Masaryk University
Faculty of Economics and Administration
Operations Management: seminar work
Application of the Theory of Constraints, Critical Chain Project Management as a
Project Management Methodology based on TOC principles
Student: Jasna Brkić
Učo: 457125
Email: 457125@mail.muni.cz
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Table of contents
Contents
1. Project description and application of TOC and CCPM ......................................................... 2
2. Effects expected by possible use of time buffers during the project....................................... 6
3. Current Reality Tree ................................................................................................................ 9
4. Ishikawa fishbone diagram and Pareto Lorenz curve............................................................ 11
5. Improvements of the Project.................................................................................................. 13
Bibliography ................................................................................................................................. 14
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1. Project description and application of TOC and CCPM
How would you apply CCPM and TOC tools for the planning of Your own project? Can you name
the main project risks? Do you know how to diminish these risk factors (to avoid obstacles)? Name
at least 10 obstacles!! Name set of UDE´s.
The Theory of Constraints was firstly introduced by Dr. Eliyahu Goldratt in 1980s and delivered
to the wider audience in his bestselling book “The Goal”, published in 1984 (Şimşit, Günay,
Vayvaya, 2014). Other connected books also written by Goldratt are The Goal and It’s Not Luck
(Dettmer, 1997).
The Theory of Constraints is a management philosophy for identifying the most important limiting
factor (i.e. constraint) that stands in the way of achieving a goal and then systematically improving
that constraint until it is no longer the limiting factor.1
This theory is based on the system approach. Goldratt sees companies as a system, and their
success depends on how well the components of the system interact among each other. He argues
that systems are similar to chains or networks of chains. Like in the chain, systems performance is
limited by the performance of its weakest link. This means that no matter how much effort is put
into improving the whole processes only the effort put into the weakest link will improve the whole
system. The weakest link in the system is called constraint (Dettmer, 1997). In manufacturing, that
constraint is often called a bottleneck.
TOC deals with the problem of managing and improving complex systems using a holistic, logical
and win/win approach (Ptak, Schragenheim, 2004, p. 21)
The ultimate goal of manufacturing company is to make profit both in short and long term. Theory
of constraints is collection of system principles and tools, or methods for solving the problem of
improving overall system performance (Dettmer, 1997). It is consisted of following tools:
• The five focusing steps – this is a methodology for identifying and removing the constraints
• The thinking processes – tools for analyzing problems and finding solutions
• Throughput Accounting – this is method for measuring performance and guiding
management decisions
Five focusing steps of TOC
1. Identify the constraint
2. Exploit the constraint
3. Subordinate and synchronize to the constraint
1
https://www.leanproduction.com/theory-of-constraints.html, accessed 11.11.2017
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4. Elevate the performance of the constraint
5. Repeat the process
Important questions to answer using TOC:
1. What to change?
2. To what to change?
3. How to make the change happen?
It is important to mention that implementation of TOC is complicated switchover process, and it
involves change. Some people don’t like change, so we can encounter on some resistance.
Critical Chain Project Management
According to Turner (1992) a project can be defined as an endeavor in which human, material
and financial resources are organized in a novel way, to undertake a unique scope of work of
given specification, within constraints of cost and time, so as to achieve unitary, beneficial
change, through the delivery of quantified and qualitative objectives (Chapman and Ward,
2003).
Usually projects are regarded as very unique, meaning every project is different. Projects are also
characterized by bigger uncertainty and risk than business activities that are considered as usual
(for example production process).
Critical Chain Project Management (CCPM) is a methodology for planning, executing and
managing projects in single and multi-project environments.2
It was developed by Goldratt and was first introduced to the market in his Theory of Constraints
book “Critical Chain” in 1997. It was developed in response to many projects being characterized
by poor performance manifested in longer than expected durations, frequently missed deadlines,
increased costs in excess of budget, and substantially less deliverables than originally promised.
