57 pages • 1 hour read
Critical Chain
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Chapters 16-20Chapter Summaries & Analyses
Chapter 16 Summary
Richard presents his translation of TOC into project management in class, and Mark, Ruth, and Fred insist that he present his findings directly to the A226 team. Richard breaks down the team’s PERT chart, showing how each step includes 200% safety time added in. Applying the five focusing steps of TOC, the plan is to identify the constraint, which is the critical path, and they exploit it with a more realistic estimate of time by removing the safety from individual steps. The team is furious, but they compromise on cutting the time estimate of each step by half, then adding a buffer of 2 months at the end of the project. Next, they subordinate noncritical paths that feed into the critical path, and they perform the same task, cutting the task in half with half the time for the step and the remaining half as a buffer to protect the critical path. Then, they subordinate resources to the critical path, creating buffers for resources, like people and machines, that are needed in both a noncritical and the critical path. Richard notes that the PERT chart indicates many instances of urgent, emergency tasks, and they work through them, clarifying which tasks are real emergencies to narrow down the division of focus. As the team works through their buffers, Richard leaves to go to the theater with Judith.
Chapter 17 Summary
Fred, Ruth, and Mark present their findings to the class, explaining how the A226 project is running more smoothly with Richard’s method. They have not yet touched the buffer on the critical path, and they are no longer losing time due to the student syndrome or to multitasking. Individuals and resources are notified and compiled before the date they are needed on the critical path, and Mark notes that no one is suggesting compromises to quality anymore. Some people in the class doubt the efficacy of Richard’s method, but the Genemodem team is confident that the project is more focused than before. Fred expresses a concern regarding noncritical paths, which may use their own buffers and delay the critical path. Richard suggests plotting those paths in order of importance, then prioritizing their issues to protect the critical path. After a lengthy debate on how they should determine priority, more students request that Richard visit their companies. One student, Roger, claims that cutting time estimates will not work with subcontractors, and he challenges Richard to meet with one of the subcontractors on his current project.
After class, Richard goes to the airport to pick up Judith, and he runs into B. J., who asks him how the effort to get more MBA students is progressing. Richard claims he has made a lot of progress, and he is forging ties with his students’ companies. B. J. says Richard should be focusing on finding middle-managers for the program before convincing the company, and she refers to his visits as “community service.” This comment upsets Richard, but he leaves when he sees Judith arriving.
Chapter 18 Summary
Charlene sits in on Richard’s next class, and he opens with the two types of projects they have encountered: those using vendors and subcontractors, and those using primarily internal resources. Richard emphasizes how it is easier for a project manager like Mark to implement a new method, as most employees are under his management. For those using subcontractors, it is more difficult to shift from cost focus to lead time focus, and Roger reiterates his assertion that project managers cannot influence subcontractors. Using Brian’s project as an example, Richard shows how even one month of delay can cost a project huge amounts of money in lost profit, and he introduces the idea that project managers should pay more for better vendor and subcontractor lead times. Ruth notes that there are other factors than money that play into subcontractor reports, and Richard suggests that they need to communicate more effectively with subcontractors, conveying the needs of both the project and the vendor to reach an agreement. The next assignment is to calculate the damages of delays in financial terms.
Richard agrees to meet with one of Roger’s vendors, who quoted Roger a six-week lead time for three molds. Richard does not know about molds, but he can see from the proposal and through asking questions that the process does not take six weeks. The vendor rejects the idea of making Roger’s molds a priority, as he insists it will cause chaos in his shop. However, when Richard notes the thin profit margin, he offers to double the vendor’s profit for a reduction in lead time. For one mold, he asks for an even shorter lead time in exchange for another addition, up to three times, of the vendor’s profit. The vendor reluctantly agrees on the condition that his lead time starts when all elements of the mold and design are delivered, and Richard offers to notify the vendor 10 days, 3 days, and 1 day prior to delivery, provided that the vendor notifies Roger in the same increments for delivery of the faster mold. Roger and the vendor agree, and Roger offers to pay Richard $500 per meeting to meet with his other vendors.
Chapter 19 Summary
Mark, Ruth, and Fred present the status of the A226 project to Levy, who is impressed by the work they have done. They all agree that final testing might put the project into their nine-week buffer, but, currently, they are two months ahead of schedule. Levy wonders if Richard’s methods could work on multiple projects, including projects that share bottleneck resources, like digital processing. Genemodem offers Richard $1,000 per day for three days each month to consult on the A226 project, and they ask Richard about applying his method across all their projects from start to finish.
