research subject: Overdue and Overruns

Agree, but….

The budget overruns are not the main reasons for the extended payback period

It is caused by the delays in completing projects

Chapter 9

Chapter 9

  • Rick explains PERT and Gantt techniques to students

Critical path is…

Make an early start and keep the slack!!

Should postpone the investments until really necessary

It’s an optimization problem!!

Chapter 91

Chapter 9

  • Class discussion gets heated

The issue must be addressed from management’s point of view, too!!

if starting too many things managers would be bound to lose focus

Using late starts, we lose slacks and everything becomes important

The control mechanism measures the progress of the project. The problem is that by the time the progress report indicates something is wrong, it’s usually too late.

Chapters 10 12 overview team 8 jake detels tom martin christopher maynard john portwood

Chapters 10-12 OverviewTeam 8Jake Detels, Tom Martin, Christopher Maynard, John Portwood

Chapter 10

Chapter 10

  • Early vs. Late Start of Critical Path

  • A waste of time

  • Concentration on minor considerations and neglect the major ones

  • The main thing is for the project manager to focus

    • Both early and late start jeopardize the ability to focus, even though to different degrees

  • Measuring Progress of Projects

  • Measurement should induce the parts to do what is good for the system as a whole

  • Measurement should direct managers to the point that needs their attention

Chapter 11

Chapter 11

  • Manage for Cost or Manage for Throughput

  • Theory of Constraints (TOC)

    • Only one or two true constraints in system

  • TOC says that conflict implies a faulty assumption and that must be corrected

    • Example: The only way to achieve good cost performance is through good local performance everywhere (Sub-Optimization)

    • Incorrect assumption and root of problems in many organizations

  • Strengthening the Chain


Chapter 12

Chapter 12

  • Prime Measurement

  • Again, there is only one (or two) constraints in a system

    • Identification of the system constraint should drive identification of the Prime Measurement

  • The main reason for an operational measurement is to induce the departments to do what is good for the company as a whole

  • “Tell me how you measure me and I’ll tell you how I’ll behave.”

  • Book examples changes at a steel mill

Critical chain ch 13 15 key takeaways

Critical Chain – Ch.13-15Key Takeaways

Group 5

Regina Anderson

Ken Fong

Brent Hawkins

Jianhua Zhang



  • Lots of safety in typical estimates (at both the project and task levels)

    • Estimates usually given at 80% conf. levels

    • Equates to 200% margin of safety

  • But why do tasks and project still overrun!?

Ways safety is wasted

Ways Safety Is Wasted

  • The student syndrome

    • No rush to start, wait until the last minute

    • Leave just enough time (the ‘true’ estimate)

    • Consequence:

      • No margin for errors, delays, or the unexpected

      • Safety already spent during the initial start delay

Ways safety is wasted1

Ways Safety Is Wasted

  • Multitasking

    • Results in increased lead times

Ways safety is wasted2

Ways Safety Is Wasted

  • Dependencies

    • Causes delays to accumulate while wasting away the advances

    • Example: 4 dependent tasks, 3 finishes ahead (-5 days), 1 finishes behind (+15 days)

      • Statistically, gainers average out the laggards

      • In reality, the advances are lost, early finishes are rarely reported

      • Results in a net delay of 15 days

Bottleneck early start dilemma

Bottleneck / Early Start Dilemma

  • Ex: soldiers in a line building a road

    • Lead time and WIP inventory interchangeable

      • Represented by the distance between the soldiers

    • Differences in production rates cause soldiers to move at different paces, i.e. creates gaps

      • Soldiers will eventually spread out, with the largest gap at the bottleneck

Bottleneck early start dilemma1

Bottleneck / Early Start Dilemma

  • Solutions

    • Chain them all together tightly, aka assembly line / conveyor belt method

      • Throughput suffers, everyone moves at the pace of the slowest producer

    • Chain them together with some slack = J.I.T.

      • Similar to conveyor belt example

      • Introduces containers which allows for a limited input buffer to accumulate

      • Creates additional inventory however

Bottleneck early start dilemna

Bottleneck / Early Start Dilemna

  • A better solution

    • Chain the leader to the bottleneck

      • Leader moves at the pace of the bottleneck

      • Length of chain from leader to bottleneck = buffer

      • Eliminates need for excess buffers / WIP inventory

        • Keeps a buffer only at where it is needed, the bottleneck

Critical chain

Critical Chain:

Chapters 16 thru 18

Group 3

Katelyn Fang ∙ Sherry Liu ∙ Kevin Nagatori ∙ Adam Terry

IOM 580

Dr. Ardavan Asef-Vazir

Spring 2009

Chapter 16

Chapter 16

  • Pitfalls of Managing a Program:

    • Pad each step’s completion dates.

    • Pad each step with a lot of safety time

    • Waste safety time:

      • Student Syndrome

      • Multi-Tasking

      • Delays accumulate and advances do not

Chapter 16 cont

Chapter 16 (cont)

Bottleneck: a resource with capacity that is not sufficient to produce the quantities that the market demands.

Critical Path: the constraint of the project.

Feeding Buffer: a buffer used by the non-critical path so that it does not affect the critical path.

Chapter 16 cont1

Chapter 16 (cont)

Before / Most Common

Project Plan with buffer at each step

After / Best Way

Project Plan with buffer at Critical Path and Feeder Buffers for Non-Critical Path

Chapter 17

Chapter 17

  • Monitoring Progress

    • Before => Monitor critical path by % complete

    • After => Adding feeding buffer monitoring

      • Days consumed on feeding buffer

      • Days consumed compared with original buffer days

      • Days left on feeding buffer

    • Conclusion => Focus on continuous monitoring

Chapter 18

Chapter 18

  • 2 Types of Projects

    • Projects done solely by the company

      • Reduce lead time estimates

      • Eliminate milestones

      • Frequent reporting

    • Projects done by vendors and subcontractors

      • Talk their language

      • Pay for vendor responsiveness

  • Penalty for not finishing a project on time

    • Cash Flow

    • Sales

    • Market Share

    • Stock Value

The critical chain

The Critical Chain

Group 2 Chapters 19-21

Lose lose to win win

Lose-Lose to Win-Win

  • Student (Ted) looks at the relationship between contractors and owners

  • Lose-Lose:

    • Contractor bids low to obtain contract

    • Contractor makes more money off of changes and delays

    • Owner pays high price for changes

    • No incentives for contractor to complete the project on time

Lose lose to win win1

Lose-Lose to Win-Win

  • The Win-Win relationship:

    • Owner benefits from a project which is completed early

    • Owner shares this benefit with contractor in incentive bonus for finishing early

    • Owner punishes contractor for finishing late with heavy penalties

    • Contractors no longer bid on price but ability to complete project faster

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