Critical Chain is defined as the longest chain [not path] of dependent tasks. In this case,
‘dependent’ refers to resources and resource contention across tasks/projects as well as the
sequence and logical dependencies of the tasks themselves. This differs from the Critical Path
Method.
Since project is associated with bigger risk and uncertainty Critical Chain Project Management
uses safety buffers to manage the impact of variation and uncertainty related to the projects.
Risk can be defined as uncertain event or condition that, if it occurs, has a positive or negative
effect on a project objective PMI (2000, p. 127), (Chapman and Ward, 2003).
If a risk is described as an uncertain event with negative impact on objectives it represents treat.
If a risk is defined as an uncertain event that could have a favorable impact on objectives.
2
http://www.goldratt.co.uk/resources/critical_chain/ , accessed 15.11.2017
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Risk management is systematic application of procedures to the tasks of identifying and assessing
risks, and then planning and implementing risk responses. This provides a disciplined environment
for proactive decision making.3
Risk can be:
• reduced or eliminated by including problem remediation activities into the project plan;
• transferred to other activities or other responsible parties, such as an outside vendor;
• absorbed or pooled by simply planning for them; and
• avoided by putting quality control practices and procedures into place.4
Risk management procedure
According to the PRINCE 2 methodology risk management procedure includes 5 steps:
1. Identify (context and risks)
2. Assess (estimate and evaluate)
3. Plan
4. Implement
5. Communicate
Description of the project
Chosen project for this seminar work is Starting up a Travel Blog, since I am a person who likes
to travel a lot. This is a project which requires careful thinking about various topics and planning
in advance how to run it effectively. Many decisions and considerations must be taken into account
before starting up a blog such as:
• Name of the blog
• Main topics about which I would like to write on the blog
• Positioning of the blog
• Design of the blog
• Writing style
• Photos style
• Consider which information to share in each blog post
• Schedule of the posts (for example once per week)
• Other appropriate social media which will help increase the visibility and reach of the blog
• Hosting services or online platform on which blog will operate
• Lastly and most importantly, travel plans must be coordinated with budget and free time
during the year
3
Managing successful projects with PRINCE 2, Axelos (2009)
4
Cervone H.F. (2006), Project risk management, OCLC Systems & Services: International digital library perspectives
Vol. 22 No. 4, 2006 pp. 256-262, Emerald Group Publishing Limited 1065-075X DOI 10.1108/10650750610706970
5
As shown in previous text a lot of decisions need to be made before starting the blog in order to
create successful blog which will people like to visit and read and ultimately recommend to other
people. There are a lot of blogs which deal with the topic of travelling, therefore it is imperative
to carefully consider all of these decisions in order to create Blog which will stand out and be
original.
In the first period when the blog is started, I assume I will be writing the blog posts about my
previous trips, so it is necessary to make notes about previous trips and gather the best insights and
tips for each destination and create blog posts. Then it is necessary to decide in which order to put
them on the blog. In the meantime, it is necessary to plan the future trips and think about future
destinations and plan both time and budget for future trips.
Then it is also important to have constantly some interesting content for social media regarding
travelling and maybe some other topic related to travelling, because it is important to post every
day on the social media, because of the visibility and reach – which will help in attracting new
people to visit my blog.
So, the next steps are also important to include in the planning:
• Writing notes about previous trips
• Research about other blogs on similar topic and assess what they do, how they write and
how is their positioning
• Create a positioning strategy for my Blog (including decision about name of the blog,
content, design, writing style, hosting…)
• Plan the schedule of posting on the Blog
• Make a Social Media Content Strategy and create a plan and schedule for posting content
• Plan future trips and plan budget and time
The Start of the Blog (the first post) should be no later than February 1st, 2018.
(the project duration – 2.5 months)
In the next table, risks associated with this project will be stated together with the mitigation
strategies.