Excited by the consulting job, Richard buys Judith jewelry and chocolates, and they agree to spend the consulting money on enjoying themselves, resolving that they are likely going to struggle for money once Richard leaves the university.
Richard asks Jim about Genemodem’s issue with multiple projects sharing a bottleneck. Richard notes that, in projects, the bottleneck is not the same as the biggest constraint, as the biggest constraint is the critical path. Since each project has its own critical path, it is difficult to see what the biggest constraint is. They call in Johnny, and all three begin working on the issue.
Chapter 20 Summary
Ted, one of Richard’s students, visits Richard’s office, and he says he cannot complete his homework. By Ted’s calculations, his company, which is a subcontractor, benefits from delays, as they usually allow the subcontractor to charge more money from the developers. Each delay is usually caused by a change, which allows the contractor to charge more money on top of the relatively minor initial contract price. Richard notes that delays also cause issues in cash flow, which can delay payments to Ted’s company, and, if the developer goes bankrupt, some payments might not come through at all. Ted says he will investigate these issues and leaves.
Johnny comes in after Ted, and he tells Richard that he wants to know more about the negotiations Richard conducted with Roger’s vendors. Richard tells Johnny that he just learned from Ted that vendors might benefit from delays, and Johnny notes a contradiction. The contradiction is that the developer and contractor should be working toward the same goal, but the current reliance on bidding for contracts prioritizes initial cost over lead time. If contractors accepted penalties for delays in exchange for bonuses for early completion, then the developer would get an early payback, allowing them to pay out large bonuses. The penalties eliminate some risk for the developer, and the contractor will outbid their competitors by promising short lead times. When Johnny leaves, Richard decides to call Ted.
Chapters 16-20 Analysis
Richard is beginning to piece together the Critical Chain method, and his students are in the process of proving his assumptions correct. The method centers on The Impact of Resource Management and Task Scheduling in Project Efficiency, proposing that shortened time estimates, carefully managed buffers and safety periods, and a prioritization of focus allows project managers to form a more accurate timeline that is easier to follow, leading to reduced lead time and greater quality. Transferring the idea of a biggest constraint from TOC, Richard notes that the critical path in a project is the equivalent to a constraint, and so every other path needs to be subordinated to the critical path. As noncritical paths feed into the critical path, Richard notes that a “‘feeding buffer’ protects the critical path from delays occurring in the corresponding noncritical paths” (197), which means managing resources and scheduling appropriately to avoid conflicts. Even though some of Richard’s students note that this appears to simply be a matter of shuffling around times, the results are largely psychological, such as eliminating “student syndrome” and Mark’s example of his workers starting “to believe that they can finish on time” (200), which encourages everyone to contribute quickly and efficiently to their individual tasks.
The main conflict with The Theory of Constraints and Its Application in Business comes in two forms, only one of which is readily solved in this chapter section. The first is that noncritical paths may fall behind and endanger their individual feeding buffers, leading to a debate on how to prioritize noncritical paths that are falling behind. Some students argue for “the accumulated delay,” meaning the number of days past the deadline the task has run, while others argue for measurements of percentage overrun or number of days remaining. In each case, the priority seems to be at the discretion of the project managers, assuming that each task feeds equally into the critical path, but there is no clear solution provided by TOC beyond the answer given in class. For the second issue, Genemodem encounters the system of multiple projects encountering the same bottleneck through shared resources. Since each project needs the digital processing department, they are all dependent on a single bottleneck, which, in production TOC, would be identified as the biggest constraint. Richard notes how “Jim uses the words ‘constraint’ and ‘bottleneck’ synonymously” (238), but the developing Critical Chain method is only borrowing from the application of TOC to production, meaning a new solution needs to be found for overlapping projects, each with their own constraint, which is the critical path, and the shared constraint of a bottleneck.
Richard’s involvement in Roger’s negotiations with vendors highlights the power of The Role of Leadership and Communication in Project Success, as he discovers that “if you talk the vendor’s language, there is no problem” (228). This tactic ultimately resolves as seeing a situation from the vendor’s perspective, rather than focusing solely on the project, assuming that, if both the vendor and project managers are happy with the situation, the project will benefit as much as the vendor’s business. The trade occurs financially, as Richard offers to increase the vendor’s profit in exchange for shorter lead times, but the path to that conclusion is basically developing an understanding of the needs and goals of each business. The vendors are trying to run their own businesses, and the only way to entice them to work faster on a project is to provide incentive, such as Richard’s later, more refined tactic of offering early completion bonuses and steep delay penalties. The same pattern can be found with Levy and the think tank, as he offers the 10,000 share incentive for speeding up project lead times, while maintaining the implicit penalty of dismissal if they fail.
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