Project Risk Mitigation Strategy
Lack of time for quality research, planning and
making good decisions before starting the blog
Make clear plan and stick to it, Make creation
of the Blog priority
Wrong judgement about the positioning
strategy
Make sure to free enough time to search what
competitors are doing, ask for the advice
people who already have their blogs
Choosing the wrong hosting company Do a good research about it + consult with
experts in this area
Lack of quality photos from previous trips Either make sure I have couple of them from
each trip or find good photos online and give
credits to people who took these photos
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Don’t have enough materials to post because
of the too narrow Blog topic
Write not only about Past travelling
experiences but also about living in CZ,
Slovakia, studying in CZ, Tips for travelling,
News about travelling, and later expand even
more topics
Personal problems which will affect my
available time for planning the Blog
This is something that cannot be predicted
quite well, but it can be reduced by not
procrastinating
Possibility to get sick which will postpone the
start of the blog due to lack of time to plan
properly
Cannot be predicted, but it can be mitigated
with not skipping the crucial steps in the
process and not procrastinating
Possibility to get job and have considerably
less time available for hobby of blogging
Job is also needed because of the money for
future trips, but with careful planning and
making clear priorities it can be done
Wrong estimation of the needed effort to run
the blog consistently which can result in big
time gaps between the posts
Try to write the blog and see how long it will
take. With good planning with all above stated
decisions this can be much reduced.
Lack of time for travelling after starting the
blog
Even If I find the job, plan for some weekend
trips or one day trips, because also majority of
people also have very limited time to travel so
they appreciate one -day trip tips and advices.
Lack of budget for travelling after starting the
blog
Plan carefully, search for the best deals, and
make sure I have the job
2. Effects expected by possible use of time buffers during the
project
Can you explain what is the time buffer? How you can measure a reached result (used metrics such
as time, resource capacity, costs, good-will and so on).
According to the TOC, buffer is designed to protect only the critical areas, the areas that control
the performance of the whole system. In the TOC terminology, they are they physical constraints
of the system.
TOC uses time-buffers as a protection mechanism against common variations of uncertainty, but
they are not enough. There is a need to identify problematic situations and respond with corrective
actions. Buffer Management is a true control mechanism.
The Critical Chain/Buffer Management (CC/BM) approach aims at the construction of latest start
schedules where the project activities use aggressive time estimates and puts a clear focus on the
determination of a realistic project deadline. In order to keep the probability high that the project
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deadline will be met, the CC/BM approach protects the project duration and the critical chain of
the project using various buffers. There are different types of buffers:
• Project buffer: A unique and single buffer to protect the project deadline, usually placed at
the end of the project.
• Feeding buffer: Multiple buffers to protect parts of the critical chain.
• Resource buffer: Multiple artificial buffers that act as warning signals to assure the
availability of resources5
.
Time buffer means adding some extra amount of time between the tasks or at the end of the project.
The project is consisted of 3 main phases and each phase is consisted of the following activities
that are important for completing successfully the project:
o Research phase (about competing blogs, their positioning, finding hosting companies,
finding appropriate web platform – free or for paying)
o Planning phase which include:
➢ Think about the name of the blog
➢ Plan overall design and appearance of the blog (writing style, photo style, blog design,
font design…)
➢ Plan content of the blog
➢ Plan the schedule of the posts
➢ Plan the social media strategy (Facebook, Instagram – for the beginning)
➢ Plan future posts and trips
➢ Plan first couple of posts to grab attention of the people
➢ Plan roughly next posts and make notes about it
➢ Create a plan to document all these decisions
o Implementing phase include:
➢ Choose the web platform for blog
➢ Buy the domain with my blog name
➢ Buy the hosting for one year (or choose some free platform)
➢ Create the structure of the blog
➢ Create the first post (but don’t share it)
➢ Create social media and post basic information and some photos (post photos and links
extensively couple of times a day to get a base of people who follow these social media
profiles)
➢ Share blog post on social media
Important notice:
About one month before creating or wanting the promote the blog, social media should be
created, in order to get some fan base before starting with the posts.
5
http://www.pmknowledgecenter.com/dynamic_scheduling/risk/critical-chainbuffer-management-adding-buffers-
project-schedule
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It is always difficult to estimate the duration of the individual activities (especially when they are
connected to brain work and thinking). In my project main phases are:
1. Researching
2. Planning
3. Implementing
I described them in detail above, and I expect that Planning phase will take most of the project
time, because it will be necessary to make important decisions and document everything, so the
Implementation phase goes easily and smoothly.
Research phase is also important, because the quality of the information that comes from this phase
will influence the planning and implementation and whole project success.
As the current situation looks like, and with all uncertainty I would put time buffers between each
activity plus at the end of the project. This is important for many reasons. Firstly, after each phase,
it is good to have buffer, so I have time to contemplate about gathered information, decisions made,
and maybe something will come up as an interesting idea in the last moment. Secondly, it is
important to have free time in case of emergencies like unexpected personal problems, illness,
tasks that cannot be postponed or changed.
This is how I would do it:
1) Firstly, assign for each of these 3 phases certain time (estimate roughly because it is almost
impossible to estimate with certainty intellectual work)
2) Secondly, I would see which amount of the time is left from the whole duration of the
project (2.5 months or 10 weeks – assigned time to 3 phases) and divide the left-over time
to 3 buffers:
For example:
1. Researching phase – duration 1 week
• Buffer: 1 week
2. Planning phase - duration 2 weeks
• Buffer: 1 week
3. Implementing phase – 4 weeks
• Buffer: 1 week
Planned activities time 1+2+4 = 7 weeks
Total project time = 10 weeks
Total Buffer time = 3 weeks (each buffer 1 week)
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3. Current Reality Tree
Create CRT and create a list of Undesirable Effects (named by You as it was mentioned already
in clause 1)
Current Reality Tree is useful thinking tool for detecting the core problem or the bottleneck of
the project. Firstly, I defined the list of undesirable effects:
UDE 1: Lack of time
UDE 2: Wrong judgment (regarding positioning, content or blog design)
UDE 3: Lack of quality content
UDE 4: Too narrow Blog scope
UDE 5: Personal problems
UDE 6: Illness
UDE 7: Job
UDE 8: Wrong estimation of effort needed (both for planning the start of the blog and for
running the blog)
UDE 9: Lack of the time for travelling after starting the Blog
UDE 10: Lack of budget for trips after starting the Blog
UDE 11: Unexpected events which cannot be postponed
UDE 12: Wrong setting of priorities
UDE 13: Bad time management
On the next page I created Current Reality Tree.
According to my analysis, main problems are Lack of time and Bad time management. It is difficult
to come up with the core problem, because this is kind of introspective analysis and it is important
to know ourselves very good. It is important to assess the real cause and effect, because couple of
undesirable effects can be approached from different perspectives and point of views, but as I said
it is really important to start from our own personality and do the analysis having in mind
objectively all of our positive and negative sides.
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Low quality BlogMissing the deadline
Lack of time
Bad time
management
Wrong judgement
Job
Illness
Personal problems
Unexpected
events
Wrong setting of
priorities
Wrong estimation
of effort
Lack of quality
content
Design
Content Positioning
strategy
Lack of time for
travelling after the Start
Lack of Budget
for travelling
Too narrow
Blog scope
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4. Ishikawa fishbone diagram and Pareto Lorenz curve
Create with use of already existing set of UDE´s Ishikawa fishbone diagram and put some weights
meaning numbers specifying an importance of assign reasons. It was clearly shows in Ishikawa
FBD power-point presentation. Based on the set of assigned scores create Pareto Lorenz curve
(use Excel). The principle is also shown in just mentioned presentation. Specify most important
reasons. Compare with root problem found by use of Current Reality Tree.
UDE Importance Importance % Accumulative
%
Lack of time 50 15% 15%
Job 45 14% 29%
Bad time management 42 13% 41%
Lack of time for travelling 40 12% 53%
Low quality of content 39 12% 65%
Too narrow blog scope 36 11% 76%
Wrong estimation of effort 32 10% 86%
Personal problems 28 8% 94%
Illness 20 6% 100%
Total 332 100%
Quality of the blog
PlanningResearching Implementing
Time
management
Content Time consuming expected
and unexpected events
Job
Illness
Personal problems
Unexpected events
Too narrow Blog Scope
Low quality content
Lack of time
for running
the blog
Lack of time
for travelling
Lack of time
Bad time management
Wrong setting of priorities
Wrong estimation of effort
Wrong judgement
Lack of time
Lack of time
Lack of budget
Not enough in-depth research
5. Improvements of the Project
State clearly Your suggestions how to improve Your Project and related benefits.
By using the thinking tools such as Current Reality Tree and Ishikawa fishbone diagram, main
problem which can significantly reduce the quality of the Blog and miss the deadline of the
projected start is the lack of time. This is something that can happen for various reasons known
and unknown, predictable and unpredictable, so it is really important to address this issue.
The lack of time can happen due to:
1. Having personal problems which consume a lot of time and energy
2. Having job (but without job, there is not enough income for travelling!)
3. Being sick
4. Unexpected events which might arise but at this moment cannot be expected or predicted
5. Lack of time can happen as well because of the bad time management
Since one of the important things is to have job, personal problems are almost always unavoidable
and not easily predictable as well as being sick and not to mention unexpected events which can’t
be predicted, I would like to focus the source of the improvements on the time management.
Time management is a soft skill and definitely can be learned. In order to learn time management,
I have to learn good practices and install a habit of always practicing time management and focus.
Some practices which I would like to implement are following:
• Concentration and Focus at the present activities (in order to avoid tiredness of constant
thinking about multiple things at once and bad multitasking)
• Prioritizing
• Scheduling
• Goal setting
• Sticking to the Plan
Benefits which I think would be achieved by daily usage of these practices are not only connected
to this project, but they will improve overall my soft skills, and help me be better at work and in
all personal or corporate activities. Expected benefits are:
• Avoid over-tiredness
• Less stress
• Better life-work balance
• Fulfillment of the both career and hobby goals
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• Better work quality (better blog, better job performance)
• Greater productivity and efficiency
• Better career advancement
• Higher levels of happiness
• Higher level of self – confidence
Bibliography
Books and articles
Chapman, C., and Ward S. 2003.Project Risk Management Processes, Techniques and Insights.
Second Ed. England: John Wiley & Sons Ltd.
2009. Managing successful projects with PRINCE 2, Axelos.
Cervone H.F. 2006. Project risk management, OCLC Systems & Services: International digital
library perspectives Vol. 22 No. 4, 2006 pp. 256-262, Emerald Group Publishing Limited.
Şimşit, Z. T., Günay, N. S., and Vayvaya, O. 2014. Theory of Constraints: A Literature Review.
Procedia - Social and Behavioral Sciences 150, 930 – 936
Dettmer, W. 1997. Goldratt's Theory of Constraints: A Systems Approach to Continuous
Improvement. Milwaukee, Wisconsin: ASQ Quality Press.
Ptak, C. A., and Schragenheim, E. 2004. ERP Tools, Techniques and Applications for
Integrating the Supply Chaing. Second Ed. US: St. Lucie Press. A CRC Press Company.
Internet sources
https://www.leanproduction.com/theory-of-constraints.html, accessed 11.11.2017
http://www.pmknowledgecenter.com/dynamic_scheduling/risk/critical-chainbuffer-managementadding-buffers-project-schedule
, accessed 15.11. 2017
http://www.goldratt.co.uk/resources/critical_chain/ , accessed 15.11.2017